Regulators turn down requests for summary denial of UP-NS merger

Union Pacific and Norfolk Southern, in their response, noted that to make a prima facie case, the application was only required to provide facts that, if viewed in their most favorable light, supported the requirement that the transaction was in the public interest. 

Among other points, the UP-NS response also said the merger would increase competition because other railroads will have to respond to the benefits created by the merger — and that the motions were an attempt to “litigate the merits” of the application before the opponents’ comments faced the scrutiny of a full proceeding.

In saying it would be aided by “a more complete record,” the board noted that evaluation of the application will be the first application of the major merger rules adopted by the STB in 2001. It also said those who filed motions and comments should “renew any challenges or arguments regarding the merits of the Transaction in their opening comments.” Under the schedule previously outlined by the board, such challenges or comments are due Nov. 18.

The decision, the board said in the release, “does not reflect any determination of the merits of the proposed transaction, nor is it an endorsement of Applicants’ arguments, analyses, or positions.”

Parties react

Union Pacific welcomed the decision. 

“We are pleased the Surface Transportation Board unanimously rejected our opponents’ challenges to the merger application,” spokeswoman Robynn Tysver said in an email. “Union Pacific and Norfolk Southern submitted an unprecedented amount of evidence showing this transaction is good for our employees, customers, and America. Our opponents’ attempts to avoid review of this deal are not based on facts but fear of competition.”

BNSF spokesman Zak Andersen said in a statement that the railroad continues to believe the UP-NS application is not in the public interest, but added, “we respect the Board’s desire to further develop the record, and are encouraged by its acknowledgment that the motions made by BNSF and others raise important questions and issues that will continue to be raised during the merits phase of the process. We are also encouraged that it was recognized within the decision what the majority of stakeholders have been saying all along; the application lacks transparency and depth while offering mitigating conditions of little benefit to address the scope of competitive harms we believe this merger represents.”

At CSX, spokesman Austin Staton said, “While we are disappointed with the outcome of Friday’s decision, we appreciate the Board’s recognition of the important questions and issues that the various prima facie challenges presented. Our position is unchanged, and we look forward to providing additional evidence and argument in our Nov.18 comments.”

An official with one of the six shipper groups that filed a motion to deny, the American Fuel & Petrochemical Manufacturers, said in a statement that the STB decision a “procedural step” and said the board “expressly stated … significant questions regarding the applicants’ proposal remain unresolved.”

Rob Benedict, the organization’s vice president of petrochemicals and midstream, also said “AFPM continues to have serious concerns that the merger could reduce competition, diminish service for freight rail customers and increase transportation costs throughout the supply chain. … Union Pacific and Norfolk Southern still have substantial work to do to demonstrate that this proposal would enhance competition and serve the public interest as the Board’s review continues.”

Among those filing comments in support of the motions were CPKC, a coalition of rail unions, and the Rail Passengers Association, which supported the motion from the shipper groups while making its own arguments regarding passenger issues.

A CPKC spokesman reiterated comments by Chief Executive Keith Creel at a recent investor conference that “this regulatory body is going to make their decision based on the truth. And I don’t think the truth ever is going to enable a yes to that merger.”

Subscribe to FreightWaves’ Rail e-newsletter and get the latest insights on rail freight right in your inbox.

Read more:

Union Pacific blasts rival railroads’ trackage rights requests

Rail freight slides in rare off-week

Norfolk Southern: New intermodal era about removing rail friction

Container delays by rail increase at busiest U.S. ports

U.S. container imports climb 3.8% to 2.6 million TEUs, 3rd highest monthly level