The Surface Transportation Board (STB) unanimously rejected three motions to dismiss Union Pacific and Norfolk Southern‘s revised merger application.
But the board’s newest member used the moment to fire a warning shot across the railroads’ bow.
On Friday, the federal regulator denied motions filed Aug. 6 by competing railroads BNSF Railway, CSX and five shipper associations arguing that the merger proposal failed to meet the “prima facie” threshold under the board’s 2001 merger rules. A prima facie review evaluates whether a merger application contains sufficient evidence to support a finding that the transaction is consistent with the public interest.
The 4-0 vote was procedural. The board stressed the five-page decision “does not reflect any determination on the merits” and “is not an endorsement” of the railroads’ arguments.
The sharper signal came in a separate concurrence from the STB’s Richard Kloster, a Trump administration appointee sworn in June 5.
“First, I believe that there has been a lack of transparency and depth in the application. Applicants have submitted thousands of pages of documents, yet they do not offer a very robust plan for how they will address competitive concerns or mitigate potential harms,” Kloster wrote. “They also rely heavily on the benefits to intermodal shipments, a market segment which, by today’s standards, is already competitive.”
Kloster noted the motion filers faced “a very high bar” and called their arguments “significant” and “compelling.” However, he criticized a “letting the line out slowly” strategy of dribbling out minimal concessions.
“Applicants should come with their best case in the application filed to justify the merger,” Kloster said. “The Board should not have to sift through vague language.”
The railroads “still have a long way to go to show that the Transaction is in the public interest,” according to Kloster, who said he remains “open-minded.”
Union Pacific and Norfolk Southern have had themselves a long back-and-forth with the STB since the parties announced their intent to merge last summer.
The regulator rejected the railroads’ original application as incomplete in January. UP and NS refiled in late April, with the board accepting the do-over a month later.
Despite the acceptance, the STB put the merger on hold, requesting additional information from both railroads. The companies offered more customer assurances in July, alongside more service protections that would enable customers to obtain temporary access to alternative rail services in the event of performance declines.
In August, the regulator removed the hold on the proposed $85 billion merger.
Union Pacific and Norfolk Southern cite 500-plus supportive customers, more than 2,000 filed statements, and backers including trucking giant Knight-Swift and a claim of 2 million fewer truckloads on highways. President Donald Trump has also openly supported the idea of a merger, and the transcontinental railroad promised by the rail giants.
On Tuesday, UP and NS flaunted a “jobs-for-life deal” with SMART’s Railroad Mechanical Departmen, which gives the merger backing from most of their unions.
But the deal still has plenty of opposition, particularly from top industry rivals that railed against the STB’s decision. In the wake of the announcement, BNSF, CSX and Canadian Pacific Kansas City (CPKC) all indicated their stances remained unchanged.
The five shipper associations that joined BNSF and CSX in their complaint—the American Chemistry Council, American Fuel and Petrochemical Manufacturers, the Alliance for Chemical Distribution, The National Industrial Transportation League and The Fertilizer Institute—called the filing “a document built on smoke and mirrors.”
Commenters can renew arguments on the merits of the proposed merger, which are due by Nov. 18, with responses to comments due by Feb. 16, 2027.
CSX slashes 1,100 track maintenance jobs
The merger debate is unfolding as CSX is cutting roughly 1,100 maintenance-of-way jobs, according to a labor group.
The Brotherhood of Maintenance of Way Employes Division (BMWED) said 165 permanent positions were abolished outright, with more than 1,000 workers anticipated to be furloughed by mid-November.
An April poll by McLaughlin & Associates found that 49 percent of likely voters expected a merger between Union Pacific and Norfolk Southern to decrease railway competition and result in job cuts.
Hundreds of affected workers are in West Virginia, Ohio and Kentucky. In one cited case, four employees would cover a 142-mile stretch of mainline plus multiple yards now handled by a dozen, with furloughed workers idle until February.
“This creates a huge safety risk to the community. We were just dumbfounded honestly,” BMWED general chairman Brian Thompson told Charleston, W.Va. news outlet WCHS-TV, warning of safety incidents and derailments from deferred maintenance.
