Businesses air dissent in rail talks

Posted July 07, 2010, at 8:58 p.m.
Last modified Jan. 29, 2011, at 11:54 a.m.
This fractured &quotfrog" on Montreal, Maine & Atlantic Railway could be seen in front of one of the railway's trains as it made a stop to pick up more freight in Masardis recently. A &quotfrog" is a railway switch that enables trains to move from one track to another at a railway junction.  (BANGOR DAILY NEWS PHOTO BY JOHN CLARKE RUSS)

CAPTION

This fractured &quotfrog" on Montreal, Maine and Atlantic railway could be seen in front of one of the railway's trains as it made a stop to pick up more freight in Masardis Thursday, March 18, 2010. A &quotfrog" is an industry slang term for a railway switch which enables trains to move from one track to another at a railway junction. Safety concerns and poor maintenance along sections of the MM&A railway in northern Maine sometimes limit the speed of their freight trains to 10 to 15 mph.  State officials are seeking a $25 million bond to repair rail in Aroostook, Penobscot and Androscoggin counties. Without such aid railways like MM&A might have to abandon their 241 miles of track which remain crucial to Maine industries. (Bangor Daily News/John Clarke Russ)
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This fractured "frog" on Montreal, Maine & Atlantic Railway could be seen in front of one of the railway's trains as it made a stop to pick up more freight in Masardis recently. A "frog" is a railway switch that enables trains to move from one track to another at a railway junction. (BANGOR DAILY NEWS PHOTO BY JOHN CLARKE RUSS) CAPTION This fractured "frog" on Montreal, Maine and Atlantic railway could be seen in front of one of the railway's trains as it made a stop to pick up more freight in Masardis Thursday, March 18, 2010. A "frog" is an industry slang term for a railway switch which enables trains to move from one track to another at a railway junction. Safety concerns and poor maintenance along sections of the MM&A railway in northern Maine sometimes limit the speed of their freight trains to 10 to 15 mph. State officials are seeking a $25 million bond to repair rail in Aroostook, Penobscot and Androscoggin counties. Without such aid railways like MM&A might have to abandon their 241 miles of track which remain crucial to Maine industries. (Bangor Daily News/John Clarke Russ)

PRESQUE ISLE, Maine – Close to 70 people from a wide array of business, economic development, and state and local organizations joined forces Wednesday to implore members of the federal Surface Transportation Board to refuse to allow Maine, Montreal & Atlantic Railway to abandon 233 miles of tracks that run through Aroostook and Penobscot counties.

But officials from MMA argued during the five-hour hearing that the railroad is suffering massive financial losses each year that they keep the line operating, and the company no longer can sustain such a drastic hit to its bottom line.

The Surface Transportation Board mediates railroad disputes. The hearing, which was so heavily attended that some had to watch the proceedings from an overflow room, was held at the Presque Isle District Court building.

Robert Grindrod, president and chief executive officer of MMA, testified that the railroad is seeking federal approval to abandon the lines because it is suffering devastating financial losses.

MMA sought federal approval in February to abandon the northern Maine tracks this summer, citing losses of $4 million to $5 million annually. MMA provides the only rail freight service in Aroostook County, serving primarily the pulp and paper, agriculture and potato processing industries.

The tracks targeted for abandonment run from Madawaska to Millinocket, with spurs to Caribou, Easton, Houlton, Limestone and Presque Isle. Nearly two dozen of Maine’s largest manufacturers and growers use those lines for shipping.

David Cole, commissioner of the state Department of Transportation, said Wednesday that the state is still hoping to buy the tracks and lease them to a rail operator that would keep northern Maine’s freight moving.

In June, voters approved a bond package that contains $7 million to save the tracks. Despite the vote, the Maine DOT has not yet successfully negotiated with track owner MMA to purchase the tracks.

