Omnitrax says it can break contract with Ottawa after government intervention, flooding – Manitoba

The company that owns the only rail line to the northern Manitoba town of Churchill says factors like government interference and unprecedented flooding mean it doesn’t have to hold up the terms of its contract with Ottawa.

Omnitrax also says it won’t pay to repair the tracks, which were damaged by severe spring flooding.

Over the weekend, Prime Minister Justin Trudeau said Omnitrax, the Denver-based company that owns the rail line, has legal obligations to clean up and repair the tracks.

“This is a responsibility that is squarely on the shoulders of Omnitrax,” Trudeau told reporters in Winnipeg on Saturday.

But Omnitrax argues recent events amount to a force majeure — a legal term referring to unforeseeable circumstances that excuse a party from fulfilling a contract — and it is unable to fulfill its contract with the federal government.

$40M for railroad upgrades in 2008

Omnitrax, which also owns the now-closed Port of Churchill, bought the rail line and the Hudson Bay Railway Company from the province in 1997.

In 2008, the federal and provincial governments each gave $20 million to the company, which was also expected to put in $20 million, to upgrade the railroad.

The contract that came with the money, obtained through freedom-of-information laws, stated Omnitrax had to assume full responsibility for the operation, maintenance and repair of the rail line until October 2018.

If the company discontinues or abandons the rail line or port, Ottawa is entitled to have the funding returned, according to the contract.

Omnitrax also received subsidies from Ottawa following the end of the Canadian Wheat Board in 2012 and the provincial government has given millions in funding to the company, including $820,000 in payments under a 2015 agreement.

The Port of Churchill was closed last August with little warning.

That was followed by a winter of powerful blizzards and a spring of severe flooding, which washed out sections of the rail line…

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