Canadian firm seeks legal right to handle freight at Madawaska mill

Posted Nov. 08, 2010, at 10:12 p.m.

Canadian National Railway Co., one of North America’s largest rail services, is battling a Hermon freight rail shipper in federal court in a property rights dispute that apparently leaves CN a few hundred yards shy of being able to handle a Madawaska paper mill’s shipping needs.

CN claims that Montreal, Maine & Atlantic Railway is using “an apparent mutual mistake” to legally deny the Canadian shipper a chance to take freight from Twin Rivers Paper Co. of Madawaska.

“This anomalous outcome was based on an apparent mutual mistake in the real property description contained in the easement deed,” said CN attorney George J. Marcus of Portland.

Under an easement agreement made years ago, both sides agree that they can use tracks that run from the CN-MM&A junction at St. Leonard, New Brunswick, though exactly how close CN can come to the mill is in dispute.

In MM&A’s counterclaim, company officials say they have always had a contractual right to maintain and manage traffic along the line and that CN would violate that right by taking over traffic from the mill.

“This case, in short, is about the regulation and movement of railroad traffic — an area of intense and comprehensive federal regulation for over 100 years,” said MM&A attorney Timothy R. Shannon of Portland.

The lawsuit was filed in Aroostook County Superior Court earlier this year and reviewed in a teleconference on Monday by U.S. District Judge John Woodcock in Bangor. No outcome of that conference was available.

CN officials and Bill Peterson, spokesman for Twin Rivers, could not be reached for comment. Robert C. Grindrod, MM&A’s chief executive officer, declined to comment when reached late Monday.

Relations between Twin Rivers, formerly known as Fraser Papers, and MM&A have been stormy for the past several years.

Fraser executives claimed that MM&A failed to maintain the company’s railroad tracks, missed delivery and pickup deadlines — often forcing the coated and uncoated papermaker to hire trucks on the fly to make shipments — due to miscommunications or insufficient numbers of railroad runs.

MM&A officials countered that they were trying to meet demand, but that Fraser’s use of trucks and downturn in production made running more trains uneconomical and helped create the conditions that led to the company seeking to abandon about 233 miles of track earlier this year.

MM&A officials also said that Fraser’s decision to split traffic between them and CN helped cause the railroad’s financial woes.

The state bought the tracks for $20.1 million late last month and plans to rehabilitate the tracks and lease them to shippers, including MM&A.

It was unclear Monday whether the purchase would have any impact on the dispute.

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