A leading railroad industry spokesman yesterday lambasted the Interstate Commerce Commission for recent actions he said will leave the industry "dead in the water."

William H. Dempsey, president of the Association of American Railroads, told the Surface Transportation Subcommittee of the Senate Commerce Committee that the ICC was ignoring recent legislation aimed at relaxing railroad regulation. Instead he said, it was adopting "an even more restrictive regulatory scheme than has been the case in the past."

ICC chairman Dan O'Neal called Dempsey's remarks "totally off base." He said what Dempsey "is really arguing is that he doesn't like what Congress did with its reorganization legislation."

Under questioning from members of the subcommittee, Dempsey also offered to debate with chairman O'Neal at a future hearing of the committee. Sen. Russell Long (D-La.) is chairman of the subcommittee.

Dempsey sharply criticized recent ICC recommendations that the industry move away from general rate hike requests and shift to specific requests for individual commodities.

"The industry cannot properly function under these newly announced policies," Dempsey said. "Although there may be some situations where selective increases make sense, given today's inflationary climate every regulatory utility in the United States, not just the railroads, must rely upon general increases to promptly offset their cost escalations."

Dempsey said the cost increases are so large, and come so fast, that "it is ridiculous to believe they can be offset by selective rate increases on individual commodities."

He said that overall net operating income for the industry had dropped to a 45-year low, and without better performance, "there is no way (the railroads) can provide sufficient freight cars, modern track, and efficient terminals, short of massive doses of taxpayer subsidies."

Dempsey also criticized the ICC for recent car service orders, demanding that the railroads quickly move critically-needed freight cars to the areas where they are needed.

"The fact is," he said, "That car service orders combine some of the worst features of government regulation. Car service orders are too inflexible to allow carriers and shippers to devise their own best approaches."

Dempsey called on the subcommittee, which is studying proposed legislation that would allow greater price flexibility, that such flexibility "will be a substancial step ahead."

ICC's O'Neal, however, told the subcommittee that it would be a mistake to allow railroads too much pricing flexibility at this time.

"In a time when the country is searching for an answer to the inflation dilemma, "and in an industry where portions of its business are subject to no effective competitive restraints on pricing, such a remedy seems clearly inapporpriate and probably inconsistent with overall national goals," O'Neal testified.

O'Neal favored flexible rail pricing, but only on routes where competition is heavy. He also called for increased use of peak period pricing in an attempt to help alleviate freight car shortages.