April 25, 2018
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DOT chief backs $25M rail acquisition bond

By Nick Sambides Jr., BDN Staff

Any competitive edge enjoyed by the state forest products industry, Aroostook County and some of the state’s largest employers would be seriously compromised if 241 miles of northern Maine railroad track are abandoned, the state’s top transportation official said Wednesday.

Montreal, Maine & Atlantic Railroad Ltd. sought federal approval last month to abandon the tracks, most of which run from Madawaska to Millinocket, by summer due to mounting debts. The company, which is based in Hermon, says it has been losing $4 million to $5 million a year on the lines, largely due to the recession and collapse of the housing industry.

Speaking in favor of a $25 million bond proposed Tuesday for rail line acquisition and improvements in Aroostook, Penobscot and Androscoggin counties, Maine Transportation Commissioner David Cole said several rail operators have expressed interest in running the freight lines MMA is proposing to abandon.

“There are three or four that we know of that have the wherewithal and experience to come in and take this on,” Cole said Wednesday. “The key thing is that our consultant feels there is hope here, that the lines have sufficient existing volume to attract an operator. Then, as the housing and construction markets rebound, there is room for growth over time.”

MMA also has expressed interest in continuing to run the lines if the state acquires them and pays the railroad’s debts, but that won’t necessarily happen, according to Cole.

The transportation proposal is part of a $99.2 million jobs bond package state Democratic leaders unveiled Tuesday.

As the bond package makes its way through the Legislature, the Maine Department of Transportation, and 22 rail line users — including Irving Woodlands, Fraser Papers, Louisiana-Pacific Corp., Maine Potato Growers Inc., and Old Town Fuel & Fiber — are working with MMA, which is Aroostook County’s only railroad, and with federal, state and local officials to fashion a business model that could make the rail lines successful, Cole said.

“It’s a last resort for us to do this,” Cole said of the state’s proposal to buy the tracks, rebuild them and lease them to a railroad company. “If we are going to buy this, we want to make sure that it will work. We want a model that can work and we are seeking funding from many places to implement that.”

Under federal guidelines, the state has about 100 days to devise a salvage plan. The interested parties met privately at Northern Maine Development Commission offices in Caribou on Feb. 24 to discuss business models, and will continue to meet until one is devised, Cole said.

“We have been talking with the railroad for over a year even before they announced their property abandonment plans,” Cole said. “I think we are right on top of it. It’s not going to be easy, but we have been working it very hard.”

A DOT-commissioned study shows that abandoning the freight lines would put another 36,000 18-wheel trucks on Maine roads and cause another 200 accidents annually while adding as much as $1 million in transportation costs to the 22 companies affected, said Denis Berube, director of transportation and planning services at the Northern Maine Development Commission.

“If you look at this long term, it will impact the supply options for most every pulp and paper mill in the state,” Berube said, referring a closure of the rail line. “It will drive up prices considerably by limiting the amount of wood fiber you can draw from. All the users will have to scale back operations to deal with costs associated with trucking. They won’t be able to ship product to further-away destinations.”

However, the rail lines are in some significant disrepair, said Tracy Caron, corporate transportation manager at Fraser Papers. The Madawaska-Van Buren line is posted to a 25-mph limit in several places, which hurts the ability of Fraser, MMA’s largest customer, to meet customer deadlines.

About 55 percent of the output of Fraser’s Madawaska mill is shipped by rail. Company officials said that a freight line closure would all but kill Fraser’s chances of emerging from bankruptcy protection as a new company.

The state will have to invest $5 million in basic rail line repairs over the next few years, with an entire backlog of deferred capital maintenance projects costing as much as $20 million, Cole said.

“It’s not like we have to do that tomorrow,” he said.

It will likely take federal dollars to fix Maine’s freight rail system, which is in many ways inadequate, said Keith Van Scotter, owner of Lincoln Paper and Tissue LLC.

“The lack of quality rail service in this state is a competitive disadvantage to companies like ours,” Van Scotter said.

Not repairing freight lines, particularly in Aroostook County — one of the finest fiber and agricultural sources and the largest county east of the Mississippi River — is almost inconceivable, Cole said. It would hamper present business and curtail future investments in fledgling industries such as biodiesel.

“For a resource-based economy to get cut off from freight rail service is a huge disadvantage,” he said. “It’s not only how it will impact the 22 shippers, but how it will really impact the future economic development of the region.”

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