RAILROADS FAIL TO REACH SERVICE, RATE AGREEMENT

RAILROADS FAIL TO REACH SERVICE, RATE AGREEMENT

Large and small railroads, after weeks of closed-door talks, have failed to reach agreement on commercial issues including interchange, service and rates.

The Association of American Railroads and the American Short Line and Regional Railroad Association delivered that message in separate letters filed late Friday with the Surface Transportation Board.However, talks may continue this week before a possible administrative solution to the issues that the railroads have discussed among themselves for the past several weeks.

The agency directed the carriers to meet with the intention of strengthening their commercial ties. That direction was part of a wide-ranging agency decision issued on April 17 that also included other competitive issues.

The large and small railroads had asked for an extension on May 11 to continue their talks.

The short line and regional group said it would make a filing with the board by Friday and request that the board take administrative action.

The April 17 STB decision had directed the parties to seek private agreement and held out the prospect of an administrative solution if talks fell apart.

The AAR, representing major carriers, said it was still attempting to set up a meeting of chief executives from both groups in an effort to reach an agreement, though there was no guarantee such a session would be convened.

The key questions under discussion have been efforts to find a mechanism that would assure that customers located on small railroads received rates and service that was comparable to similarly situated customers on large carriers.

Another question being debated was contractual barriers that block some small railroads from a second outlet to a major carrier.

Freight car allocation issues also have been negotiated. Large railroads can control how equipment is directed to and from smaller carriers.

Smaller carriers have been seeking a mechanism to allow them to invest in equipment for their customers' use with some degree of confidence that the cars they buy will be handled and returned promptly by the major railroads.

''AAR recognizes the importance of improved relations with our partners - the smaller railroads - and we are committed to continuing to work with ASLRRA in an effort to conclude successfully these negotiations,'' said the letter from James A. Hagen, AAR's recently appointed president.

William Loftus, president of the short-line and regional group, told the STB that ''ASLRRA representatives and I stand ready and willing to talk further with the Class I (major) railroad representatives.''