STB hears Aroostook rail concerns

14 years ago

By Kathy McCarty 
Staff Writer

PRESQUE ISLE — Federal officials from the Surface Transportation Board joined state, local and business leaders at the Presque Isle District Court July 7 for nearly six hours of discussion on the future of rail service between Millinocket and Madawaska. The meeting was necessitated by Montreal, Maine & Atlantic’s request earlier this year to be allowed to abandon about 233 miles of track in parts of Aroostook and Penobscot counties.

Participants were designated a few minutes each to voice their concerns and answer questions posed by each of the STB officials, led by STB Chair Daniel Elliott III.

STB Commissioner Charles “Chip” Nottingham said it was “bittersweet to be here (at the Presque Isle hearing)” because it could mean the possible termination of freight rail service, should MMA’s request for abandonment be approved and no agreement reached for the purchase of the section of track in question.

Congressman Michael Michaud kicked off the discussion, expressing gratitude to the Board for making the trip to Aroostook County to see “firsthand the devastation this abandonment would create.” He said the economy of states like Maine couldn’t grow, without the infrastructure (like rail) in place.

“It’s vital to the area’s livelihood. If this line were to shut down, it would devastate the region,” said Michaud. “We need to show we’re serious about keeping the line open. Everyone has to be willing to make a sacrifice to do so.”

Michaud said he hoped officials could reach some type of agreement, noting that “what’s behind the agreement will affect people’s lives.”

“Now it’s time for the STB to look at more than dollars and figures. This (the decision) will also affect individuals who rely on rail to stay alive,” said Michaud. “Maine’s entire delegation is behind this 100 percent to make this happen.”

Sharon Campbell and Phil Bosse, on behalf of Sens. Olympia Snowe and Susan Collins, agreed, noting how rail plays a major role in the County’s economy and the creation of jobs for many who call Aroostook home.

Maine DOT Commissioner David Cole called northern Maine “one of the finest wood baskets in the eastern United States,” and noted that “this not only fuels the area’s economy but mills downstate.”

“Based on interviews with shippers, there is produce to be shipped and there are outside opportunities. But first we must preserve the rail,” said Cole. “Shippers have invested in their facilities. Without rail in place, they can’t take advantage of the economic upturn. MMA, unfortunately, has already written off (the rail line), that’s why we’re working with shippers to find a solution.”

Cole said without rail, companies would have to rely on transporting products by truck.

“The idea of putting all these trucks on the road doesn’t make sense. In this day and age, it’s not environmentally friendly — it would be a step backwards for sure,” Cole said.

Nottingham said upwards of 70,000 trucks would be needed to compensate for the loss of rail service.

“That will trigger additional road maintenance,” Nottingham said.

Cole said despite the current waiver on weight limits — trucks weighing up to 100,000 pounds are now allowed on the interstate —  a number of problems would result, including a shortage of trucks and drivers, increased use of fossil fuels, damage to roadways and safety concerns for other drivers.

“We’re not anti-truck, we’re (pro) intermodal,” said Cole.

Edward Burkhardt, of Rail World Inc., of Chicago, spoke next, noting MMA “stepped into a bad situation in 2003” when it picked up the rail line in bankruptcy court.

“In light of the economic meltdown, the situation has become worse, including the bankruptcy of businesses that ship with us,” said Burkhardt, adding the line was costing the company over $3 million a year — something the company couldn’t afford to keep doing and stay afloat.

He indicated the company had taken steps to reduce its expenses, including cutting staff and defaulting on loans in order to come up with funds to keep the line operating.

Railroad Executive Robert Grindrod followed, saying MMA had “made an earnest effort.”

“You don’t make money by going out of business,” he said. “We hope an agreement can be made. Mediation continues,” said Grindrod.

Linda Morgan, MMA attorney, addressed the STB board, indicating company officials would continue to work with the state to find a solution. She questioned some of the concerns raised by others in recent discussions.

“Losses have been overstated. If abandonment occurs, it’s not true that no reasonable alternatives exist; trucks can be used,” she said.

Morgan also indicated abandonment wouldn’t be as detrimental to the area, since the tracks could be salvaged and recreational trails created where lines once ran, boosting recreational activities and related business in the area.

James Howard, MMA legal advisor,  was next, noting that if “a short line was brought in, it has to be viable or we haven’t solved the problem.”

