Owner of rail line to Churchill appeals order to fix flood-damaged tracks

A federal agency isoverstepping its authorityin orderingrepairs be made toflood-damaged train tracks to Churchill, argues rail line owner Omnitrax-Hudson Bay Rail.

The Denver-based companyfiled an appeal with the Federal Court of CanadaJuly 9 in hopes of having a Canadian Transportation Agency order to fix the tracks overturned.

CBC News obtained the document from the Federal Court of Appeal.

Omnitrax-Hudson Bay Rail has been trying to unload the rail line after it was seriously damaged more than 400 days ago in a2017 spring flood.

Omitrax arguestheunforeseeable flood hit as HudsonBay Rail which Omnitrax ownswas on the brink of financial insolvency. It has so far "had difficulty in securingfunding" for the "enormous" costs associated with repairs, states the appeal.

Ever since the flood, the lack of rail shipment access has driven upfoodandfuel costsandharmedlocal businessesin the community of about 900, located 1,000 kilometres north of Winnipeg.

The company has also been involved in legal disputes with the federal government over who shouldpay for the rail line repairs since last year.Meanwhile,tension continues to buildamong locals over the delays.

"The bottom line is, this rail line needs to get fixed," said Manitoba NDP Leader Wab Kinew.

"Every day that there is a delay, and every day that goes by without getting the rail line fixed means another day of high gas pricesand high food costs for people in Churchill, which is to say nothing of the people who are either out of work or laid off because of this whole ongoing battle."

CTA, Omnitrax go to court

In June, based on a complaintlaunched by the Opposition Manitoba NDP, theCanadian Transportation Agency concluded Omnitrax hadabdicated its responsibility to the public in not getting started on repairsby November 2017.

The agency, which is an independent tribunal of the federal government,issued an order requiring the company to get startedon repairs by July 3 and get them done "as expeditiously as possible."

Last Friday, having learned the company had not begun repairs,theCTAwent a stepfurther and filed an orderwith the Federal Court of Canada compelling Omnitrax-HudsonBay Rail to fix the rail line.

In response, the company states in its appeal theorder"significantly oversteps the [CTA's]remedial jurisdiction" under the Canada Transportation Act.

Hudson Bay Rail claims the CTA neglected to take into account that the companyisn't responsible for the extensive damage caused by a "once-in-200-years" flood, nor does it have the estimated $43.5 million needed to make the repairs.

"HBR has tried to find financing for the repairs but its efforts have, to date, been fruitless," the appeal reads.

The order alsodidn't clearly explain the nature of the repairs that weresupposed to have begun by the CTA's July 3 deadline, the appeal states, and is "incapable of being complied with."

Based on its financial situation, Hudson Bay Rail says it isn't obligated to make the repairs under the Canada Transportation Act, which states a company's "financial necessities are of the first order of concern" when determining what duty it has to deliver service.

Negotiations back on: Omnitrax

The company declined to provide a statement regarding its Federal Court appeal of theCTAorder.

Hudson Bay Railofficials have maintained thelifeline toChurchill should be treated as a public utility because it is no longer commercially viable.

It has nonetheless been in purchase talks with a consortium representing northern communities and First Nations Missinippi Rail Partners along with Fairfax Financial Holdings and AGT Food and Ingredients.

The sale of the rail line has turned into a sagaof its own, with negotiations falling apart and coming back together at various times, coming undone once againlast week.

As of Monday, Hudson Bay Rail presidentSergio Sabatinisaid negotiations are back on and include talks about the repair process.

Meanwhile,Kinew says he doesn't believe Omnitraxintends to fix the rail line.

"Looks like they're trying to come up with all kinds of excuses they're broke, they can't get a deal to sell the thing but when that order to fix the rail line came down, it didn't say, 'Fix the rail line if you can find a suitable buyer.' It didn't say, 'Fix the rail line if you can make money on it.'It said, 'Fix the rail line or else.'"

He added the NDP is confident the order should be upheld and his party is prepared to go to court.

"Since the carrot of getting a deal to sell the rail line seems to be off the table for now, then we think it's important to pursue the stick of going to court," Kinew said. "We're prepared to stand up for people in Manitoba."

Kinewalso said the Progressive Conservative provincial government should have pressured the company to get the rail linefunctioningagain.

He said ifPremier Brian Pallisterand his government wantto get on board with the NDP fight, they're more than welcome.

The PCs have in the past claimed rail lines and ports fall under federal jurisdiction.