Larger subsea rail tunnel could expand freight-handling capacity of Baltimore’s port.

DALLAS -- Maryland will make a second attempt to obtain federal funding for a project that would expand a rail tunnel beneath Baltimore Harbor to eliminate a bottleneck that limits freight shipments to and from large cargo ships docking at the Port of Baltimore.

Gov. Larry Hogan said Monday that the state will seek a federal grant to expand the Howard Street Tunnel after missing out earlier this year on a $155 million request in the first round of funding from the Transportation Department's Fastlane program.

The tunnel, which was completed in the 1890s, is not large enough to accommodate rail cars carrying double-stacked shipping containers. With a two-foot taller tunnel, almost 200,00 shipping containers a year that now must be moved out of the harbor by large trucks could be transported over CSX Corp.'s rail system.

"This is something that we're going to make sure gets done," Hogan said. "It's critically important, not only to the Port of Baltimore and the city of Baltimore, but the entire state of Maryland. It really could be transformative to our economy."

Construction work on the tunnel project would create about 500 jobs and the expanded capacity would result in some 3,000 new jobs in and around the port, Hogan said after recently touring the tunnel area with CSX officials.

Less than 10% of the freight handled at the Port of Baltimore is transported by rail because of the tunnel limitation, said port executive director Jim White.

"It's a big deal for us because right now, we do very little rail business," he said.

The ability of shippers to double-stack containers on rail cars in Baltimore would take 178,000 trucks off the road, said Louis Renjel, CSX's vice president of strategic infrastructure.

The tunnel expansion had been expected to cost from $1 billion to $3 billion, but new engineering techniques have lowered the estimated cost to $425 million.

In its application for a $155 million grant from this year's first round of Fastlane grants, Maryland said it would contribute $145 million to the project with CSX pledging $125 million.

Hogan, a Republican who was elected governor in 2014, said he was optimistic about the tunnel project's fate in the second round of annual Fastlane grants next summer due to its high scores in the initial competition. Hogan also cited his personal appeals to President Obama and Vice President Joe Biden for project funding since the first bid failed.

"We believe that this time, we will be successful," Hogan said. "I had lunch with Vice President Joe Biden to discuss the importance of this infrastructure project. I discussed it with the president in the Oval Office.

"Our indication is that our project scored very high, that we just missed the funds last time, and we're going to push like heck to make sure we get them next time," he said.

The Transportation Department awarded $795 million of discretionary grants to 18 highway and rail freight projects from the Fastlane funding provided by the Fixing America's Surface Transportation Act. The 2016 grant applications totaled nearly $10 billion.

The rail tunnel will be expanded even without federal funding, Hogan said.

"We'd hate to say that we're going to do it without the feds or they wouldn't want to help us," he said. "We're hopeful to get the federal money. It's a very small chance that we won't. But if we don't, we'll go back to the drawing board and figure out a way to get this done."

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