During Wednesday’s hearing, MMA officials said that they could no longer afford to continue service or make the necessary repairs to keep the tracks viable, telling the board that it would take between $18 million and $19 million to upgrade the tracks appropriately. They said that insufficient maintenance over the years by MMA’s predecessor has played into their financial difficulties.

MMA has suggested options for companies that use the rails to ship their products if the lines are abandoned, such as shipping by truck or through transloading, which is using several types of transportation to get the product to its destination. Transloading could involve, for instance, trucking products to the nearest available airport or rail line and transferring the goods.

Cole told the three members of the federal board that 21 businesses currently ship by rail in Aroostook County. He said that if those companies were forced to ship all of their products by truck, they would have to absorb increased operating costs, which would make them less competitive in regional and national markets. More than 70,000 trucks would be added to Maine roads if companies were forced to abandon rail cars, according to an environmental analysis done by the state.

He said that an estimated 750 to 1,000 direct jobs would be lost if the tracks are abandoned. More than 700 indirect jobs also are at risk if the lines are shut down, according to the commissioner.

Cole said that the state has been working with MMA on a viable solution since the start of the year and continued up until Tuesday evening to negotiate with them regarding the purchase of the tracks. The parties have asked for another discussion with a mediator from the Surface Transportation Board next week, according to Cole.

If the board grants MMA the abandonment authority it seeks, Cole said, the state will still attempt to acquire the lines and take steps to operate them successfully.

Negotiations by the state with MMA also will continue if the board refuses to let them abandon the lines, he said.

Cole said that despite MMA’s claims of financial distress, the state believes that the lines can be operated profitably.

Much of the afternoon was taken up by statements from shippers who use the lines.

Arkon Horne of Fraser Timber Ltd. in Ashland told the board that the company does 70 percent of its shipping by rail and often struggles to find trucks to ship its product. He said that if the company does not have access to rail for shipping, its customers will go elsewhere.

Robert Pennette, vice president of Irving Woodlands, also pushed the board not to let MMA abandon the lines. He said that his company would “lose economic access to certain markets” if the lines were abandoned. He said that a number of Irving’s customers prefer rail over other types of shipping.

At the same time, Pennette said that MMA is to blame for part of Irving’s financial losses. He said that MMA has been providing irregular and uneven service for about seven years and that track speeds have slowed down as well.

“We could increase sales if we had access to reliable and more efficient rail,” he told the board.

Travis Turner is the plant manager of Louisiana-Pacific Corp. in New Limerick. He said that in 2008, the company finished a $140 million project to expand the plant and convert it from oriented strand board production to laminated strand lumber production.

“MMA never told us at the time that rail service was in jeopardy,” he said Wednesday. “We would not have done the transition if MMA had told us that rail service might be shut down.”

He added that rail is vital to Louisiana-Pacific, and that without economical rail service, the company could not be as competitive or successful. He said that MMA has suggested transloading, but Turner said that option would come at an increased cost for the company.

Officials from economic development groups such as the Southern Aroostook Development Corp., the Aroostook Partnership for Progress and Leaders Encouraging Aroostook Development also urged the board not to allow MMA to abandon the tracks.

They fear the ripple effect of such a move, pointing out that if a company lays off employees because it has lost business due to the abandoned tracks, those employees would not have as much money to spend in the community, which could lead to the closing of stores and other businesses.

Several officials said they felt that the proposal for the state to purchase the tracks and lease them to a rail operator was a good solution.

Daniel Elliott, chairman of the Surface Transportation Board, said that the board would take all of the comments into consideration while it weighs its decision. A spokesperson for the board said after the hearing that a decision could be issued within two weeks.

Cole said after the meeting that he felt the hearing went well, with a lot of good testimony on the state’s behalf.

“Hopefully if we [the state and MMA] can’t come to terms on a plan, they [members of the Surface Transportation Board] will set the terms,” he said Wednesday. “That is not the ideal situation, but it is preferable to seeing the tracks abandoned.”

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