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(The following story by Daniel Brock appeared on the Charleston Business Journal website on September 10, 2010.)

Charleston, SC — State officials never intended for a summit on commercial rail to end the discussion on the increasingly contentious issue. But the 10-member Review and Oversight Commission on the State Ports Authority emerged Thursday with a strong message for CSX Transportation and Norfolk Southern.

“Either you come together and reach an agreement,” said Rep. Hugh Leatherman, R-Florence, “and if you can’t, we’ll do it for you.”

Lawmakers, rail executives, business leaders and other port stakeholders met for nearly five hours at the College of Charleston Stern Student Center.

Planning to plan
The debate over how cargo should be moved by rail from the port has been disjointed and unorganized. Small groups have met sporadically — sometimes in secret — trying to get a plan on track.

Thursday’s summit gathered many of the interested parties under one roof. While the stated aim was not to judge the merit of a single plan, some ideas were bandied about, most notably a well-publicized proposal linking the city of North Charleston, CSX and local developer Shipyard Creek Associates.

That plan would see Shipyard Creek Associates’ Macalloy property and CSX’s Cooper Yard transformed into an intermodal rail yard and large-scale warehousing operation. The facility would provide near-dock rail access to the new $600 million SPA terminal under construction at the former Navy Base.

The plan also would remove 3.2 miles of CSX rail track in North Charleston, build roughly a half-mile of new track and renovate another half-mile of mostly dormant track.

“You have to fix the rail infrastructure in order for this port to move forward,” said Frederik Eliasson, vice president for emerging markets for CSX Transportation.

The trio signed a memorandum of understanding cementing the partnership last month. The group is now working on acquisition of federal funds for a planning grant.

Norfolk Southern and the S.C. Commerce Department’s S.C. Public Railways division, however, contend the North Charleston plan is unfair, because they feel it doesn’t offer the Virginia-based carrier equal access to a near-dock intermodal facility.

To access the Macalloy site, Norfolk Southern would have to pay a fee to cross its competitor’s track. But according to Robert Martinez, Norfolk Southern’s vice president for business development, the more important factor is that Norfolk Southern’s operational schedule would be at CSX’s mercy.

CSX is none too keen on the idea of sharing limited space at Macalloy with Norfolk Southern, anyway, and the North Charleston plan calls for Norfolk Southern to build a near-dock facility of its own near the Arthur Ravenel Jr. Bridge. Norfolk Southern has repeatedly rejected the proposed site as unfeasible.

Some commission members and business leaders took a dim view of the proposal, as well, saying that if Norfolk Southern were denied access to a near-dock facility, it would hurt business statewide.

Thomas Brooks, the Saluda County Planning and Economic Development director, said that 60% of all cargo at the port either originates or terminates in the Upstate.

“The Upstate is concerned about access,” Brooks said.

Clarifying dual service
A misconception seemed to arise throughout the meeting among some who thought that the North Charleston plan called for the port to be serviced only by CSX.

The maritime facility would remain dually served under the proposal, though access would not be equal. The difference would lie in how far the two rail carriers would have to haul cargo before loading it on their trains.

Under the North Charleston plan, CSX’s trip distance, or dray, would be less than a mile to the Macalloy property on a private road. Conversely, Norfolk Southern would have to carry goods nearly five miles to its current North Charleston yard, with a portion of the trip over Interstate 526.

According to Martinez, the North Charleston plan “would place the port — not just Norfolk Southern — at a serious competitive disadvantage” because “effective competition brings about tremendous benefits for shippers and the general public.”

It’s a message that many across the state appear to be buying into. The commission was handed a packet of 15 letters from county governments, trade associations and businesses, including Michelin, all calling for dual and equal rail access to remain a top priority as the body moves forward.

But Eliasson pointed to instances at ports in Savannah and Virginia in which one of the rail carriers had a clear advantage for an extended time period, yet the ports flourished.

“This notion that you can’t succeed with the fact that you have one railroad that has near-dock access is some of the misinformation that is out there today,” he said.

And despite opposition from some corners, the North Charleston rail plan is for now the only actual plan on the table. It’s a factor that could become increasingly important with the Panama Canal’s expansion, slated for completion in 2014, and the Navy Base terminal, scheduled to open in 2017.

When the canal is finished, the largest cargo ships in the world will likely look to call on Charleston with increasing regularity. A proposed harbor deepening, itself a point of contention, would allow them to arrive fully loaded.

Commission Chairman Larry Grooms said an inadequate rail solution would likely be disastrous.

“The greatest economic opportunity of our lifetime is laid before us,” said Grooms, a Republican state senator from Bonneau.

A state rail study commissioned last year by the Department of Commerce suggested three potential solutions for near-dock rail access, but “That’s all they were: three potential solutions,” said Jeff McWhorter of S.C. Public Railways. “There was no hard-and-fast plan as to how that was going to be accomplished.”

Public Railways, the agency that provides rail service to the SPA terminals, and Norfolk Southern have backed one of the study’s proposals. Though details remain somewhat nebulous, the proposal basically calls for a single terminal, serviced by both CSX and Norfolk Southern, to be constructed at the Navy base’s north end.

Northern rail access would run afoul of a 2002 memorandum of understanding between North Charleston and the SPA prohibiting such movement, though Grooms said he felt the state was not bound by that commitment.

“There is no agreement with the state of South Carolina,” he told CSX’s Eliasson at one point.

While such a facility would achieve equal, dual access, it would be constructed on pieces of land owned by the Clemson University Restoration Institute, North Charleston, The Noisette Co. and others. Those tracts could face condemnation through eminent domain, which would negatively impact the existing tax increment financing for improvements on the former Navy Base, according to an economic impact study released earlier this week.

Though the wind turbine drivetrain testing facility slated for the Clemson property would not be directly affected — the land proposed for the rail yard is across the street from the facility — Restoration Institute Executive Director John Kelly said that giving up the property would box in the facility.

Kelly said the uncertainty surrounding the land has left him unable to showcase the extra space to manufacturers who might want to move there to take advantage of the proximity to the testing complex.

“We want that land,” he said.

Other voices
Dana Beach, president of the Coastal Conservation League, said that the new port terminal, along with Boeing Co.’s arrival and the coming drivetrain testing facility represented an “unparalleled opportunity or a catastrophe in the making” as a result of their combined traffic and environmental impacts.

S.C. Manufacturers Alliance President Lewis Gossett strongly encouraged the commission to push for dual rail access and added that manufacturing is the best way to get the economy back on track.

“We want to take advantage of the fact that they’re (the rail carriers) competitive with each other,” he said.

North Charleston Mayor Keith Summey’s assistant, Ray Anderson, who was representing North Charleston at the meeting in Summey’s absence, contended that the city was following a plan drawn up years ago and was “doing our job to bring jobs to the state of South Carolina.”

Summey, a major figure in this debate, had a prior commitment.

Anderson also said that the Macalloy plan was good for the North Charleston because the city was “dissected, digested and split apart by rail.”

Still, representatives from the southern part of North Charleston, where rail traffic would increase under the Macalloy plan, weren’t so sure about the idea.

“What is the balance going to be between commerce and community?” asked North Charleston City Councilman Michael Brown.

Rahim Karriem, president of the Lowcountry Alliance for Model Communities, had questions, as well.

“Will our community have the opportunity to benefit, as others have,” from our sacrifices, he asked, referring to the heavy industrial flavor of his Union Heights neighborhood.

The takeaway
Grooms seemed pleased with the day’s results.

“We can build on this testimony,” he said.

The Review and Oversight Commission will meet again in weeks ahead, according to Grooms, and likely will release a report on its findings before year’s end.