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OMNITRAX PHOTO / FILES Omnitrax has 30 days to repair the line, which has been out of service since spring floods washed out numerous sections of track and destabilized bridges.

The federal government has served notice to Omnitrax that it must repair the Hudson Bay Railway and restore rail service to Churchill in 30 days or face a $18.8-million lawsuit for breach of contract.

In a statement released Friday from Winnipeg MP and Minister of Natural Resources Jim Carr, Transport Canada has given Omnitrax 30 days to repair the line, which has been out of service since spring floods washed out numerous sections of track and destabilized bridges.

Transport Canada will instruct Justice Canada to file a lawsuit for breach of contract if the repair is not completed in 30 days.

It is clear from extensive engineering reports that the repair work will take at least 60 days to complete and the imminent winter weather will now prevent that from happening this year.

In an interview, Carr acknowledged the work is unlikely to be completed on time, but Ottawa will continue negotiating with Denver-based Omnitrax.

He also said Ottawa might hold back on a lawsuit if the company shows progress.

MIKE DEAL / WINNIPEG FREE PRESS MP Jim Carr, talks to the Editorial board at the Winnipeg Free Press Friday morning.

"I'm not an engineer, there have been varying reports. If it's not possible to complete the work, then let's hear another alternative from Omnitrax," he said in an interview. "Good will would be terrific."

The company has been angling to divest itself from its ownership of the Hudson Bay Railway and the Port of Churchill for more than a year. The May 23 washout of the line further intensified its desire to rid itself of those assets. Omnitrax officials have said repeatedly that they do not intend to spend the money necessary to fix the line.

In its response to Ottawa's threat of legal action on Friday Omnitrax continued to take a defiant stance in the dispute with both the federal and provincial governments that has been going on for more than a year (see accompanying statement).

Churchill Mayor Mike Spence, repeated his often-stated view that the Town of Churchill's number one priority is to get the rail line up and running. He acknowledged that threatening legal action may not accomplish that right away but he was pleased Ottawa was taking a tougher stance.

"It's clear Omnitrax has not met its obligations and Canada is taking it seriously and, as indicated, they will hold them accountable," Spence said on Friday.

“I'm not an engineer, there have been varying reports. If it's not possible to complete the work, then let's hear another alternative from Omnitrax. Good will would be terrific.” — Minister of Natural Resources Jim Carr

But elsewhere in Churchill, Friday's news was met with cynicism, where violent gusts rocked the Via Rail train as it was moved to the port to be shipped out of Churchill.

"We're super disappointed," said resident Dave Daley. "I think people are resigned to the fact that this is the signal that the line isn't going to be fixed this winter."

Daley, president of the Churchill Chamber of Commerce, was among those planning to form a barricade if the train cars left — but he now admits it was a bluff.

"We never, ever thought it was going to go out on the boat. Because Trudeau said he was going to have this line fixed before winter," he said, referring to the prime minister's late-July promise to resolve the issue.

Carr, who will be visiting Churchill next week, said the government has worked for months to find a solution. "We are very keen on maintaining goodwill with the people of Churchill, because we have a shared objective, and that objective is to secure the repair of the line."

The RCMP brought in extra officers to ensure the cars leave safely. Those officers — who did not bring riot gear — met with town officials and locals to go over the rights and limits for both demonstrators and the company.

At that meeting, Via Rail explained its rail cars would continue to rust if left in place, and wouldn't be able to roll south even if the rail line opened.

On Friday, the province's emergency propane shipment was set to arrive imminently.

But sources in the town and in Ottawa said it's unclear how the town will access diesel and gasoline, with current capacity that could possibly run out by February, when the port is frozen. Last week, Calm Air offered its jet-fuel tanks to Omnitrax to hold incoming gas.

A second supply boat is scheduled to arrive Oct. 19, right before freeze-up.

Carr also said Friday that he was encouraged by the significant breakthrough towards an agreement between two previously competing northern Manitoba groups — Missinippi Rail and One North — to join forces in an effort to take ownership of the rail line and port.

But sources familiar with the negotiations said Omnitrax presented a 28-page letter-of-intent to Ottawa, based off of a memorandum signed earlier with Missinippi Rail, and that the federal government made no counter-offer.

The sources said Omnitrax was riled that the federal government balked at the $43.5 million repair bill for the line, just weeks after pledging $35 million to the Canada’s Diversity Gardens pavilion at Winnipeg's Assiniboine Park.

Carr bristled at such comparisons, saying investments are made looking at needs identified by Canadians.

"It's never useful to compare one government investment to another," he said. "People firmly believe that one priority is more important than another."

In addition, Carr said the future of the rail line and of northern Manitoba and Churchill will be part of Canada's Arctic strategy.

"This is a major policy thrust for the government of Canada, and Churchill will be an important part of it," he said. "I think the people of Churchill will get great comfort from that."

Christian Sinclair, chief of Opaskwayak Cree Nation, one of the driving forces behind the One North group, said the federal government's recognition of the importance of a rail line through Northern Manitoba is about time.

"It has always been a strategic infrastructure, not only for Manitoba but for all of Canada," he said. "It will be the new Silk Road, or Buckskin Road as climate change causes melting in the North."

In August, the Free Press reported that rail experts believed Omnitrax was in clear violation of rail law, and the federal regulator opened an investigation at the behest of Free Press readers. Last week, the regulator said it’s received "a number of emails" and appointed a panel to adjudicate one formal complaint of non-service.

Daley said residents' anger is directed at both Omnitrax and Ottawa.

"Everyone's super-pissed."

martin.cash@freepress.mb.ca

dylan.robertson@freepress.mb.ca

Dylan Robertson

Parliamentary bureau chief In Ottawa, Dylan enjoys snooping through freedom-of-information requests and asking politicians: "What about Manitoba?" Read full biography