Union Pacific (UP) and Norfolk Southern (NS) have had two chances to make their case to the Surface Transportation Board (STB) for what would be the largest railroad merger in American history. Twice, they have now come up short.
Last week, the STB accepted the Union Pacific (UP)-Norfolk Southern (NS) merger application, but delayed the review process to collect vital information that is still missing from the railroads’ revised application, putting it on hold. A recent letter from six Attorneys General documents how the application “remains incomplete,” with key information and data missing on projected market shares, downstream consolidation, and control of important jointly owned industry assets. UP and NS have now twice submitted an extremely flawed proposal.
However, even worse than these errors are fundamental problems with the merger itself. If they can’t get the paperwork right, how can we believe they’ll pull off the largest railroad merger in history without causing a national supply chain meltdown? And those problems would be devastating for the America people: no real competition created no binding commitments on shared infrastructure, no meaningful pricing protections, and no enforceable guarantees for the workers and shippers who would live with the consequences for decades.
American freight rail moves the economy. It carries the grain that feeds the world, the chemicals that power industry, and the goods that stock store shelves from coast to coast. When that system works, few people notice. When it breaks, everyone pays. This merger would hand control of half of all U.S. freight rail to a single combined entity. In reviewing the proposed merger, STB must ask: does it serve the public interest?
It does not. Under federal law, UP and NS bear the burden of demonstrating substantial and demonstrable public benefits, including enhanced competition, which could not be achieved by other means. Their amended filing does not even come close to meeting that burden.
The applicants describe this transaction as “unambiguously pro-competitive.” That claim collapses under even minimal scrutiny. Not a single existing UP or NS customer would gain a new competitive rail option because of this merger. In fact, they will have fewer service options and face greater railroad monopoly power on a national scale.
For agriculture shippers, this is the whole story. Farmers depend on rail. The combined entity would control half of all freight rail traffic in the United States, with nothing in the application to protect shippers from the pricing power that kind of concentration creates. Existing UP or NS customers, including our Nation’s farmers, are facing fewer checks on rate increases, and less bargaining power. This is a risk farmers should not have to endure. The Board cannot approve a megamerger on the strength of good intentions. Enforceable, independently verifiable conditions are the bare minimum required.
The Committed Gateway Pricing proposal is the applicants’ meager answer to concerns about rate increases. This proposal offers little coverage with extensive carve-outs and for too short a period. It covers less than one percent of traffic, excluding intermodal shipments, unit trains, certain chemical freight including chlorine, and movements involving CN or CPKC. The proposal will expire in five years, while the competitive harm this merger creates is permanent. And even within its narrow scope, it still permits price increases.
Every major rail merger in modern history has produced service disruptions. No one has previously figured out how to merge two class I railroads without creating unintended delays, lost cars, clogged lines, and overloaded customer service centers — and no one has attempted a merger at this scale. The Service Assurance Plan in this application lacks both enforceability and accountability. The arbitration remedies proposed will be slow, and recovery will be capped. Contract traffic, which represents a significant share of chemical and industrial shipments, is excluded from arbitration entirely. If service fails after this merger closes, most affected shippers will have no meaningful path to recovering their losses.
Labor fares are no better. For Maintenance of Way workers and Locomotive Engineers, the people who keep the physical network functioning, there are no binding guarantees on job security, staffing levels, or work preservation. The application enables sweeping operational consolidation with no obligation to protect the workforce that makes the system run.
The applicants overstated benefits, minimized harm, and left critical questions unanswered, expecting the Board and intervening parties to fill in the gaps. Shifting the burden and leaving shippers and regulators trying to fix the unfixable. The Surface Transportation Board has an obligation to ensure this merger benefits American shippers, workers, and the communities that rely on competitive freight rail. This application does not meet that high bar, and is not in the public interest. The Board must reject it.
The Stop the Rail Merger Coalition represents a diverse cross-section of the American economy, including agriculture, manufacturing, energy, labor and transportation stakeholders.