When asked by STB Vice Chairman Francis Mulvey if MMA had given any thought to making the abandonment the entire 303 miles so whoever purchased the line would have it all (current plans would have MMA retaining sections to the north and south of the proposed abandonment route), Burkhardt pointed sale of those sections might be an option, but the price would be considerably more than the section currently under discussion, since the north and south pieces are “profitable” and therefore worth more to MMA. Burhardt said one thing that would need to be worked out with whoever purchased the section between Madawaska and Millinocket would be the fee to connect to MMA’s sections on either end.

“In our view, maintaining rail service that’s not sustainable is not beneficial to the local economy,” added Morgan.

“We ship about 70 percent annually by rail, 30 percent by truck. If rail is stopped, that would require us adding over 2,500 trucks annually. Trucking resources aren’t available. We’d struggle to meet our customers’ needs,” said Arkon Horne, controller, Fraser Timber LTD.

John Cashwell noted his company, Portage Wood Products, had invested millions in the mill. He expressed concern over chopping up the line and creating more owners (of sections) — complicating an already problematic system.

“What we’re doing is duplicating these ‘dysfunction junctions.’ For an example, we had to truck from one line five miles, while another rail carrier went straight to our mill. Haulage and trackage rights need to be clear,” Cashwell said.

Irving’s Robert Pinette said “reliable and efficient rail service was critical to Irving Woodlands.” He said many of his company’s customers invested in rail to receive Irving’s goods and they’d look elsewhere for products if rail service ends. “Many jobs depend on quality rail service and would be lost without rail.”

Alan Weber indicated Huber Engineered Woods relied on rail to receive resin and wax, as well as shipment of products. He said this year has been good for the Easton plant, with the “first six months of this year better than the past two years.” Weber said with the market coming back and product demand increasing, Huber’s need for rail service will increase.

Travis Turner agreed, noting that Louisana-Pacific products from the Houlton facility are shipped all over the country and that without rail, the company would lose business, since at least one of its products is too large to ship by truck.

“LP wouldn’t have invested in strand expansion without reliable rail service. We’re the only producer of the product in the country. Without rail, we won’t be able to compete outside the region. MMA is wrong; trucks are not viable for all our products,” said Turner. “Transloading is not a viable option for LSL products. Our shipping costs would increase up to 40 percent.”

James Davis said LEAD focuses on job creation and economic development and both would be negatively impacted if the line’s abandoned.

Walt Elish, of Aroostook Partnership for Progress, said, if anything, the line “needs to be enhanced.”

“Our infrastructure makes it possible to service national markets. We have ample recreation trails; we don’t need more,” said Elish.

Larry Clark noted four of his tenants in the Presque Isle Industrial Park use rail. He said he uses rail access as a sales tool when promoting the park.

Theresa Fowler, Presque Isle Area Chamber of Commerce, said as the representative of an agency that serves 13 communities, she had received a lot of feedback from concerned community members wondering about the future of their jobs.

Southern Aroostook Development Corporation’s Jon McLaughlin noted a lot of MMA’s reduced traffic was “due to poor service,” and not all a result of the “economic slump.” He said a solution needed to be found to the “book-end” issue. “SADC is not opposed to MMA’s abandonment; we do oppose them holding the buyer hostage at either end with exorbitant fees.”

Rodney Leach, of Maine Public Service, indicated his company relies on rail to transport utility poles from western states and “to lose rail service would increase our costs about $60,000 annually.”

Inn owner Steve Dobson said while he does not “have a dog in this fight,” he’s talked to several people and it appears “MMA doesn’t have a lot of respect for its customers.”

Kevin Moore. General chair, Brotherhood of Locomotive Engineers and Trainmen, addressed the loss of jobs that would occur if the line is abandoned. He said he was “just opposed to the plan as a whole.”

Eric Strohmeyer, managing partner, WMS, LLC, took issue with the “stranded segment” and if “a carrier could be ordered to follow statute, if authority was lacking over a part of the shipment line.”

Nottingham said that was an excellent point and indicated the board would look into what its authority would be over the border (into Canada).

It was noted during the meeting that the state and MMA had reached some type of agreement, but STB officials could not elaborate.

After the meeting, NMDC’s Denis Berube said DOT and MMA officials would be going back into mediation this week in Philadelphia and there is an agreement on purchase price. What remains to be settled, according to Berube, has to do with trackage/hauling rights and options on MMA tracks at both ends of the abandonment section leading to interchanges. No date has been set as to when the STB will render a decision.