Omnitrax says it can't pay up to $60 million to repair rail line to Churchill

Engineers say line could be fixed before winter, but the company says stakeholders must pay for it.

Federal government says Omnitrax has 'obligation' to repair and maintain line

The company announced it has a 60-day plan to repair the tracks and plans to start work in September. (Mike Spence/Submitted)

The only rail line to Churchill could be repaired by the end of October, but it would come with a $60 million price tag, according to the company that owns it.

However, Omnitrax Rail, the Denver-based company that owns the line, says it can't pay for the repairs and is looking to governments and First Nations to cover the cost.

"It [the rail line] is not commercially viable, so we believe it's a public utility," said Peter Touesnard, chief commercial officer for Omnitrax.

"We believe it's still the least expensive way to supply service to the north, in particularly the community of Churchill, and we believe there is a role for the public to play in that."

Severe flooding washed out the line in May, disconnecting residents of the northern Manitoba community from the rail service that locals have described as a lifeline.

Since then, food prices have soared and businesses have been forced to lay off staff as goods and materials usually shipped by freight are flown into the community at a much higher cost. 

A spokesperson for the office of Transport Minister Marc Garneau emailed a written statement to CBC News on Tuesday.

"Omnitrax has an obligation to repair and maintain its line and maintain service to residents, and we expect Omnitrax to meet its obligations," the statement reads.

"If Omnitrax fails to meet its obligations, our Government will have to examine what are the next steps and alternatives to ensure residents can get the food and supplies they need."

'Get on with it'

In a technical briefing Tuesday morning, Omnitrax announced it has a 60-day plan to repair the tracks and work could start at the beginning of September.

That timeline depends on the company finding contractors, housing and resources quickly and could be derailed by bad weather or the discovery of more areas in need of repair.

Churchill Mayor Mike Spence said the company is running out of time to make it happen this year.

"The end of October and that's it, your construction season is done," Spence said. "So we're running out of time, here. Let's get on with it."

Churchill Mayor Mike Spence called on governments and Omnitrax to meet with him "as early as tomorrow" to set the 60-day repair plan in motion in time for polar bear season. (Jaison Empson/CBC)

After the briefing, Spence reiterated his call on the federal and provincial governments to meet with him and Omnitrax "as early as tomorrow" to put the plan in motion.

'Clearly inadequate': infrastructure minister

"Today's technical briefing provided by Omnitrax was clearly inadequate," provincial Infrastructure Minister Blaine Pedersen said in an email statement, adding it left "many unanswered and hypothetical questions."

"Our senior provincial officials have repeatedly asked Omnitrax for details about their independent engineering assessment and future intentions of the rail line including timetables respecting necessary mitigation efforts, details of insurance policies and status of claims, to which we have had no response," Pedersen said.

"What was made clear today by senior Omnitrax officials is that they are not prepared to repair, maintain or operate the rail line. It appears that they intend to abandon the line. If so then it is their obligation to the people of Churchill and indeed Manitobans to communicate their abandonment decision to the federal government."

'We have a plan': Omnitrax

Tuesday's announcement from Omnitrax followed the completion of a third-party track assessment commissioned by Omnitrax and completed by AECOM Canada.

So far, the engineering company has identified 13 bridges, 68 culverts and 31 washout areas needing repair in the roughly 300-kilometre stretch connecting Churchill to Gillam, Man.

"We do have a plan — 60 days — it's not going to be inexpensive or easy, but we have a plan," said Ron Mitchell, the AECOM engineer who has led the assessment of the line since shortly after the flood.

Preliminary estimates indicate repairs will cost at least $13 million. That number does not include estimates for bridge repairs, contractor labour and profit, boarding for the workers, project management, rail equipment rental or the cost of investigating and repairing unstable areas that haven't been inspected yet.

Company officials say the price could climb as high as $60 million.

Omnitrax executive Peter Touesnard says the rail line to the Hudson bay is a public utility and the public should pay for its repair. (Jaison Empson CBC )

Omnitrax president Merv Tweed has said the company doesn't have the resources to fix the rail line on its own and called on the federal and provincial governments to contribute cash.

Company officials at the briefing Tuesday reinforced that assertion. Omnitrax was losing money operating the line and needed assistance to pay for it, they said.

Touesnard said Omnitrax has been in regular contact with federal officials and provincial staff at the Emergency Management Organization, but a dialogue between the company and provincial politicians has not happened.

"Premier Pallister had indicated [through the media] he wanted to understand the cost before the province became engaged," Touesnard said. "We have not, honestly, heard from the province directly."

Provincial politicians have maintained it has been difficult to engage with the company.

Province boosts food subsidy

In its Tuesday statement, the federal government said its "first and foremost concern" is to ensure people in the area have access to food and supplies and ha already taken "concrete action" to that end.

In late June, the federal government extended its Nutrition North food subsidy program to Churchill until the rail line is restored.

Manitoba Health put out a release Tuesday stating it will increase its own food subsidy to the community, boosting the subsidy rate from $1.20/kg to $1.60/kg — the same as the federal subsidy.

The provincial subsidy, called Affordable Food in Remote Manitoba (AFFIRM), applies to milk, infant formula and fresh fruit and vegetables—items not covered by the Nutrition North program.

'They are basically abandoning it'

Some at the briefing Tuesday challenged Omnitrax record of maintenance on the line and the extent of the damage caused by flooding.

"I think what they've described here today is not totally accurate. I don't believe that [the cost of the repairs]. I don't think it's going to cost that much," said York Factory First Nation Chief Ted Bland.

Bland said Omnitrax appears to be including ongoing maintenance the company didn't do on the line and expanding the size of the damaged area beyond what was actually flooded last May.
York Factory FN Chief Ted Bland says Omnitrax including extra work for old repairs that weren't completed. (Jaison Empson CBC)

"I think it's time for them to step aside," Bland says. "They are basically abandoning it."

Mayor Mike Spence has criticized Omnitrax in the past for dragging its heels on the track assessment.

During the briefing, Mitchell emphasized the importance of doing the repairs to a high standard.

"Repairs have to be done properly, not just crossing your fingers that the train makes it," the AECOM engineer said.

Mitchell warned the audience that the repairs won't happen over night.

The AECOM engineer defended Omnitrax's record on maintenance on the rail line, insisting the track had been maintained with sound engineering practices and adheres to Transport Canada regulations.

He said Omnitrax spent $60 million improving conditions on the line since 2009.

Mitchell described several areas where this year's unprecedented one-in-200-year flood did damage to the line. But he said there are many "further assessments" that must be made.