Rail company files complaint in dispute over broken northern Manitoba rail line

OTTAWA _ The owners of a broken rail line in northern Manitoba that has cut off the subarctic town of Churchill served notice Tuesday that they plan to file a complaint against the federal government under the North American Free Trade Agreement.

The formal notice from Denver-based Omnitrax is the latest volley in an ongoing battle over who is responsible for the rail line left inoperable by spring flooding, leaving Churchill’s 900 residents facing higher food and fuel prices and lower tourism numbers.

Omnitrax said Ottawa’s decision to end the Canadian Wheat Board’s monopoly on western wheat and barley in 2012 drastically cut grain shipments along the Hudson Bay Railway and through the Port of Churchill because the open market allowed producers to use southern rail lines and ports, which are Canadian-owned.

Omnitrax’s Canadian current president, Merv Tweed, was a backbencher in the Conservative government that made the decision.

“Article 1102 of the NAFTA requires that Canada provide to investors or investments of the other NAFTA Parties treatment that is ‘no less favourable’ than it provides to its own,” the 22-page notice document states.

“Through the steps it has taken to undercut the (the rail line) and its market position relative to Canadian-owned railways, the Government of Canada has de facto discriminated against Omnitrax to the benefit of its Canadian competitors, so as to provide Omnitrax with treatment less favourable than that accorded to Canadian-owned enterprises in like circumstances.”

Omnitrax said it hoped to resolve the standoff amicably, but also said it might file a lawsuit for $150 million if no agreement is reached.

The federal government, which has threatened to sue Omnitrax for failing to maintain the rail line, responded Tuesday by saying the company received $18.8 million in federal subsidies a decade ago on the condition it keep the rail line operational.

“As the private owner of the line, Omnitrax had the obligation to repair the rail line when it was damaged and it is irresponsible that they have not commenced repairs,” said a written statement from the office of Transport Minister Marc Garneau.

Omnitrax has said it cannot afford the estimated $43 million to fix the rail line. The company has been in talks with a consortium of northern communities to transfer ownership of the rail line _ a move that would require government aid.

Churchill Mayor Mike Spence, a member of that consortium, said Tuesday he was optimistic progress will be made on the transfer of ownership and repairs might begin soon.

For now, Spence said the town is still dealing with the higher cost of flying in goods and people since the rail line was the only land link to the community.

“I think we all want to see 2017 hurry up and move along and let’s hope that 2018 is going to be a lot more rewarding to the community.”