Late in May, the Surface Transportation Board (STB) accepted Union Pacific and Norfolk Southern’s revised merger application for consideration after the initial filing was rejected for being incomplete. But it’s not full steam ahead in the approval process as the STB paused the proceeding and environmental review while requesting more information from the railroads.
Those answers are due by the end of July and will specifically provide information on potential impacts, including competition and modal shifts–moving freight from trucks to trains.
“The key word is enhanced competition,” says Mike Steenhoek, executive director of the Soy Transportation Coalition. “For them to approve any kind of consolidation with the rail industry, it doesn’t need to maintain competition, it needs to enhance competition. And so they’re looking for things like, how is competition going to be enhanced? And if the railroad says, it’ll be enhanced because we’re more competitive with truck, they need to make a very extensive projection of what the ramifications of that are going to be, including how the trucking industry is going to respond.”
Opposition Grows
While the STB is proceeding with its process for approval, the organization of those who oppose the merger is growing.
A coalition of state attorneys general, led by Montana Attorney General Austin Knudsen, who was joined by attorneys general from Iowa, Kansas, Florida, North Dakota and South Dakota, called on the STB to reject the proposed merger. They warned that the deal could reduce competition, increase shipping costs, and raise prices for American consumers via downstream consolidation and control of jointly owned assets. Rail consolidation has historically affected agricultural shipping rates, timing of service, and more.
In May, the Agricultural Retailers Association joined the Stop the Rail Coalition. This merger has implications not just for grain leaving the farm, but fertilizer and chemicals coming to the farm. Rail competition, service reliability, rates and supply chain resilience all matter for producers, shippers and the ag input sector.
With 10 members, also including the American Farm Bureau Federation, representing transportation, agriculture, energy, labor and manufacturing, the coalition says the merger of UP and NS would:
- Reduce competition
- Hurt workers
- Drive up costs for American manufacturers, farmers and consumers
- Weaken the nation’s supply chain
So What’s Next?
STB will determine the next steps in the review, and has said it is working to ensure enhanced competition. Union Pacific anticipates a 2027 decision, but delays are expected, possibly pushing it to 2028.
Steenhoek says watching the process is reassuring to him in how the board with jurisdiction on the final decision is going through the neccesary steps.
“I think it’s really showing that the Surface Transportation Board is serious about doing due diligence, so I think that’s really healthy. So a lot of questions remain for this moving forward,” Steenhoek says.
But he also notes the political dynamics involved in this decision and those could very likely be different after the midterm elections and looking ahead to 2028.
