Canadian government sues railroad over Churchill line

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Churchill, Manitoba
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OTTAWA, Ont. — The Canadian federal government has launched an $18-million dollar lawsuit against Omnitrax, the U.S.-based shortline operations company.

The lawsuit alleges that Omnitrax allowed tracks leading to the isolated community of Port of Churchill, Manitoba, to fall into disrepair after flooding washed away portions of the tracks. If proven in court, it would mean that the railroad violated terms of a 1997 purchase contract that stated that the government would pledge $20 million towards Omnitrax upgrading the line by 2019, and that the federal and Manitoba provincial governments would be entitled to the return of those funds if Omnitrax sold, abandoned, or stopped service on the line before 2029.

Though the railroad is the far northern community's primary year-round means of importing goods, Omnitrax has argued that the recent flooding amounts to a force majeure preventing them from fulfilling their contract, and that federal changes to the way grain is shipped make Ottawa partially culpable for the cessation of service to Port of Churchill. The federal lawsuit came hours after Omnitrax indicated on Tuesday that it intended to file a Chapter 11 North American Free Trade Agreement claim against the Canadian government that alleged Ottawa sabotaged their efforts to repair the line. That provision allows private businesses to sue a government without going through that country's court system.

"We believe we have exhausted all available options to facilitate the repair and transfer of the HBR, port, and related assets," Omnitrax president Merv Tweed said in a statement to CBC Canada. "At every turn, our efforts have been stalled, obfuscated, or ultimately sabotaged by the federal government. We view this NAFTA claim as a last resort."

In the meantime, the loss of rail service has caused the price of basic goods in Churchill to skyrocket. The community is inaccessible by road, and the only alternatives are to ship supplies by air or sea.

"Since the closure of the rail line, which falls under federal jurisdiction, our government has focused primarily on the safety and security of the community — mainly with respect to critical supplies of food, propane and other fuels," a spokesperson for the Manitoba government said in a statement to CBC Canada.

Churchill Mayor Michael Spence and local residents support One North, a partnership between local municipalities and First Nation councils to buy the rail subdivision and operate it on their own terms — a proposition that could yield long-term benefits as climate change makes the area more favorable to development.

See the original article online.
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