ANNAPOLIS -- The CSX railroad has defended its policy of charging a premium to ship western Maryland coal to the port of Baltimore, saying the rates are the lowest in the Eastern United States.
During a state legislative hearing last week, the sharp difference between statements made by CSX Vice President E. Ray Lichty and other witnesses was accounted for by the way costs are determined.
A consultant hired to study ways of increasing coal exports from the mines of western Maryland said the cost per mile to transport a ton of Maryland coal is much higher than rates in neighboring states of West Virginia and Pennsylvania.
Lichty said, however, that because western Maryland mines are so close to Baltimore, the cost of shipping a ton to the port is lower than any other area served by CSX even though mileage rates are higher.
"Western Maryland has the shortest haul and western Maryland has the lowest rates that we have," he said.
Jeffrey Watkins, coauthor of the report that was discussed at a hearing of the House Economic Matters Committee, argued that CSX charges a high rate in Maryland because coal miners have no other way to get coal to Baltimore.
He said Conrail charges $3 less a ton to ship coal from nearby Somerset County, Pa., to the port of Philadelphia.
"Since Pennsylvania coals are similar in quality and cost to Maryland coals, the $3 a ton transportation cost advantage all but ensures that overseas customers will buy Pennsylvania coal before considering Maryland coal," the report said.
The consultant recommended that the Maryland General Assembly enact legislation similar to a new West Virginia law that will give all railroads access to the same tracks. The report said that could create competition for CSX in Maryland, with resulting lower rates. At the least, it said, the bill would provide coal operators in western Maryland with a bargaining chip to get lower rates from the company.
The study said CSX could make a reasonable profit charging $7.27 a ton instead of the $13.48 a ton it charges.
The study also called on the General Assembly to take steps to reduce the time it takes to get a surface mining permit.endqua