Maryland lawmakers vow to push forward with Howard Street Tunnel expansion, despite CSX's exit

Maryland’s state and federal lawmakers pledged Thursday to explore how to move forward with a planned expansion of the Howard Street Tunnel under downtown Baltimore, after CSX Transportation, the railroad that owns it, said it could not justify paying for its share of the $425 million project.

“We’re going to go back to the drawing board,” Gov. Larry Hogan said. “It’s a worthwhile project and we’ll be pursuing it from every direction.”

While government officials could offer incentives such as shouldering more or all of the cost, analysts said, they have little power to force the railroad to expand its century-old tunnel enough to stack shipping containers two-high on its trains — a project long sought for the port of Baltimore.

“Is there recourse against CSX Railroad?” said Brooks Royster, who served as executive director of Maryland Port Administration under Republican Gov. Robert Ehrlich from 2005 to 2007. “I’m just not sure of what that would be.”

Z. Andrew Farkas, director of the National Transportation Center at Morgan State University, said he didn’t know of a way for Maryland’s local, state and federal lawmakers to force the railroad to support the project.

“I don’t know what the government can do, short of offering to pay for it themselves,” Farkas said.

Hogan and the state’s congressional delegation both said they hoped to meet with CSX management to discuss the railroad’s reasoning for turning its back on the tunnel expansion.

The project, which would have raised the ceiling and lowered the floor of the tunnel, was long considered a mutual goal of the port of Baltimore and CSX. An expanded tunnel would allow for significantly more shipping containers to be moved through the port and along the railroad.

The railroad and the state had agreed to kick in $270 million of the cost, and seek the remaining $155 million from the federal government.

“We had a great plan put together with CSX, the federal government and the state government sharing in the cost of that,” Hogan said during a news conference in Annapolis. “It would have a transformative effect on our economy.”

The state’s congressional delegation sent a letter to CSX Transportation CEO Hunter Harrison requesting a meeting and an explanation for the decision. The bipartisan letter, signed by every member of the delegation, took a frustrated tone with the Jacksonville, Fla.-based railroad, which pledged support as recently as December for Hogan’s plan.

“We seek to understand how a project that has been a top priority for CSX, multiple local, state and federal representatives and the business community for many years — to the exclusion of other local needs and projects — is suddenly no longer of importance to CSX,” the delegation wrote in its letter.

The railroad said Wednesday that the tunnel project “no longer justifies the level of investment required from CSX and our public partners at this time,” prompting the state to cancel its federal funding request for it.

The company, which is the successor of the Baltimore & Ohio Railroad, has not explained the reasoning behind its calculation. It attributed the decision to “Precision Scheduled Railroading,” the new operating plan Harrison implemented in May, which involves reviewing “use and development of existing and planned infrastructure projects.”

CSX spokesman Christopher B. Smith acknowledged the congressional letter in a brief statement Thursday: “CSX appreciates the partnership that we have developed with the State and we look forward to continuing the dialogue with our partners about our new operating plan.”

Since CSX hired Harrison as CEO in March, the company has slashed its management ranks by 950 people and spent $1.5 billion to buy back shares of its stock. Last week, it announced plans to buy back another $1.5 billion of its stock.

Farkas wondered whether CSX officials expect some otherwise unforeseen downturn in container traffic — or whether the company is putting its resources into projects for other ports.

“What has changed that that extra capacity isn’t needed?” he asked. “Are they potentially focusing on different ports? That would be nice to know. If Baltimore is not the priority it once was, it would be interesting to know what other port facilities are of higher priority.”

Baltimore is among the only ports on the East Coast that can handle the super-sized ships now transiting the larger Panama Canal carrying Asian-manufactured goods, the congressional delegation noted. Freight volumes are expected to grow significantly in the coming decades, and safety and infrastructure improvements to accommodate that growth are “critical,” members wrote.

“The long-term, bipartisan, state, federal and local financial support for this project is a reflection of the importance we have all placed on the need for these improvements,” the letter said.

Royster, the former port director who now is president of Baltimore-based MTC Logistics, said he believes CSX is in “a cost-cutting mode” under Harrison.

“I think this was caught in that net,” he said.

Royster said the tunnel project plays an integral part in the port’s future growth prospects.

“This needs to happen. It’s not an option,” Royster said. “It’s curtailing and restricting freight. For CSX to arbitrarily turn its back on this is extremely unfortunate.”

The Maryland Democratic Party blamed the Republican governor, calling the project’s derailment a failed campaign promise.

“Governor Hogan’s inability to deliver on the Howard Street Tunnel joins his cancellation of the Red Line and State Center projects as examples of his failure to improve the lives of hard-working Baltimoreans,” state Democratic Party chair Kathleen Matthews said in a statement. “These projects would have created thousands of jobs and helped working families struggling to make ends meet get a foothold in the middle class.”

Hogan’s press secretary, Shareese N. Churchill, shot back in a statement that the administration “has never wasted time on the small and inaccurate opinions of paid, partisan political operatives, and we are certainly not going to start now." She added that Hogan is committed to the State Center redevelopment.

Hogan did cancel state funding for the Red Line, an east-west light rail line in the advanced planning stages for Baltimore, in 2015, effectively killing a project he deemed too costly.

CSX praised the governor’s efforts on the project’s behalf in its statement Wednesday.

“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,” the company said.

Baltimore Mayor Catherine E. Pugh has expressed her “profound frustration and disappointment” to CSX, spokesman Anthony McCarthy said in a statement Thursday. He said the decision “clearly puts the Port of Baltimore at an incredible disadvantage.”

“She hopes they will reconsider and keep their commitment to the community, the city and the state of Maryland,” McCarthy said.

The congressional delegation said it will invite Maryland and Baltimore City officials to the Capitol Hill meeting with CSX. A date has not been set.

The members of Congress asked Harrison to prepare “an overview of changes you have made to CSX operations in the State of Maryland, what changes you will implement in the near future, what, if any, assistance you anticipate requesting from state, local and federal governments regarding these changes and any other federal issues that are important to CSX such as limiting truck trailer size, federal tax issues and other priority public-private rail improvement projects around the nation.”

Baltimore Sun reporter Pamela Wood contributed to this article.

cmcampbell@baltsun.com

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