LESS THAN STANDARD SEPARATION BETWEEN SMT AND ACR WHEN SMT WAS AT WRONG ALT BECAUSE OF WRONG ALTIMETER SETTING.

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ON 7/MON/88 AT APPROX XA00 HRS; IFR FLT PLAN FROM 5B5 TO FRG WAS FILED WITH BURLINGTON FSS ON LANDLINE. ADVISED BURLINGTON FSS THAT WILL PICK UP IFR CLRNC WITH ALB DEP ONCE AIRBORNE ON 125.0. CONDITIONS AT BENNINGTON AT TIME OF DEP WERE CLEAR. ARPT WAS UNATTENDED AND NO BAROMETER SETTING WAS AVAILABLE. WITH 2 ALTIMETERS ON BOARD; BOTH WERE SET TO FIELD ELEVATION OF 830' MSL AND CHK WAS MADE TO CONFIRM ALTIMETERS AGREED WITH EACH OTHER AND VERIFIED A NORMAL TKOF WAS MADE WITH CLB TO APPROX 2500' MSL. WHEN RADIO CONTACT WITH ALB WAS ESTABLISHED AND IFR CLRNC WAS GIVEN AND READ BACK INITIAL CLB TO 6000' AND THEN TO 7000'. NO ALTIMETER SETTING WAS GIVEN ON INITIAL CONTACT. UPON CLBING THROUGH 6500' ON THE WAY TO CLRED ALT OF 7000'; ALB CALLED AND REQUESTED ALT LEAVING. WE COMPLIED WITH 'OUT OF 6.5 FOR 7000'.' LCL TIME APPROX XX00 HRS. THE ALB CTLR THEN ASKED US TO STOP ALT SQUAWK AND THEN FINALLY GAVE US LCL ALTIMETER SETTING. AT THAT POINT I REALIZED THAT WE WERE APPROX 400-500' TOO HIGH AND CORRECTED WITH DSCNT IMMEDIATELY. AS WE WERE STARTING TO DSND ANOTHER ACFT FLEW OVER US. NO TFC ADVISORY WAS GIVEN TO US. OTHER ACFT APCHED US FROM 7-7:30 POS AND COULD NOT BE SEEN UNTIL ALMOST DIRECTLY OVERHEAD. ALB THEN ASKED US TO SQUAWK ALT AND EVERYTHING AGREED. WE WERE THEN HANDED OVER TO BOS CENTER. SHORTLY AFTERWARD BOS SAID THAT ALB WANTED US TO CONTACT SUPVR UPON LNDG. WE CALLED AS REQUESTED AT APPROX XB07 HRS LCL TIME AND TOLD SUPVR ABOVE. CONCLUSIONS: CTLR TO GIVE LCL ALTIMETER SETTING ON INITIAL CONTACT AND MUST BE VERIFIED WITH READBACK--SHOULD BE MANDATORY. (YESTERDAY; 7/SUN/88; ON BOS CENTER FREQ; I HEARD A PLT READ BACK ALTIMETER INCORRECTLY 2 TIMES AND THIS WAS NOT NOTICED BY BOS. I POINTED THIS OUT AND BOS REPEATED ALTIMETER ON FREQ IN THE BLIND.) TFC ADVISORY MUST BE GIVEN AND CTLR VERIFY THAT PLT ACKNOWLEDGES. DON'T HAVE CTLR TELL PLT TO STOP ALT SQUAWK. IT IS ASSUMED BY CTLR THAT ACFT IS IN ERROR. INSTEAD; CTLR SHOULD HAVE ACFT MAKE AN IMMEDIATE TURN; AND THEN WHEN POSSIBLE CONFLICT IS OVER; VERIFY. CALLBACK CONVERSATION WITH RPTR REVEALED THE FOLLOWING: RPTR HAS BEEN CONTACTED BY FSDO; BOTH BY LETTER AND PHONE. THEY ARE INVESTIGATING THIS INCIDENT WITH AN EYE TOWARD AN ENFORCEMENT ACTION. RPTR WAS TOLD BY THE INVESTIGATOR THAT THE TAPES FROM ALB REVEALED THAT HE HAD NEVER BEEN GIVEN AN ALTIMETER SETTING AFTER DEPARTING 5B5. WHEN THE CTLR NOTICED AN APPARENT ALT DISCREPANCY SHE DID NOT FOLLOW THE REQUIREMENTS OF THE HANDBOOK BY GIVING A CURRENT ALTIMETER SETTING BEFORE TELLING RPTR TO 'STOP SQUAWK.' THE ACFT THAT PASSED OVERHEAD ABOUT 600' ABOVE WAS A CIVIL JET; SO SEP WAS APPARENTLY LOST. WHY ENFORCEMENT ACTION IS CONTEMPLATED IS A MYSTERY. RPTR STATED THAT THE NEXT TIME HE DEPARTED 5B5 AND RECEIVED HIS CLRNC IN THE AIR; ALB FAILED TO GIVE A CURRENT ALTIMETER SETTING UNTIL HE ASKED FOR IT.