SEPTA has formally rejected binding arbitration of its contract dispute with commuter railroad engineers and electricians, moving a step closer to a possible strike that would halt Regional Rail service early next year.

In letters Thursday to Daniel Rainey, chief of staff of the National Mediation Board, SEPTA's labor-relations chief Stephanie K. Deiger, said the transit agency "respectfully declines the proffer of arbitration."

The Brotherhood of Locomotive Engineers and Trainmen, Division 71, which represents about 220 SEPTA engineers, and International Brotherhood of Electrical Workers, Local 744, which represents about 200 electricians, had both agreed to arbitration.

The next step, under federal railroad labor laws, is for the mediation board to release the parties from mediation. That would start a 30-day "cooling off" period and a 240-day dispute-resolution period required before a strike or lockout would be permitted.

- Paul Nussbaum