Canadian Underwriter

Regulator says company had legal obligation to fix and maintain rail line

June 15, 2018   by The Canadian Press

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WINNIPEG – Federal regulators have ruled that the owners of a broken rail line to Churchill were wrong not to repair the line that kept the northern Manitoba community connected to the outside world.

The Canadian Transportation Agency says the Hudson Bay Railway Co., owned by Denver-based Omnitrax, had a legal obligation to fix and maintain the line.

A VIA Rail train sits idle at the train station in Churchill, Man., on June 22, 2017. The town of Churchill in northern Manitoba is saying thank you to everyone who has helped the community since it lost its rail service. Mayor Michael Spence and his council say in a release on Twitter that many Manitobans, Canadians and people from across the world have reached out. The town of 900 people on Hudson Bay lost its only land connection to the south last spring when severe flooding damaged the rail line. THE CANADIAN PRESS/Alex de Vries

The line is the only land link to Churchill and was severely damaged by flooding in May of last year.

Omnitrax said it could not afford to repair the line and rejected demands from the federal government to fix it.

For the last year, goods and people have had to be flown in at much higher cost, and Omnitrax has been negotiating a deal to sell the rail line to a consortium of northern communities.

Manitoba’s Opposition New Democrats filed a complaint with the federal regulator, which has ruled that Hudson Bay Railway should have been able to repair the line within six months of the flood.

“The agency finds that since November 2017, HBR has been … in breach of its level of service obligations,” the 11-page ruling states.

“The (Canada Transportation Act’s) long-standing rail level-of-service provisions reflect the public duty of railway companies to provide service on the railway lines they own or operate.”

The decision may be moot, because Omnitrax has reached an agreement in principle to sell the railway, along with the Port of Churchill, to the consortium. The deal, which would leave the new owners with the responsibility for repairs, is expected to be finalized next month.

Omnitrax has 30 days to appeal the ruling. Company officials were not immediately available for comment Friday.

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