State seals deal on rail, searches for operator

By Matt Wickenheiser, BDN Staff
Posted Jan. 21, 2011, at 11:15 p.m.

The state expects to pick an operator for the newly purchased rail system that runs from Millinocket to Madawaska by the end of March, transportation officials said Friday.

The 233 miles of Montreal, Maine & Atlantic rail were purchased by the state on Jan. 14 for $19.1 million. The federal government contributed $10.5 million for track upgrades.

“We do now own the rail,” said David Cole, acting commissioner of transportation for the state. “Certainly on a personal level, I’m glad to see this was completed. We did spend a lot of time on this.”

The actual closing of the deal was delayed due to the heavy snowfall last week. Documents had to be physically recorded in Fort Kent, Houlton and Bangor, said Cole. Necessary documents from the federal government were shipped by FedEx, but the plane they were on was grounded in Tennessee due to the weather, he added.

MM&A sought federal approval a year ago to abandon the northern Maine tracks, citing losses of $4 million to $5 million annually. MM&A 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 ran 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, including Louisiana-Pacific Corp. and Irving Woodlands.

The state drafted a plan to buy the tracks and lease them to a rail operator that would keep northern Maine’s freight moving, keeping as many as 1,722 people employed. The rails are used to haul lumber, paper products, logs and wood chips.

Nate Moulton, the director of the rail program for the Maine Department of Transportation, said the state has a request for proposals out now for an operator to run the rail system. The state is now taking questions from rail companies on requirements and has fielded queries from about 10 operators, he said. Proposals will be due in the middle of next month, he said.

Using input from the shippers on the line that would use the freight service, the state will narrow the interested operators down to a few and then pick one, said Moulton.

The state will use the $10.5 million in federal funds to improve the rail lines, increasing efficiency and effectiveness of the system, said Moulton, and allowing the trails to move faster as well.

After that initial project is done, he said, the expectation is that the operator that leases the lines from the state will maintain the property and provide good service to the companies on the line. Moulton said the operator will also be responsible for marketing the service to increase business on the rail line.

The end game is to build the rail system into a profitable venture and then sell it to a rail company, said Moulton.

“Obviously, that’s up to future policy makers. Since the inception of this, that was the idea — the state was stepping up with the goal of getting it back to the private sector when it can be done,” said Cole.

While MM&A cited serious annual losses, Moulton noted that the company was dealing with substantial debt on the property and didn’t have the ability to spend on maintenance. That won’t be the case with the state, he said.

http://bangordailynews.com/2011/01/21/news/state-seals-deal-on-rail-searches-for-operator/ printed on August 30, 2014