Canadian Pacific Railway Ltd. is caught up in the fallout from a political battle in Wisconsin over the building of a high-speed rail line.
The Calgary-based North American rail freight giant is making its case to a Wisconsin state arbitrator that it is owed more than $500,000 (U.S.) for planning work it did on a high-speed-rail project that was cancelled when a Republican politician opposed to it won the governorship in 2010.
CP, through its Soo Line Railroad Co. subsidiary, owns the right-of-way to several rail lines in the proposed corridor that would have required upgrading to accommodate high-speed passenger trains.
CP contends in its claim it "expended substantial resources" to help the Wisconsin Department of Transportation in 2009 and 2010 obtain an $810-million grant from the federal government in a rushed fashion before the 2010 election.
And it alleges it did so without securing a written contract because state officials right up to Democratic Governor Jim Doyle "coerced" it into completing the work ahead of the November election.
Work on the high-speed rail bid for federal funding was halted the day after Republican Scott Walker won the election; Mr. Walker said during the campaign that a high-speed rail line would be too expensive to operate and maintain.
The State of Wisconsin Claims Board – the arbiter in cash disagreements with the state – is scheduled to hear CP's case Tuesday.
Wisconsin's transportation department claims that none of the documents CP submitted, including an invoice dated Dec. 10, 2010, "constitute a contract" obligating the state to pay for any expenses incurred by CP.
"At most, the parties had an agreement to agree, which does not create a binding contract," the Wisconsin Board of Transportation said in its 2013 response to CP's claim.
"CP invested its resources in the [proposed Madison-Milwaukee rail project] at the request and insistence of the then-current administration," a 2013 letter the claims board from CP's U.S. lawyer said.
The company was promised payment orally and took a big risk in not getting a written contract, the letter said.
"The highest level of [Wisconsin transport dept.], the Governor of the State of Wisconsin, and the United States Secretary of Transportation, insisted with great urgency that CP proceed with the [project]," it said.
CP, in similar fashion to the experience of a local railway company, was "coerced into incurring substantial expenses at the State's urgent request."
CP spokesman Martin Cej said the company never comments on matters before the courts.
"They will deal with it on the merits of our claim," he said.
CP claims that, as a freight hauler, the upgraded track for passenger trains would have had only "marginal benefit to CP, most of which would have been offset by increased conflicts with passenger service."