Union Pacific kicks off regulatory review for $85 billion coast‑to‑coast rail merger

By Sabrina Valle

NEW YORK, Dec 19 (Reuters) – Railroad operators Union Pacific and Norfolk Southern on Friday filed a nearly 7,000‑page merger application with the U.S. Surface Transportation Board (STB),  drawing fresh scrutiny from rivals on their plan to create the nation’s first coast‑to‑coast freight railroad.

If approved by regulators, the merger would reshape how goods move across the United States, leaving the remaining two top U.S.-based freight railroads to compete with a transcontinental giant.

 Friday’s filing triggers a 30‑day period in which the railroad regulator can seek more information or propose initial remedies as it reviews the deal. It also opens a formal window for stakeholders to respond to the $85 billion transaction, including shippers, labor unions, consumer advocates and local officials, who can support, oppose or seek conditions as the STB evaluates its competitive and public‑interest impact.

Union Pacific’s merger proposal in July surprised analysts and industry executives, who said such an initiative would be unlikely under earlier administrations because of tougher antitrust scrutiny.

The proposal received public support from President Donald Trump. Union Pacific was among the corporations that contributed to Trump’s White House ballroom project, public disclosures show. UP Chief Executive Jim Vena and Trump have said creating a single East‑West railroad aligns with the president’s vision to “make America great again,” after a meeting between the two at the Oval Office in September.

        OPPOSITION FROM COMPETITORS 

The proposal drew strong opposition from competitors in an already concentrated industry. Four Class I freight railroads dominate the U.S. market, with Union Pacific and BNSF controlling most western routes and Norfolk Southern and CSX covering the East.

UP and NS argue the combination would eliminate the East‑West handoff barrier — especially the costly, delay‑prone Chicago interchanges — by providing single‑line service. They say this would reduce handoffs, improve transit times and help rail compete more effectively with long‑haul trucking.

Union Pacific’s Vena said on Friday he is confident the deal will get regulatory approval.

“If we stand still, we are going to get left behind. I’m not into that. The benefits of this transaction are undeniable,” Vena said.

BNSF, owned by billionaire Warren Buffett’s Berkshire Hathaway, said the merger will reduce shipper choices and lead to higher rates. BNSF CEO Katie Farmer said the company is still reviewing the filing and will have more to say soon, but added that so far it “does not change BNSF’s opposition to the proposed merger.”

“The transaction poses a significant threat to the U.S. economy and the American consumer through its long-term competitive harms,” she said in a note.

Canadian Pacific Kansas City (CPKC), one of the two large Canadian railroads operating in the United States, echoed BNSF’s concerns, saying the merger would pose extraordinary and far‑reaching risks to customers. The company said it will be active in the review and submit comments to STB.

“Approval of this merger is not inevitable,” CPKC said in a note.

CSX, which earlier this year tried and failed to negotiate a merger, is reviewing the filing and will participate in the STB process to ensure it remains well positioned to compete, the company said.

But the future of rail consolidation is still fluid, said Anthony Hatch, an independent analyst. CSX, BNSF and Canadian Pacific could eventually pair up in response to the UP–NS bid, depending on what competitive concessions, market access or operating advantages the STB ultimately grants, he said.

“If these railroads get enough market access through the STB process, they may decide they can remain independent — and if they don’t, they risk being outmatched unless they merge,” he said. “It is too soon to know.”

The UP–NS transaction is the first major railroad merger to be reviewed under the stricter STB framework adopted in 2001, which requires railroads to prove a merger will enhance competition — not just preserve it — and show clear public‑interest benefits, Hatch said. 

(Reporting by Sabrina Valle in New York; Editing by Nick Zieminski and Andrea Ricci )