Tiny rail line chugs toward its dream Maryland Midland covets a 42-mile prize from the Conrail battle

Rebuffed for years

Union Bridge carrier lobbies to force CSX to sell track and rights


February 02, 1997|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

As CSX and Norfolk Southern battle for Conrail's extensive rail system, a little-known short line in Union Bridge is trying to extract a prize -- two relatively minuscule chunks of tracks -- to fulfill a longtime dream.

Maryland Midland Railroad officials have been aggressively lobbying state officials to urge federal regulators to require CSX to sell 42 miles of track and trackage rights to Maryland Midland Railroad as a condition for approval of any rail merger agreement.

"It's a mouse among the dance of the elephants," said O. James Lighthizer, former Maryland secretary of transportation and a lawyer who now represents the Carroll County-based railroad. "Maryland Midland is just trying to expand their little world."

Incorporated in 1978, Maryland Midland owns 65 miles of track from Glyndon in Baltimore County to Highfield in Washington County, along the main line of the old Western Maryland Railway.

What Maryland Midland wants is 17 miles of track running from Highfield to Hagerstown and the rights to use 25 miles of CSX's track from Glyndon to Baltimore.

That would give the short line control of the tracks from Baltimore to Hagerstown, where five railroads, including Norfolk Southern, already converge.

Key elements of Maryland Midland's plan are purchasing the state-owned Canton Railroad, a short line switching railroad in the Canton area that provides access to Seagirt Marine Terminal, and forming an alliance with the Wheeling and Lake Erie Roadway Co., which reaches from Hagerstown to Bellevue, Ohio, southwest of Cleveland.

"It would be a strategic alliance connecting the port of Baltimore to the industrial heartland," said Paul D. Denton, president of Maryland Midland and a former CSX official.

For years, CSX has rebuffed Midland's repeated efforts to secure the track, largely because CSX is unwilling to provide access that would enable its chief competitor, Norfolk Southern, to capture freight once it reaches Hagerstown.

"We've been extremely prudent with our system, especially active rail lines such as this one," said Robert L. Gould, spokesman for CSXT, the railroad division of CSX Corp. in Jacksonville, Fla.

With its 65-mile network and $3.5 million in annual operating revenues, Maryland Midland, indeed, seems like a midget compared with CSX and its 11,000-mile network and $10.5 billion in revenues.

In 1989, Maryland Midland lost an antitrust suit in federal court against CSX to secure the tracks.

Yet Maryland Midland's latest gambit -- with its promise of jobs and more rail competition -- has won considerable support among lawmakers in Annapolis.

Under the proposal, Maryland Midland, which employs 28 people, would immediately hire 50 more workers, buy up to 15 more locomotives and 400 more cars. It has raised $1.5 million in seed money and arranged financing for another $15 million, Denton said.

Because of the lower costs associated with operating a short line, Maryland Midland says, it can offer rates four times cheaper than CSX, enabling shippers to manufacture and move products more economically and increase their work forces.

The plan ultimately could stimulate enough growth to create 5,000 jobs statewide and pour $23 million annually into state coffers, according to a study conducted for Maryland Midland by Michael Conte, an economist with Towson State University.

"The impact of the proposal is quite significant," Conte said.

But top state officials have been lukewarm to Midland's proposal as they establish priorities and identify potential bargaining chips in a merger battle in which they admittedly have little control.

Some fear that the plan could divert attention from the real priority: preserving competition by two major rail systems.

"Our primary goal is to assure competition by two Class I railroads," said Maryland Transportation Secretary David L. Winstead.

"We've got to meld Maryland Midland's interests within the framework of these negotiations."

Currently, Conrail and CSX compete in Maryland, but a merger of the two threatens to create a one-rail system in the state. Norfolk Southern has a very small presence in Maryland with its rail line terminating in Hagerstown.

Officials fear that a lack of competition could put Maryland -- particularly the port -- at a disadvantage.

Maryland Midland is one of 500 small railroad companies in the United States.

While tiny in comparison with the giant rail systems produced by the mergers of the 1980s and '90s, regional and short lines account for a fourth of all the nation's tracks, employ 12 percent of rail workers and generate a 10th of rail revenues.

As the larger railroads, or so-called Class I railroads, streamlined operations to focus on long-haul service, the short lines filled in the gap with less expensive pickup and delivery service to companies within small areas.

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