STB Rejects UP-NS Merger: $85B Deal Halted Over Incomplete Filing

WASHINGTON D.C. – The U.S. Surface Transportation Board (STB) has unanimously rejected the initial merger application from Union Pacific and Norfolk Southern, finding the extensive submission to be incomplete. This decisive regulatory action halts the official review of the proposed $85 billion rail industry consolidation before it could even begin, forcing the two Class I railroads to address significant informational deficiencies.

In a major setback for what would be a historic merger, the Surface Transportation Board announced today its unanimous decision to return the application submitted by Union Pacific Railroad (UP) and Norfolk Southern Railway (NS). The board determined that the filing did not contain certain critical information required by its regulations, rendering it unfit for review. This move effectively freezes the regulatory clock on the deal, which was anticipated to undergo a rigorous 12- to 18-month approval process.

The rejection follows formal objections raised by rival Class I carriers. In a January filing, Canadian National (CN) argued that the nearly 7,000-page application lacked crucial competitive disclosures necessary for stakeholders to properly assess the merger’s potential impact. Specifically, CN pointed to the absence of a clear methodology for identifying routes where two parallel tracks would be consolidated into one, and a failure to provide complete lists of shippers who could be adversely affected by reduced competition or service changes. The STB’s decision validates these concerns, demanding a higher level of detail from the applicants.

The path to this roadblock began on December 19, when UP and NS filed their application, heralding the combination as a pro-competitive move that would enhance service reliability and shift freight from highways to rail. However, competitors quickly mobilized. Both BNSF Railway and CN filed motions urging the STB to compel more transparency. BNSF accused the applicants of “blocking efforts to see what they actually believe and discuss internally” regarding potential harms to competition, service disruptions, and whether the claimed public benefits were achievable without a merger.

Key Takeaways

• The anticipated 12- to 18-month regulatory review of the $85 billion merger is now indefinitely delayed until a complete application is refiled and accepted by the STB.
• Rival railroads, notably Canadian National and BNSF, have successfully influenced the regulatory process by highlighting specific, critical omissions in the initial filing.
• The STB is demonstrating a stringent enforcement of its post-2001 merger rules, placing a heavy burden of proof on the applicants to demonstrate clear public and competitive benefits from the outset.

Editor’s Analysis

This is more than a simple procedural stumble; it is a clear signal from the STB that the era of rubber-stamping major rail consolidations is over. By rejecting the application based on arguments first raised by competitors, the Board is forcing UP and NS to publicly provide the very data that opponents will use to challenge the deal on its merits. This ruling puts the applicants on the defensive, stalls their momentum, and suggests the path to approval will be far more contentious and data-driven than they might have hoped, setting a formidable precedent for any future Class I merger aspirations.

Frequently Asked Questions

Why did the STB reject the Union Pacific and Norfolk Southern merger application?

The STB found the application was incomplete because it lacked required information. This included technical details on how track routes would be consolidated, complete lists of potentially affected shippers, and other critical competitive disclosures needed for a full review.

What is the value of the proposed merger and what happens next?

The merger is valued at approximately $85 billion. The regulatory review process is now on hold. Union Pacific and Norfolk Southern must revise their application with the missing information and resubmit it to the STB before the review can officially begin.

Did other railroads play a role in this decision?

Yes. Competitors Canadian National (CN) and BNSF Railway filed motions with the STB after the initial application was submitted. They argued that it lacked the necessary transparency and data, which directly contributed to the STB’s decision to deem the application incomplete.