The federal government is moving ahead with legal action against the Hudson Bay Railway Company (HBRC), a subsidiary of North American railroading company OmniTrax Inc.
Ottawa is suing HBRC for $18 million, claiming that the company failed to live up to terms in a 2008 contract that required the company to maintain rail service on a section of track in northern Manitoba until 2029.
The track has been out of service since early 2017 after flooding caused extensive damage.
OmniTrax officials have indicated that the company has no intention of resuming rail service or paying for repairs, which could cost more than $40 million.
“Transport Canada believes it is important to hold Hudson Bay Rail Company accountable and that is why we have moved ahead with legal action,” said officials from Western Economic Diversification Canada in an email to The Western Producer.
“As this matter is the subject of legal proceedings, it would be inappropriate to comment further.”
Meanwhile, federal transportation regulators recently ruled that HBRC breached its legal obligations to keep the line open and provide rail service to shippers and communities in northern Manitoba.
The Canadian Transportation Agency (CTA) ruled June 15 that federal legislation required HBRC to repair damaged sections of the track between Gillam, Man., and Churchill, Man., and restore service following a “reasonable pause” in operations.
The CTA acknowledged that HBRC was justified in halting operations after flooding washed out several sections of the track last May.
But after a “reasonable pause” HBRC was obligated to repair the rail line, regardless of repair costs, HBRC’s ability to pay for the repairs or the line’s commercial viability, the CTA ruling suggested.
The CTA ordered HBRC to begin repairs on the track no later than July 3.
Repairs are to be completed and service restored “as expeditiously as possible,” the ruling added.
The company is also required to file monthly progress reports beginning Aug. 1 but it is not required to pay compensation for financial losses that were incurred by northern Manitoba shippers or residents as a result of the line’s closure.
The CTA said that if HBRC had no intention of repairing the damaged line and resuming rail service following a reasonable pause in service, it could have used discontinuance provisions within the Canada Transportation Act, which allow the track to be sold or removed for salvage.
OmniTrax has confirmed it will appeal the CTA ruling.