PRODUCERS GET WORD OF WARNING ON CSX COAL LOADING RULES CAUTION URGED ON NEW TERMS

PRODUCERS GET WORD OF WARNING ON CSX COAL LOADING RULES CAUTION URGED ON NEW TERMS

A fuel transportation consultant is warning coal companies to be cautious about agreeing to new terms covering the amount of coal loaded into railroad cars on CSX Transportation Lines.

Earlier this year coal producers were put on notice that CSX is planning to raise the standard for loading coal into rail cars from the present operating level of 93 percent of capacity by weight. It generally has been thought that the new level will be 98 percent of capacity - or 98 tons in a 100-ton car.CSX officials, including company president John Snow, consider the new loading requirements to be part of a program of efforts under way at the railroad to improve productivity and efficiency.

But Fred Murrell, of the law firm of Schroder, Holmes & Murrell, Atlanta, said utilities and coal companies "should be very careful" about load-weight requirements that may be impossible for some suppliers to meet because of the individual characteristics of their coal.

Mr. Murrell is a former vice president of both CSX and Electric Fuels Corp., the coal-buying arm of Florida Power Corp., St. Petersburg.

Speaking at a coal and transportation contracts seminar sponsored by his firm in Houston, Mr. Murrell said that some coal producers already have run into problems - even at the 93 percent standard - because their coal was so light it filled train cars to the brim without reaching the required weight level.

Because coal companies and utilities pay for rail freight on a per-ton basis, some consider the effect of the new standard to be a rate increase. One coal transportation official argued that the raised standard means coal shippers will be "paying for air."

Mr. Murrell said utilities that agree to the raised standard without determining if their suppliers will be able to meet it are opening themselves up to litigation and the possibility of paying charges they assumed to be the responsibility of the mining company.

Mr. Murrell said, "I know CSX wants to improve its profitability. However . . . (it) needs to be careful about making changes which are punitive to its shippers and coal suppliers."

Mr. Murrell and other sources said the new standards would pose problems for coal companies on an industrywide basis.

But Tom Frost, of CSX's sales and marketing department, said the "vast majority" of the producers on CSX lines will be able to meet the new requirements.

Those who comply won't see a rate increase but will see an improvement in

CSX's utilization of open-top hopper cars, Mr. Frost said.

He said CSX will make a final decision on the loading requirements in three to five weeks.