Surface Transportation Board Puts Union Pacific's $85 Billion Norfolk Southern Takeover Through Its First Test Under the 2001 Merger Rules

The Surface Transportation Board, the federal agency that regulates freight railroads, is reviewing Union Pacific’s $85 billion takeover of Norfolk Southern. Its final decision is due by August 28, 2027.

The deal would join Union Pacific, one of the two big railroads in the West, with Norfolk Southern, one of the two in the East, and create the first single-company transcontinental railroad in the US: more than 50,000 route miles in 43 states. Shareholders of both companies approved it in November 2025 by more than 99%. The board now has to decide whether it’s in the public interest, and it’s using a standard no railroad merger has faced before.

Photo: James St. John, CC BY 2.0 via Wikimedia Commons

Why the 2001 rules matter

The board last rewrote its major merger rules in 2001, after the mergers of the 1990s left four big railroads in the US and service on some of them collapsed. No major merger has been reviewed under them until now. The Canadian Pacific and Kansas City Southern merger approved in 2023 was reviewed under a waiver that kept the older rules.

The difference is the burden of proof. Under the 2001 rules a merger of large railroads has to enhance competition, not just preserve it. Applicants also have to show how they’d keep service running during integration and account for the likely next round of mergers the deal could set off.

So far the board has made the applicants work. It rejected the first application, filed on December 19, 2025, as incomplete on January 16. It accepted a revised one, filed on April 30, on May 28, then put the case on hold and asked for more on competition, access for shippers who’d go from two railroads to one, how much freight would move from trucks to rail, gateways where railroads swap traffic, and passenger rail. It also decided the deal needs a full environmental impact statement.

The railroads filed the extra material in July. On August 18 the board restarted the review and set a schedule:

• comments, protests and competing applications due November 18;
• replies due February 16, 2027;
• a public hearing in the spring and final briefs on May 28, 2027;
• the decision by August 28, 2027.

Who’s against it

On August 6 BNSF, CSX and a coalition of chemical, fuel and fertilizer shippers asked the board to throw the application out without a full review. Canadian Pacific Kansas City, rail unions and the Rail Passengers Association backed them. Seven state attorneys general, from Montana, Iowa, Florida, North Dakota, South Dakota, Tennessee and Kansas, wrote urging rejection.

Their argument is that the main competition offer, a pricing program for traffic handed between the merged railroad and others at interchange points, doesn’t create new rail-to-rail competition. BNSF said the application “lacks transparency and depth.”

The board turned the motions down unanimously on September 18, saying the decision “does not reflect any determination of the merits.” Richard Kloster, sworn in as a member in June, added a separate statement: “I believe Applicants still have a long way to go to show that the Transaction is in the public interest.” Union Pacific says more than 500 customers support the deal and called the opposition “fear of competition.”

The rival railroads’ interest is plain. If this merger goes through, BNSF and CSX face pressure to combine too. That’s the downstream effect the 2001 rules make the board weigh.

A board shaped by the White House

The board has five seats and four members. In August 2025 the White House fired Robert Primus, a Democratic member, without citing any of the grounds in the statute. He sued. In June the Supreme Court’s ruling in Trump v. Slaughter, which lets the President remove members of the Federal Trade Commission at will, made his case much harder, since the board’s removal language is nearly identical. We covered what that ruling did to other independent agencies in a separate post. The President has publicly backed the merger.

The current members are chairman Patrick Fuchs, vice chairman Michelle Schultz, Karen Hedlund and Kloster. So far they’ve applied the rules strictly, on the record, and without dissent.

What the decision sets

The board can approve the deal, reject it, or approve it with conditions such as trackage rights for rivals or guaranteed access for captive shippers. Whatever it decides becomes the first reading of the 2001 rules, and every future railroad merger will be measured against it. The agreement between the companies runs to January 28, 2028, with extensions if the review takes longer. The next marker is November 18, when opponents file their full case.