The HBRC will be solely responsible for any damages and costs to repair the rail line. Omnitrax photo.
The parent company of Hudson Bay Railway Company (HBRC), US-based Omnitrax, is off the hook for any damages lost in a pending lawsuit. HBRC will be solely responsible to the federal government if they are found liable for not repairing the washed out rail-line that links Churchill with the south of Manitoba. In May 2017 the tracks were washed away in nearly 20 locations rendering the stretch of tracks useless until millions of dollars are allocated for repair.
Omnitrax’s claim that HBRC is a separate entity has been upheld and thus the Federal Government of Canada has removed its name from the lawsuit.
Soon after two late spring blizzards began to melt, the tracks suffered severe damage in multiple locations. Omnitrax, based in Denver, Colorado, refused to spend an assessed $60 million for repairs. The company claimed economic hardship with regards to the project and was faced with the federal government threatening to sue after the 30-day start deadline elapsed.
The government filed a lawsuit this past November naming Omnitrax and HBRC as defendants. Under a 2008 agreement, Transport Canada indicated that Omnitrax was responsible for keeping the railway running through 2029. As a result, the lawsuit is seeking to recoup $18 million that was an original part of the terms to operate the port and rail line. However, the company has claimed the damages resulted from unforeseeable circumstances or “act of God” thus releasing them from their obligation to repair under their contract with the government.
Omnitrax counsel Jamie Kagan acknowledged that the Attorney General of Canada and Omnitrax have agreed to remove the parent company’s name from the lawsuit and relieve them from any judgment for damages. Any fault and levy of damages will now only be filed against HBRC.
“Our view has always been that this is a political action mainly brought for the purposes of PR and not for a legal remedy, and it appears that the Government of Canada, when pushed, ultimately agreed and has withdrawn the allegations against Omnitrax Inc.,” Kagan said in an interview after the hearing.
“As the private owner of the line, Hudson Bay Railway Company -which also conducts business under the name OmniTRAX Canada- had the obligation to repair the rail line when it was damaged,” a spokesperson for Transport Canada said in an emailed statement.
Churchill residents and business people have been faced with increasing costs for everyday supplies as most now are transported by air. Government subsidies have deferred costs to some extent though some residents have been forced to relocate to Winnipeg or other locations as a result.
Omnitrax is still trying to work out a purchase and sale agreement with a group comprised of northern Manitoba First Nations. Those talks have stalled since the disaster last spring.
The Port of Churchill sale expected to go through soon. Port of Churchill photo.
Current Port of Churchill owners OmniTrax Canada and a group of northern Manitoba First Nations, known as the Missinippi Rail Consortium, have finally agreed to seal the deal that will hopefully get the facility running again.
This agreement will allow the First Nations Consortium to begin lining up customers and vendors ahead of the 2017 grain season so to insure a smooth transition in bringing the port back up to par.
In a press release statement from omnitrax the company stated, “This step was taken after a year of due diligence and the signal from the consortium that it intends to move forward,” Omnitax has owned and operated the port and rail line since 1997.
“We are grateful that OmniTrax Canada believes in our process and our people and is willing to get started now,” said Chief Arlen Dumas of the Mathias Colomb First Nation, which has led the consortium.
“Ensuring First Nations ownership in these assets is a vital part of ensuring long-term viability in the north. Now we need the government of Canada to complete their review so that this process can be concluded as soon as possible.”
“It is a pleasure working with Chief Dumas. The chief’s leadership, consideration and thoughtfulness have allowed us to ensure a great home for these assets with the Manitoba northern First Nations,” said Merv Tweed, OmniTRAX Canada president.
“He has taken bold steps to prove his commitment to the transaction and we are eager to see it come to fruition in the coming months.”
This past July OmniTrax announced that the port was closing much to the surprise of Churchill townspeople and government officials. Layoff notices followed almost immediately to the roughly one in 10 Churchill residents employed at the port and the accusations began to fly. Municipal leaders, politicians and organizations representing agricultural producers all spoke out against the shut down and called for the reopening of the port. It didn’t happen but perhaps the local ownership will prove to be the answer to the problem.
The Port of Churchill sale expected to go through soon.
Anticipation of Manitoba’s port of Churchill and the Hudson Bay rail-line sale going through is building. The deal involving current owner Omnitrax from Denver, Colorado and a group of Manitoba First Nations are expected to finalize the sale in the short term. Omnitrax is opting out of the grain shipping business as a result of decreased numbers. After the Canadian Wheat Board dissolved and government incentives dried up, the shipping quota dwindled to 186,000 tons this past fall season- about a third of the average total for past seasons. It just seems as if Omnitrax’s heart wasn’t in the business as shipping totals have fallen consistently over the last few years. Hopes are high that a localized group with more alliances will spur growth and provide consistent employment for more local people in Churchill. Stay tuned for updates!