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Canadian Pacific Ltd. and Consolidated Rail Co. may be close to settling a trackage dispute that has delayed CP's planned purchase of the Delaware & Hudson Railway, a spokesman said Friday.

"We're still talking," said John Cox, a spokesman for CP. Asked whether both sides were close to settlement, Cox said, "Oh, yes, the meetings have been very productive."

Conrail spokeswoman Pat Linskey said, "We can confirm that the discussions between Conrail and CP with respect to the use of Conrail tracks by the D&H and other issues raised by CP's pending purchase of the D&H are progressing smoothly."

CP has offered to buy the financially ailing D&H for $25 million. However, the deal was stalled when Conrail refused to allow CP to run its trains and crews along a short stretch of Conrail tracks between Buffalo and Niagara Falls.

A federal judge recently decided that the issue must go to arbitration. However, Cox said CP hoped the issue could be resolved through the ongoing talks. "An arbitrator has not even been picked yet," he said.

The D&H, the nation's oldest continually operated railroad, filed in July 1988 for protection from its creditors under U.S. bankruptcy laws. The railroad, which runs from Montreal to Washington and between Albany and Buffalo, owes more than $100 million.

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