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UPDATE 2-CSX's Hunter Harrison bashes U.S. trade groups over rail complaints

(Adds details from new STB letter, comment from Rail Customer Coalition)

Aug 17 (Reuters) - CSX Corp Chief Executive Hunter Harrison hit back at dozens of trade groups that urged a federal probe of service disruptions at the No. 3 U.S. railroad, saying their complaints were "grossly exaggerated," according to a letter seen by Reuters on Thursday.

The Rail Customer Coalition this week asked federal rail regulators to investigate CSX's "chronic service failures." It called on Congress to make it easier for shippers to file complaints and allow other railroads to use CSX track during disruptions.

Harrison responded to the shippers group, defending what he called the "transformational changes" implemented since he took over as CEO in March to boost CSX' productivity and finances.

Harrison, a septuagenarian known for turnarounds of Canadian railroads, also slammed the Rail Customer Coalition for not discussing its complaints with him first. He said the group went public to advance its own legislative agenda.

"CSX was greatly disappointed with your many unfounded and grossly exaggerated statements in your letter of August 14 related to the service experienced by some customers," Harrison wrote.

A Rail Customer Coalition spokesman said its letter reflected "broad agreement" among its members - which include chemical and agricultural companies, steel makers and beer producers - that "further action was needed to address CSX's ongoing service problems."

Harrison said the Jacksonville, Florida-based railroad was acting aggressively to fix service disruptions and would work with the Surface Transportation Board (STB), the main U.S. rail regulator, as it monitors CSX's "ongoing improvement."

The STB sent Harrison a letter on Monday expressing its "continued concerns over the widespread degradation of rail service" across CSX's system, according to the letter, seen by Reuters.

The STB said it was not apparent the situation is improving since its July 27 letter listing customer complaints, and said it requested weekly service performance data as it holds talks with senior CSX management.

An STB spokesman did not immediately respond to a request for comment.

The Coalition's letter on Monday echoed complaints from employees and union officials who told Reuters that job cuts and rapid-fire operations changes - like closing rail yards and doubling the length of trains - are disrupting service.

Shippers and employee sources said Harrison's changes are causing rail cars to sit idle or be re-routed across multiple states, delaying product shipments and leading to inadequate customer service. An analyst survey from Aug. 1 found some shippers switched freight to rival Norfolk Southern Corp and truckers. (Reporting by Eric M. Johnson in Seattle; editing by Bernadette Baum and Dan Grebler)