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May 15. 2013 8:54PM

Executive Council rejects Pan Am bid for state-owned railroad track

CONCORD — The Executive Council in a 3-2 vote Wednesday rejected a Department of Transportation proposal to give a subsidiary of Pan Am Railways control of an 18-mile stretch of state-owned track from Milford to Bennington.

Councilor Chris Sununu, R-District 3, accused the three-member majority of "trying to play favorites," in a reference to State Rep. Peter Leishman, D-Peterborough, who currently operates the Millford-Bennington Railroad freight line and was unsuccessful in his bid with the DOT.

"I can't see why we wouldn't go forward with (the DOT recommendation)," Sununu said. "I can't find a reason to say 'no' unless we are just starting to play favorites, and that's the most dangerous thing you can do."

While on the surface, all that's at stake is control of a tiny freight line, the intense debate reflected a 20-year feud between the parties involved that has affected the state's ability to make progress on commuter rail.

Councilor Debra Pignatelli, D-District 5, said her vote against the contract was based on the state's years of experience with Pan Am, known as Guilford Rail System before 2006. "This company has been a main obstacle in thwarting passenger rail to Nashua and Southern New Hampshire," she said. "I don't think this contract is good for Nashua or our state. The company has not been a good corporate citizen ... it has a past so checkered it's dizzying."

Pan Am Executive Vice President Cynthia Scarano said the company would have to consider whether it would participate in a second round of bidding.

"To be perfectly honest, that's something the whole group of us are going to have to sit down and discuss," she said from Pan Am headquarters in North Billerica, Mass.

She challenged Pignatelli's characterization of the company. "I don't think that her information is correct," said Scarano. "Our proposal included letters of support from 95 percent of the rail customers in the state, along with the endorsement of the two largest railway unions — the United Transportation Union and the Brotherhood of Locomotive Engineers and Trainmen."

An 'insult to the state'

Sununu said the proposal from Pan Am was complete, while the proposal from Leishman was full of holes. "They left multiple things blank because they assumed they were going to get the contract," he said. "That's insulting to the state of New Hampshire."

Councilor Colin Van Ostern, D-District 2, voted with Sununu in support of the Pan Am contract, while councilors Ray Burton, R-District 1, and Chris Pappas, D-District 4, joined Pignatelli in voting against.

Control of the short stretch of track has been a contentious issue ever since Guilford abandoned the line decades ago. Leishman's company revived freight traffic to serve a single customer, Granite State Concrete, in transporting crushed stone from a Wilton quarry to the company's processing plant in Bennington.

Granite State Concrete has lobbied aggressively in Leishman's favor since the council tabled the matter two weeks ago, telling councilors and others that it did not think it could do business with Pan Am. The council tabled a vote on the contract on May 1 because Sununu was not present.

At that time, Pappas appeared to be leaning toward approval of the Pan Am deal, but a visit to Granite State Concrete influenced his final vote.

"We've got to keep the line running; we've got to keep the customer being served; and we've got to make sure the state captures some revenue," he said, "and I'm just not sure that this contract is going to produce any revenue given my conversations with the customer already on the line, and a potential second customer."

The potential second customer is Monadnock Paper Mills in Bennington, which is also considering freight service from Milford-Bennington Railways.

Simmering for years

Pappas said the enmity between Leishman and Pan Am President David Fink runs deep. "The feud that rages between these interested parties makes politics look like child's play," he said.

Burton agreed: "It's been simmering here for years," he said. "Mr. Leishman has been sending in money to the DOT, but they refuse it."

Leishman defended his initial response to the DOT requests for proposals and said he would resubmit. "I believe my response was complete, especially in light of my more than 20 years of service to the supportive customer and my well-documented history of maintaining the track to a better condition than the contract required, providing monthly review reports, and yearly marketing reports. After all, I am not a new prospective operator who has no experience operating this corridor."

The Democratic state rep suggested he was being made a sacrificial lamb to get Pan Am to cooperate on proposals for commuter rail. He quoted a 2009 letter from then-associate attorney general Ann Rice to David Fink, in which Rice wrote, "you conveyed the information to your legal counsel ... that if the contract were not put out to bid, Pan Am would pull out of ongoing negotiations relating to the Capital Corridor line."

Leishman said a Pan Am attorney subsequently wrote to the DOT affirming that Pan Am was ending negotiations. "As far as I know, Pan Am has not stated any willingness to resume negotiations," Leishman said. "However, I have to wonder if Pan Am made a similar threat that if they didn't get this contract, they would pull out of any future passenger rail negotiations."

dsolomon@unionleader.com


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