Short-line railroader grants temporary reprieve to keep Huron Central running

Genesee & Wyoming Canada is postponing its end-of-March decision to chop rail freight service between Sault Ste. Marie and Sudbury, citing "notable progress" in their talks with Ottawa and Queen's Park on much-needed track maintenance funds.

Christian Richard, the chief commercial officer with  the Montreal-headquartered railroader told Sault Ste. Marie City Council on Feb. 24 that he's seen enough headway in recent weeks that the company will defer their March 31 drop-dead date "as long as there continues to be positive signals."

But it'll only be a stay of execution unless the feds and the province can cobble together a $40-million package for track maintenance and safety upgrades to the 278-kilometre line.

In an update to city council, former Sault mayor Steve Butland, part of a task force seeking to preserve rail service, admitted to being "frustrated" and "disappointed" over the  past two years with their inability to secure government funding in a timely fashion.

But he and fellow former mayor Joe Fratesi sounded upbeat in coming out of two "productive" meetings with federal associate finance minister Mona Fortier and senior bureaucrats in Ottawa on Feb. 6, and with provincial transportation minister Caroline Mulroney and various ministry staff in Toronto on Feb. 20.

Fratesi believes they raised the level of awareness in impressing upon them the importance of the railroad to the region's economic vitality.

"We think both levels of government are viewing this, not as a hand out but as an investment," he said.

The rail line services Algoma Steel in Sault Ste. Marie, Domtar's pulp and paper plant in Espanola and EACOM's sawmill operation in Nairn Centre.

It's the third time in a decade Genesee & Wyoming has threatened to drop freight service over the condition of the tracks, and the third time Fratesi has dived in to broker a deal between the rail carrier and the government.

The line is owned by CP Rail but it doesn’t contribute toward track maintenance. Genesee & Wyoming inherited that responsibility when they were contracted to take over operations in 1997.

Genesee & Wyoming Canada said it invests 12 per cent of revenue generated from the Huron Central back into capital projects every year. 

But the company insists there's not enough freight volume there to pay for the repairs and upgrades needed, including for new federally-mandated level crossings. 

The loss of the line would jeopardize 45 railway jobs at the Huron Central, likely 200 with EACOM, and 500 jobs at Domtar, as well as threatening the future of those north shore communities.

"If Northern Ontario is to survive and grow," said Fratesi, "important infrastructure such as this railway needs to continue to be invested in by both levels of government."

Fratesi said he further impressed upon the politicians and bureaucrats that their recent public investments into industries like Domtar's Espanola operations and Algoma Steel would be for naught if those operations were adversely impacted.

For Domtar, rail is the primary mode of moving their specialty paper products to market.

Fratesi said transferring freight for all these industries onto the highway would be the equivalent putting 45,000 transport trucks on the road annually, an option that would be cost prohibitive nor desired from an environmental perspective.

Further complicating their lobbying efforts has been the timing of the federal and provincial elections; followed by the sale of the Huron Central's ultimate parent company, Connecticut-based Genesee & Wyoming to Brookfield Infrastructure Partners last summer; and a delay in finalizing that sale due to a lengthy regulatory review by the U.S. Surface Transportation Board.

On the federal funding side, investing in short line railroads doesn't fit the criteria of any of Ottawa's transportation infrastructure programming.

And provincially, the Ford government has been exploring alternatives other than Genesee & Wyoming. 

A Sudbury rail services company, Diesel Electric Services, told Northern Ontario Business they've been approached by provincial cabinet ministers Greg Rickford and Vic Fedeli to gauge their interest in working with the Crown-owned Ontario Northland Transportation Commission in running freight and passenger services on that line.

In what's become a buck-passing exercise between governments, Fratesi said he's made it clear to both parties that their involvement in saving the freight service is conditional on each other cooperating.

Some online public criticism has surfaced over taxpayer dollars being spent to subsidize a deteriorating line operated by an otherwise profitable rail carrier. 

But Fratesi argues this potential government investment should be viewed no differently than any other mode of vital transportation infrastructure such as highways, airports and harbours. 

While there are no guarantees Genesee & Wyoming won't be back asking for more money at a later date, Fratesi informed council he knows of two new industries that would set up shop along that line if the Huron Central were to continue operating.

 - Northern Ontario Business