Analysis

A year on, Churchill still waits for repair of rail line as confusion continues over who will fix it

Nearly a year ago, a flood closed the rail line to Manitoba's northernmost community. A solution hasn't appeared yet and the costs of inaction is mounting.

Manitoba and Canada appear out-manoeuvred by American-based Omnitrax

On Wednesday, May 23, it will be one year since a flood cut the rail connection to Manitoba's only ocean port. (Mike Spence/Town of Churchill)

Force majeure: a legal term referring to "unforeseeable circumstances that excuse a party from fulfilling a contract."

Those two words are the ballast on which Omnitrax — the company that owns the rail line to the northern Manitoba town of Churchill — has based its court defence for not repairing the line.

And Omnitrax has, somehow, managed to defy a federal government and stymie an interested buyer, all the while leaving a small population of northern Canadians under the wheels of a bus the size of a locomotive. 

It is also a stark reminder of the relatively modest shadow Manitoba casts on the federal conscience and the kind of imperative Ottawa has placed on arctic sovereignty.

On Wednesday this week, it will have been a full year since a flood blew out the rail line to Churchill — the only land-transportation link to the town of about 900 on the shore of Hudson Bay, 1,000 kilometres north of Winnipeg.

Churchill's isolation has cost millions in subsidies and legal fees, but the rail line remains closed. (CBC News )

In that time, both provincial and federal ministers have visited (by air), subsidies have flowed to defray rising costs, ships have been deployed to deliver critical fuels and hopper cars of lawyers, bureaucrats and PR people have been thrown at the problem.

Oh, and a hugely expensive "cat train" was put into service to deliver vital materials to the town during the winter.

Omnitrax denies obligation to repair

But the land line to Churchill is still out and its U.S. owner continues to out-manoeuvre provincial and federal politicians.

Omnitrax's Denver-based owner, Pat Broe, unleashed squads of engineers last summer to explain the intricacies of repairing the line, saying the costs hovered around $60 million.

That number would eventually drop substantially for a bare-minimum, get-back-and-running operation.

'Omnitrax has legal obligations to clean up and repair the tracks,' Prime Minister Justin Trudeau said last July. (CBC News )

Broe filed a NAFTA challenge against Canada and successfully forced the federal government to remove his U.S.-based company from a federal government lawsuit, leaving a husk of a company — Hudson Bay Rail — as defendant.

A single stroke of a court pen shredded the federal government's single publicly made threat to the American businessman.

Since December of 2015, when Broe served notice that Omnitrax was getting out of the port and rail business in Manitoba, he has successfully parried and jabbed against any responsibility his company has for operating or making repairs to his orphan northern company. 

In July last year Prime Minister Justin Trudeau came to Winnipeg with tough talk.

"Omnitrax has legal obligations to clean up and repair the tracks," Trudeau said. "This is a responsibility that is squarely on the shoulders of Omnitrax."

Nearly 10 months later the rail line is still closed.

Business soap opera

Clearly Broe wasn't intimidated by the legal or verbal finger-wave of the leader of one of the wealthiest countries in the world.

A possible knight in business armour finally appeared in the form of Toronto entrepreneur Prem Watsa and his turn-around specialist company, Fairfax Financial Holdings. 

In November, corporate turn-around firm Fairfax Financial joined other groups seeking to buy the Churchill port and northern rail line. Since then, new suitors for the line and port have emerged. (CBC News )

In November last year, together with a group of Bay Line communities and First Nations (a consortium called One North), Fairfax started negotiating with Omnitrax and a federally appointed mediator (former Privy Council clerk Wayne Wouters).

This past week, the One North group declared their solidarity and said publicly the negotiations were continuing.

However, the business soap opera continues.

After being on the sales block since 2015, new suitors for the line and port emerged in the form of a group from Calgary called iChurchill and another, the Herun Group Co. Ltd. from China.

IChurchill has a relationship with Glenn Hudson, chief of Peguis First Nation in Manitoba's Interlake, but the details of its consortium are unclear. 

A request for information sent to the company last Thursday resulted in a cryptic response.

"We are at a very sensitive stage of negotiations at the moment so we cannot comment. We are likely to have more to say in the next week or so," wrote iChurchill's Stephanie Mesher.

Chief Hudson has said little on the record.

Hot property

Omnitrax suddenly appears to have a hot property on its hands. The company wrote to CBC this past week saying it had signed a letter of intent with iChurchill and there were others taking a hard look at a deal.

"We have also received letters of interest from several other Canadian companies," wrote Omnitrax president Merv Tweed. "As of this moment, no transaction has been completed. We are continuing discussions with a number of interested parties."

Tweed did not answer questions about whether the company had been on the rail line this spring to update its condition or whether it allowed any other interested parties to do the same.

Omnitrax executive Merv Tweed says discussion on the future of Churchill's port and the rail line are continuing with 'a number of interested parties.' (CBC News)

The Province of Manitoba and the federal government have been unable to get that kind of clearance.

Declaring a state of emergency could have bulldozed both governments onto the line in short order.

But then-infrastructure minister Blaine Pedersen told CBC News just weeks after the flood in 2017 that a state of emergency "didn't make make sense" and instead the province had "a better plan for the subarctic community."

That "better plan" soon morphed into a stock response by Premier Brian Pallister and every cabinet minister near the file: "ports and railroads are a federal responsibility."

In other words, Churchill is Ottawa's problem.

Meter is running

Despite reluctance (actually a firm "no") on the part of the Pallister government to declare a state of emergency, it had no qualms applying for federal disaster financial assistance last May for its expenses related to the Churchill flood.

That includes providing funding and logistics to get propane into the community by ship for the past winter.

What triggers a DFA agreement? On Public Safety Canada's website, the preamble for assistance reads: "in the event of a large-scale natural disaster, the Government of Canada provides financial assistance to provincial and territorial governments."

In the eyes of the province the Churchill flood was "large-scale" enough for assistance, but not large-scale enough to answer the community's call for the declaration of a state of emergency and fast repairs to the rail line.

If the rail line isn't repaired by summer the province will be forced to order millions of dollars more in propane, shipped in by water, and pay more to have the empty, and rented, gas cylinders shipped out.

The clock is ticking toward the need for another ship-supplied round of fuel for Churchill. (CBC News )

So yes. The meter continues to run.

When thinking about the tragedy of errors that has become Churchill, it is helpful to return to the principle that Omnitrax owner Pat Broe's legal strategy has operated under — force majeure, and the company's assertion of "unforeseeable circumstances that excuse a party from fulfilling a contract."

Perhaps "unforeseeable circumstances" will ultimately be the only explanation Ottawa and Winnipeg will give to Canadians about the loss of their only arctic port and to Manitobans about the shutdown of the only northern rail line to it.

About the Author

Sean Kavanagh

Provincial Affairs Reporter

Born and raised in Winnipeg, Sean has had a chance to live in some of Canada's other beautiful places (Whistler, B.C., and Lake of the Woods, Ont.) as well as in Europe and the United States. In more than a decade of reporting, Sean has covered some of the seminal events in Manitoba, from floods to elections, including a stint as the civic affairs reporter responsible for city hall.