Union Pacific and Norfolk Southern are pushing back against early challenges to their proposed merger, arguing that their application has provided the Surface Transportation Board (STB) with more than enough evidence to move the regulatory process into a full review.
In a response filing submitted Thursday, the two railroads said their application reflects months of extensive work and contains sufficient evidence for the STB to determine that the proposed combination is in the public interest. The companies dismissed opponents’ preliminary objections as an attempt to stop the transaction before regulators have had the opportunity to fully assess its potential benefits.
The filing comes after the STB issued a procedural schedule on Aug. 18 for the merger proceeding. That schedule formally moves the application into the next phase of regulatory review and sets deadlines for public comments, evidentiary submissions and the board’s assessment of the proposed transaction.
“We’ve more than cleared the threshold to move review of this transaction forward, and opponents’ efforts to kill the deal do not change the facts,” Union Pacific (NYSE: UNP) Chief Executive Jim Vena said in a statement.
Vena said the companies had presented what he described as an unprecedented volume of evidence showing how the merger could benefit employees, customers and the wider U.S. economy.
The response arrives as opposition to the proposed transcontinental combination continues to build. A growing group of elected officials, state attorneys general and shippers has raised concerns about the deal and its potential effects on the rail market.
Union Pacific and Norfolk Southern, however, maintain that combining their networks would create a more efficient single-line railroad. They argue that the deal would improve service for agricultural and industrial customers, strengthen competition and encourage more freight to move from highways onto rail.
Norfolk Southern (NYSE: NSC) President and CEO Mark George said the transaction is designed to support growth throughout the rail industry while making transportation more affordable for shippers and consumers.
“Our application clearly shows this merger is about growth,” George said. “While delivering great public benefits, including better affordability for shippers and, ultimately, consumers.”
George also highlighted the companies’ proposal to guarantee unionized employees jobs for life and add positions as demand and service levels increase. According to George, bringing the two networks together could help reverse rail’s declining share of freight transportation compared with trucking while creating additional opportunities for employees, customers and communities.
Railroads outline expected benefits
Union Pacific and Norfolk Southern identified several measurable benefits they say would result from the proposed combination:
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New and faster single-line service opportunities across more than 88,000 county-to-county lanes.
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Expanded single-line service across 10,000 existing lanes.
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Supply-chain reductions of 24 to 48 hours on affected movements.
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Approximately $1 billion in annual operating savings for the combined railroad.
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Approximately $3.5 billion in annual savings for customers that move freight from truck to rail.
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The diversion of 2.1 million truckloads to rail, reducing highway congestion and emissions while improving driver safety.
The companies said the combined railroad would be able to deliver more efficient service across a significantly broader network, particularly for freight that currently requires an interchange between the two systems or involves multiple rail carriers.
Commitments aimed at competitive concerns
The merger application also contains several commitments intended to address concerns about competition.
Among them is an Open Gateway Commitment modeled on conditions adopted by the STB in recent railroad merger proceedings. The proposal also includes Committed Gateway Pricing and new access rights for Canadian National Railway (NYSE: CNI) between St. Louis and Kansas City.
Union Pacific and Norfolk Southern additionally submitted an analysis examining the potential competitive effects of the transaction, along with a Service Assurance Plan designed to protect customers throughout the implementation of the merger.
The STB’s prima facie review focuses on whether a merger application contains enough evidence to support a finding that the proposed transaction is consistent with the public interest. Union Pacific and Norfolk Southern contend that their filing goes beyond that threshold and offers compelling evidence of benefits for shippers, employees and communities.
The procedural schedule issued by the board will now determine the next stages of the review. Those stages include further filings and opportunities for public participation before the STB conducts its substantive assessment of the proposed combination.
A final decision is expected in late 2027.
