I was in Berkely Springs, WV over the weekend and we stopped in Hancock, MD - along the Western Maryland Rail Trail - for lunch. I haven't been in probably 7-8 years so it was interesting to see how much the town has developed along it. There were new lights and plantings, the restaurant we ate at was not there last time and was designed to open up to the trail and the street. There was at least one B&B along the trail. And there were signs calling it a "trail town." [The C&O Canal path also passes through town].
Anyway it got me interested in what was going on with the extension to Paw Paw, WV. So I'll give you the bad news first. It's not happening. As the railroad right-of-way gets farther west it starts crossing back and forth across the Potomac from Maryland to West Virginia and back. It also starts passing through tunnels, three of which; Indigo, Stickpile (or Stick Pile) and Kessler, are on NPS property Due to the presence of bats in these tunnels, it was decided several years ago to not use these tunnels for the trail starting with the Indigo.
In addition to the biological hazards posed by bat droppings, the past five years have seen numerous bat colonies in the northeastern U.S. become infected with White-nose Syndrome, a serious fungal infection. In an effort to halt its spread, the National Park Service has severely restricted access to the tunnel.
Maryland Department of Natural Resources (DNR) biologists have confirmed that bat carcasses collected from a cave near Cumberland on March 5, 2010 were infected with White Nose Syndrome (WNS). In partnership with the U.S. Fish & Wildlife Service, DNR biologists are following strict protocols established by the Northeastern WNS Working Group to close Maryland cave access to all human activity except for approved research.
Maryland worked out a bypass for the Indigo that will use the C&O Canal to get to Little Orleans, but just west of there, the trail passes into West Virginia for the first time, and Maryland has announced that
West Virginia is no longer a partner in the trail project.

So it won't be extended to Paw Paw. In the Maryland Department of Natural Resources March-May 2016 Newsletter they announced that
DNR hired the design firm of A Morton Thomas and the design is complete.
The Cooperative Agreement between DNR and the National Park Service regarding Operation & Maintenance and Law Enforcement for the trail has been signed.
DNR is currently in the process of obtaining an Access Permit from Allegany County for the crossing of Little Orleans Road.
All of the required environmental permits have been obtained other than Erosion & Sediment, which the Maryland Department of Environment (MDE) can not approve until they have seen the final drawings.
If the project is ready to advertise in by April 2016, then the Maryland Department of General Services will take 90 days to hire a construction firm. A Notice to Proceed would be sent out in July 2016. Given the extreme weather conditions in Western Maryland, the construction firm would be given one year to complete the project.
The contract will be awarded and the contractor will be on-site in July 2016 and the trail will open in July 2017.
I can't find any evidence that they advertised the project, so it may be that April was too ambitious, but it seems like they are very close to starting work on the next section. Which is good news.
Maybe someday West Virginia will get back involved and/or Maryland will look to build on more of the right-of-way west of Paw Paw to Cumberland.
If you really must bike through a tunnel of the WM Railroad, there is a small section of the right-of-way that has been turned into the Carpandale Rail Trail in Carpandale, WV. This 0.8 mile long trail crosses over the North Branch of the Potomac River between Carpendale in West Virginia and Cumberland in Maryland and through the 1,500-foot-long Knobley tunnel.
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