CSX decides not to seek expansion of Howard Street Tunnel

CSX Transportation withdrew its support for a long-awaited expansion of the aging Howard Street Tunnel under downtown, causing state officials to cancel a request for $155 million in federal money for a project they hoped would be a boon for the port of Baltimore.

The Jacksonville, Fla.-based railroad — successor to the Baltimore & Ohio Railroad — did not explain why it was turning its back on the project, which would have expanded the century-old tunnel to accommodate trains with shipping containers stacked two-high.

In a statement, CSX attributed the decision to “Precision Scheduled Railroading,” its new operating plan, which involves reviewing “use and development of existing and planned infrastructure projects.”

“We determined that the Howard Street Tunnel project proposal no longer justifies the level of investment required from CSX and our public partners at this time,” the company said.

The Hogan administration had developed a plan with CSX to split the cost of the project three ways with the federal government, but the project may be dead now.

In a letter to the U.S. Department of Transportation, Maryland Transportation Secretary Pete Rahn called the move “both surprising and incredibly troubling, especially considering the countless hours and energy that have been expended by the Hogan Administration on this effort.”

Maryland will not submit a grant application for federal funds for the project this year, Rahn wrote. The state’s application last year did not win money, but Gov. Larry Hogan announced last December that the state would reapply.

“Ultimately, as the project is to improve CSX infrastructure, Maryland cannot pursue the project without the support of CSX,” Rahn wrote.

He said the state wants to work with CSX to explore other ways “to improve the flow of freight into and out of the Helen Delich Bentley Port of Baltimore.”

“Improving access to our Port would have wide-ranging public benefits not only in the State of Maryland, but the entire region from Florida to the Midwest,” he wrote.

A spokesman for Maryland Port Administrator Jim White declined to comment.

Maryland’s congressional delegation sent a letter to CSX asking company officials to come to Capitol Hill to explain the cancellation.

Scott Cowan, president of the International Longshoremen’s Association Local 333 in Baltimore, called CSX’s move “a big letdown” for the port.

“It’s horrible to hear,” Cowan said. “That hurts the flow of container traffic through the port. It restricts our growth.”

Since the opening of the expanded Panama Canal in 2016, the port has seen an increase in intermodal containers, the metal boxes that carry goods on ocean freighters, trucks and trains. Baltimore handled a record-breaking 10.3 million tons of general cargo and nearly 908,000 20-foot-equivalent units of containers in the fiscal year that ended June 30, according to the Maryland Port Administration.

Cowan said the growth has been restrained by the Howard Street Tunnel’s low ceilings, which don’t permit CSX to doiuble-stack containers. He doesn’t see an alternative to expanding the tunnel that would have the same impact.

“The traffic has increased over the last year, but that’s the main sticking point right there,” he said. “The double-stacking of the containers through the Howard Street Tunnel is the restriction that we have.”

The Maryland Port Administration purchased 356 acres of land near Seagirt Marine Terminal for $55 million in May, the first expansion of the port in 30 years. The acquisition is expected to allow for container storage to accommodate growth through 2030.

“The Port Administration did their job; they purchased more land,” Cowan said. “[The tunnel] is the last piece of the puzzle. We need to get it done.”

The tunnel, built in the early 1890s by the B&O Railroad, achieved international notoriety in 2001 when a 60-car train derailed and set off a chemical fire that paralyzed downtown Baltimore for almost a week.

Nobody was killed, but the fire severely damaged the city’s underground infrastructure, causing significant flooding, halted freight traffic along the Eastern Seaboard and forced the cancellation of three Orioles games.

The disaster brought increased interest in rerouting the CSX line or widening the existing tunnel, but the railroad and the state and federal governments have been deterred by the enormous cost of the project. Some of the proposed solutions, such as a new tunnel to the west of the existing one, could have run into the billions of dollars.

The state and CSX announced last year that they had agreed on a plan to keep the existing tunnel while lowering its floor and raising its ceiling to improve clearances and allow double-stacking. A CSX executive hailed the plan as “transformative.”

The cost of the plan was estimated at $425 million. The railroad and the state agreed to kick in a total of $270 million, and seek the remaining $155 million from the federal government.

As recently as December, CSX appeared to be committed to the project. The company issued a news release announcing the completion of its Virginia Avenue Tunnel project in Washington, clearing the other major bottleneck on its Eastern Seaboard line. At the time, CSX said completion of the Howard Street project would boost the port, remove trucks from the nation’s highways and bring more than $640 million in benefits to 25 eastern states.

But CSX ran into problems this year as customers complained of increasing delays. In March the company brought in a new chief executive officer, Hunter Harrison, who adopted a new strategic plan. In September, Harrison cut the company’s earnings forecast but said CSX was “returning to a normal operating rhythm.” Last week, he announced a $1.5 billion stock buyback to increase the price of shares, leaving less money for infrastructure projects.

CSX said Wednesday that intermodal will remain an important part of its business.

“We are committed to supporting the freight rail needs of our customers and the Port of Baltimore through frequent, reliable, on-dock service,” the company said. “This business decision is in no way a reflection on the leadership of Governor Hogan, who has supported this initiative to the greatest degree possible on behalf of the businesses and citizens of Maryland. CSX appreciates the partnership we have developed with the State and we look forward to continuing the dialogue with our partners about our new operating plan.”

cmcampbell@baltsun.com

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