Wednesday, November 15, 2017

Canada moves forward with legal action against OmniTRAX

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Canada moves forward with legal action against OmniTRAX OmniTRAX

What began with a 200-year flood event may now be brought to a close through legal action. The government of Canada is following through with an ultimatum it issued to OmniTRAX Inc. in October: Repair the Hudson Bay Railway (HBR) line in 30 days or face a breach of contract lawsuit.


On Nov. 13, Minister of Transport Marc Garneau said the government would move ahead with its planned suit against OmniTRAX Inc. as the company has failed to resume operations on the portion of the HBR line that runs from Gillam to Churchill, Manitoba.

"Our government remains committed to the people of Churchill and northern Manitoba and we recognize the importance of the rail line for the community. We also believe it is important to hold OmniTrax accountable and that is why we are moving ahead with legal action. We are optimistic that interested buyers can develop a viable, sustainable business plan towards owning and operating the line," said Minister Garneau.

Transport Canada says OmniTRAX did not fulfill its obligations under the terms of the contribution agreement it signed with the government of Canada in 2008. Under the terms of the agreement, the government of Canada provided CA$20 million (US$16.18 million) in funding for the rehabilitation of the rail line between The Pas and the Port of Churchill, Manitoba. Transport Canada says it has paid out CA$18.8 million (US$15.2 million) to date.

According to Transport Canada, "the agreement requires that OmniTRAX Inc. operate, maintain and repair the entire Hudson Bay Railway Company Line in a diligent and timely manner until March 31, 2029. It also specifies that the company must repay Transport Canada if it significantly reduces, discontinues, abandons or sells the Hudson Bay Railway Line."

The line between Amery and Churchill has been inoperable since May 23 following flooding that requires between CA$20 million (US$16.18 million) and CA$60 million (US$48.55 million) in repairs. In September, the government of Canada "formally demanded" that the Hudson Bay Railway Company, which is owned by OmniTRAX, honor a 2008 agreement and repair the tracks and on Oct. 13 the government gave the railroad 30 days to make repairs.

OmniTRAX has argued that the line is not commercially viable and should be viewed as a public utility.

"We recognize this position has frustrated many, but it has become the inconvenient truth for Churchill," Merv Tweed, president of OmniTRAX Canada, said in a statement issued in October.