Editorial: Maine Rail Solutions

Allowing the rail link between Aroostook County and the rest of the state to disappear would be economically devastating to the region. But, with limited resources, the state isn't in a good position to operate a financially troubled rail line, according to an editorial in the Bangor Daily News.

State
and federal officials, along with shippers and the Montreal, Maine &
Atlantic Railway, are looking for ways to keep the more than 200 miles of rail
line operational. They must focus on ways to secure more shipments – which
translates into more revenue – to make the line financially viable for the long
term.

Montreal,
Maine & Atlantic Railway last month filed a "notice of intent" with the
federal Surface Transportation Board to abandon 233 miles of its track in
Aroostook and Penobscot counties. The notice covers the railroad’s line from
Millinocket to Madawaska with spurs to Presque Isle, Easton, Limestone and
Houlton.

One
scenario under consideration is for the state to buy the rails and then lease
them to MMA or another company to operate the system. Lawmakers are considering
bonds of up to $25 million for such a purchase.

Transportation
Commissioner David Cole last week said that several rail companies have expressed
interest in running the lines. A consultant hired by the department said that
there was room for growth on the line, especially when the housing and
construction markets recover.

Also
last week, Sen. Susan Collins asked U.S. Transportation Secretary Ray LaHood
about the railroad during a Senate hearing. He said the department’s rail
administrator would soon visit Maine and "we’ll figure out some kind of funding
opportunity to make sure this rail line is not closed down."

Sen.
Collins and Rep. Mike Michaud also asked the Surface Transportation Board to
hold a hearing in Maine to hear firsthand from companies that would be affected
by the proposed abandonment.

No
matter who owns the rails, the underlying problem remains – the revenue
generated by shipments on the line doesn’t cover its costs. MMA says it has
been losing between $4 million and $5 million a year on the route.

In
a letter this summer, the railroad’s President Robert Grindrod said traffic
dropped by about 40 percent over last year. Wood chips, lumber, pulpwood and
cooking oil for McCain Foods are the primary freight on the lines.

Grindrod
suggested that a state takeover of the rail lines is the "best possible
solution." However, another sentence in his letter should give state officials
pause. "MMA, as a private company, cannot continue to sustain the level of
financial loss which is currently ongoing, with little or no prospect of
improvement," he wrote.

An
industry standard says that a railroad should earn between $50,000 and $60,000
per mile annually. MMA is earning about $20,000 on these lines. The only way to
earn more is to get more companies shipping more freight on these lines. If the
state is to intervene, it must have commitments from local mills and businesses
that more volume will be shipped on the line.

A
first step is to maintain the rail corridor. A second, more difficult, one is
to develop a plan to make the route financially sustainable.