ON January 16 the US Surface Transportation Board (STB) issued a decision unanimously rejecting the merger application filed by Union Pacific (UP) and Norfolk Southern (NS) “because it does not contain certain information required by the board’s regulations.” This includes “future market share projections showing the combined effects of merger-related growth, diversions, and merger-influenced and other changes to market conditions that applicants anticipate.”
According to the STB, the submission from UP and NS includes their Agreement and Plan of Merger, but does not include “certain schedules and documents that are expressly made part of the merger agreement and that define applicants’ obligations under it.” UP and NS have made no attempt to justify why these materials were withheld from the board, the STB says.
UP and NS have until February 17 to inform the STB if they intend to resubmit their application. On January 16 UP and NS issued a brief statement confirming their intention to do so.
Filed with the STB on December 19, the 6700-page application to create the first transcontinental freight railway connecting the east and west coasts of the United States provides “comprehensive and compelling” details of how the end-to-end merger would enhance competition and deliver a wide range of public benefits, according to UP and NS.
The merger would provide a faster, more efficient single-railway service to freight shippers, eliminating time-consuming interchanges and an estimated 2400 wagon and container handling operations as well as 96,000 wagon-km each day.
UP and NS say that this would enable rail to compete more effectively with long-haul trucking, enabling the modal shift of an estimated 2 million truckloads of freight from road to rail each year.
Responding to the STB’s invitation to comment on the completeness of the application, competing Class 1 railways BNSF, CN, CPKC and CSX claimed that it was incomplete, as did the National Grain and Feed Association (NGFA), representing a major customer base for UP and NS. At that time, UP and NS maintained that the application contains all the information required by STB merger rules, “and presents a prima facie case that the proposed transaction is consistent with the public interest.”
