Market Matters Blog           01/22 08:24

   STB Ruled Union Pacific-Norfolk Southern Merger Application Incomplete

   The Surface Transportation Board determined the Union Pacific-Norfolk 
Southern merger application was incomplete and rejected it.

Mary Kennedy
DTN Basis Analyst

   On Jan. 16, the Surface Transportation Board (STB) reported on their website 
that, in a unanimous decision, the major merger application filed by Union 
Pacific (UP) and Norfolk Southern (NS) on Dec. 19, 2025, is incomplete because 
it does not contain certain information required by the board's merger 
regulations.

   "Under the law, the Board therefore must reject the application and does so 
without prejudice to Applicants refiling a revised application remedying the 
deficiencies identified in the decision. Today's decision is based solely on 
the incompleteness of the Dec. 19 application and should not be read as an 
indication of how the Board might ultimately assess any future revised 
application," said the STB.

   The board's regulations 49 C.F.R. part 1180 detail the information that must 
be contained in a major merger application. This includes: (1) Full system 
impact analyses that include, among other things, market share projections for 
the entity to be created by the transaction; and (2) The entire merger 
agreement, including the submission of any contract or other written instrument 
that pertains to the transaction. See the full STB Jan. 16 statement here: 
https://www.stb.gov/news-communications/latest-news/pr-26-02/.

   Class 1 railroads Canadian Pacific Kansas City (CPKC), Canadian National 
(CN), CSX Transportation (CSXT) and Burlington Northern Sante Fe (BNSF) and 
National Grain and Feed Association, along with other shippers, sent comments 
on Dec. 29, 2025, to the STB to reject the UP-NS merger application because it 
was incomplete. Read their comments here: 
https://www.dtnpf.com/agriculture/web/ag/columns/cash-market-moves/article/2026/
01/05/four-class-1-railroads-ag-group-say.

   Mike Steenhoek, executive director of the Soy Transportation Coalition, said 
in an email to DTN in response to the merger rejection, "The STB instructed UP 
and NS that an application of this nature must require certain information, but 
they had failed to do so. As a result, the application was deemed to be 
incomplete and therefore rejected. This does not mean that STB is rejecting the 
overall potential merger. In their statement, STB made clear that the ruling on 
the incompleteness of the application is not an indication on whether or not 
they will ultimately approve the merger."

   The Code of Federal Regulations (49 C.F.R. section 1180.1 a) states 
"Although mergers of Class I railroads may advance our nation's economic growth 
and competitiveness through the provision of more efficient and responsive 
transportation, the Board does not favor consolidations that reduce the 
transportation alternatives available to shippers unless there are substantial 
and demonstrable public benefits to the transaction that cannot otherwise be 
achieved. Such public benefits include improved service, enhanced competition, 
and greater economic efficiency. The Board also will look with disfavor on 
consolidations under which the controlling entity does not assume full 
responsibility for carrying out the controlled carrier's common carrier 
obligation to provide adequate service upon reasonable demand."

   Steenhoek reiterated that "the threshold that needs to be met in order to 
allow a merger to proceed is not whether it will maintain competition, but 
whether it will enhance competition. Proving a merger will enhance competition 
is certainly a higher threshold to achieve."

   Steenhoek added, "I continue to hear from agricultural rail shippers who are 
supportive of the proposed merger and others who are strongly opposed. Those 
who are supportive point to the prospect of increased fluidity and efficiency 
of rail service from one area of the country to the other as the rationale. 
Without question, it is a fundamental reality within supply chains that 
handoffs -- whether between modes of transportation or providers of 
transportation -- frequently result in additional costs. Freight does not like 
to be treated like a baton at a relay race. The fewer handoffs, the better. 
Those who have long promoted consolidation between the eastern and western 
railroads have argued that eliminating these handoffs between one railroad and 
another will reduce costs and enhance marketing options for shippers. Certain 
agricultural shippers argue that eastern shippers will have augmented access to 
western markets and ports. Similarly, western shippers will have increased 
access to eastern markets and ports.

   "Those agricultural shippers who oppose the proposed merger express how 
further consolidation in the rail industry will result in a reduction of 
competition among railroads and how this could result in increased rates and 
diminished service. It is in the best interest of agricultural shippers to have 
as many transportation providers as possible -- whether within a given mode of 
transportation or across modes -- competing for their business. When the number 
of transportation providers decreases, the concern among many is that the 
balance between a railroad and rail customer will shift away from the customer 
and toward the railroad. The negotiating power of the rail customer, as a 
result, will diminish."

   STB provided UP and NS an opportunity to respond by Feb. 17 regarding 
whether they will refile the application. The revised application must be 
submitted no later than June 22, 2026. So far, there has been no comment by the 
UP or NS, but it is expected they will refile.

   Link to Code of Federal Regulations (49 C.F.R. section 1180.1): 
https://www.ecfr.gov/current/title-49/subtitle-B/chapter-X/subchapter-B/part-118
0/subpart-A/section-1180.1

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow her on social platform X @MaryCKenn




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