The Surface Transportation Board (STB) has picked up its review of the proposed $85 billion merger between Union Pacific and Norfolk Southern, ending a pause that started in late May. The deal aims to create the first coast-to-coast freight network in the U. S., combining two of the six remaining Class I railroads.
On Tuesday, the STB made clear that resuming the review doesn't mean the merger is approved. The board based its decision on whether the railroads had provided enough new information, like service protections and fixed pricing agreements for customers.
The STB has laid out a timeline for the merger review, expected to last until at least May 28, 2027. A final decision will come within 90 days of closing the record, though that date isn't set. Public comments will be part of the process, allowing a look at the merger's potential impacts.
Union Pacific and Norfolk Southern wanted a quicker review of their plan to give up control of the Terminal Railroad Association of St. Louis. But the STB rejected it, saying this should be considered within the larger merger context.
The STB also told the railroads to resubmit missing data by August 28. They had left out data they considered non-essential, which led to big gaps in the final analysis.
Those wanting to join the merger review must file by September 4. BNSF Railway, another Class I railroad, opposes the merger, stating that it does not meet STB's standards for competition and public interest.
This month, BNSF, along with CSX and Canadian Pacific Kansas City (CPKC), filed motions asking the STB to dismiss the merger proposal, arguing that Union Pacific and Norfolk Southern haven't shown it would benefit the public.
On the other hand, Canadian National (CN) dropped its opposition after gaining haulage rights in the Midwest and southern U. S. This deal also gives Union Pacific more rights over a CN-owned corridor near Chicago, addressing some competition worries.
Some lawmakers are urging the STB to reject the merger. On August 11, seven Republican attorneys general from different states asked the board to stop the deal, criticizing the proposed pricing setups. They specifically targeted the Committed Gateway Pricing mechanism, which could raise costs for many shippers by setting rates at the 70th percentile of similar traffic rates.
The STB's move to resume the merger review came after Union Pacific filed a report showing it collected over $90 million more in fuel surcharges than it paid in the second quarter. This filing noted surpluses by others as well: $3.6 million and $8.4 million respectively.
Critics argue that fuel surcharges, meant to cover rising oil costs due to geopolitical tensions, are often too high. Union Pacific defended its strategy, stating that fuel surcharges are a component of the overall cost negotiated with customers. The company reported these surcharges added 14 cents per share to its earnings last quarter.
