Government issues ultimatum over broken rail line to Churchill
WINNIPEG — The federal government has issued an ultimatum to the owners of a broken rail line that has cut off the town of Churchill in northern Manitoba — fix it within 30 days or face an $18.8-million lawsuit.
Ottawa says Denver-based Omnitrax, which bought the rail line from the government in 1997, has a legal obligation to repair and maintain the line, which is the only land connection to the subarctic community on the coast of Hudson Bay.
Transport Canada points to a 2008 agreement with Omnitrax that included $18.8 million in federal support for repairs and upgrades.
“Notwithstanding that your Sept. 6 letter indicated you would be effecting the necessary repairs to the (rail line), you have since failed to do so, and time is running out with winter’s approach,” reads a letter sent to Omnitrax by Transport Canada on Friday.
“As a result of the above, it has become clear to Transport Canada that (the company) is in default of its obligations under ... the agreement.”
Omnitrax responded by saying the rail line is no longer economically viable, due largely to federal government decisions that include ending the Canadian Wheat Board’s monopoly on western wheat and barley.
The wheat board used to ship grain along the rail line to the Port of Churchill.
“It is our view that, as a result of the federal government’s actions — or inactions — recently and over the past 10 years, the (rail line) is not commercially viable,” Omnitrax Canada president Merv Tweed said in a written statement.
“Culminating in the threat of legal action from Transport Canada today, it has become clear to us that the federal government has no intention of constructively solving this problem for Churchill.”
The 250-kilometre rail link was severely damaged by flooding last spring and Omnitrax has said it cannot afford an estimated $43 million in repairs.
For months, goods and people have had to be flown in at a high cost. The town of 900, known for its polar bears and beluga whales, has seen a dramatic drop in tourism numbers as well.
The Town of Churchill issued a statement Friday about Ottawa’s ultimatum to Omnitrax.
“The town continues to be disappointed that to date the rail line owner has refused to meet their obligations to restore service,” said the statement issued as a public notice on social media.