STB rejects Union Pacific – Norfolk Southern transcontinental railroad merger application as incomplete; what comes next?

The proposed combination of UP and NS is anticipated to have significant impacts for the rail industry and its various stakeholders, including other railroads, shippers, passenger rail systems, equipment providers, service providers, ports, and rail labor. Although we believe it is likely (but not certain) UP and NS will refile their application, the Board’s rejection decision provides interested stakeholders with a brief window of opportunity to assess (based on the initial application materials) how the proposed merger would impact their interests and whether they should participate in the STB merger review proceeding going forward if any revised application is filed and accepted by the Board as complete.

We have provided below our initial assessment of the key potential impacts of the proposed merger on various rail stakeholders.

• Other Railroads (including Short Lines). The other Class I railroads have all expressed public opposition to the proposed merger based on its alleged impacts on rail-to-rail competition and the combined railroad’s market power. The applicants (UP and NS) have stated in the application that short line railroads are likely to see increased traffic volume as a result of new single-line routes and traffic diverted from trucks. However, each short line will have to evaluate the potential competitive impact of the merger (especially in the areas where there is overlap between the UP and NS systems).
• Shippers.The applicants assert that shippers could see cheaper alternatives for transporting goods with lower overall costs. In addition to shipments which may be diverted from trucks, the applicants argue that the increase in single-line service and reduction in interline movements will eliminate costly delays. The applicants also assert that technological advancements could enable shippers to see more transparent pricing and supply chain visibility. However, shippers could be subject to longer haul-lengths which could result in higher rates, longer transit times, reduced car supply, and potential service disruptions immediately following the merger. Many shipper associations, particularly those with members in the chemical manufacturing and agricultural industries, have already publicly stated their opposition to the merger and their concerns about the resulting consolidation of market power (and pricing) in a transcontinental railroad. In particular, shippers should evaluate whether they face a risk of:
  • “2 to 1” scenarios where a shipper currently served by two competing railroads is left with only one carrier option
  • Vulnerability to changes in service terms (particularly if made unilaterally by the railroad)
  • Reductions in car supply or adverse impacts on equipment availability
  • Higher rates and loss of negotiating leverage
  • Diminished service reliability
  • Longer transit times during integration
• Equipment Providers.The initial application indicated that the merger would result in more efficient use of locomotives and rolling stock by the combined railroad, and would likely reduce near-term acquisitions of equipment by the combined railroad following the merger.
  • Rolling Stock. UP and NS acknowledged in the application that “[b]ased on the UP/NS growth plan and current rolling stock fleet of the two railroads, Applicants do not anticipate future acquisitions of rolling stock. Instead, the increased demand will be served by bringing inactive cars in the fleet into service.” Application Vol. II, at 671.
  • Locomotives. The application indicates that the merger would promote effective locomotive and rolling stock inspection and repair practices and leverage the existing “extensive mechanical departments” of each railroad. Application Vol. II, at 695. However, UP and NS anticipate that no locomotive acquisitions would be necessary for the railroads to handle to projected volumes of increased rail traffic by the end of year 3 following approval of the merger. Instead, UP and NS intend to store the majority of excess locomotives (with older models being sold) and would likely defer future asset replacements. See Application Vol. II, at 661.
  • Car Owners and Lessors. In general, the applicants indicated that the proposed combination of their systems would result in faster service, more productive use of assets, and lower equipment costs. The merger also would likely impact the use of railcar shops and maintenance facilities throughout the UP and NS networks as their operations are consolidated. That said, many in the industry have cautioned that the merger, if approved, could result in higher costs for car owners due to a higher concentration of freight on a single railroad.
• Service Providers. Providers of services, such as maintenance and signaling system services, are likely to face both opportunity and risk if the proposed merger proceeds. If the merger results in substantial investment in integration and capacity upgrades (as applicants claim), there may be higher demand for maintenance and other service contractors. Vendors should also consider potential standardization of vendor requirements and changes to procurement practices by the combined railroad.
• Ports. The applicants asserted that while the proposed merger is not expected to result in operational changes to connections with the ports served by UP and NS, there could be increased traffic moving to ports as a result of the transition to single-line service. See Application Vol. II, at 751-52.
• Passenger Rail Systems. Potential benefits of the merger to passenger rail systems include streamlined routes, expanded service opportunities from reduced freight capacity on certain routes, and enhanced communication with public transportation agencies. However, each passenger rail system which runs on either UP or NS tracks will have to evaluate how the proposed Operating Plan filed with the initial Application will impact their future operations.
• Underserved Regions. The initial application projected that typically underserved regions, including the upper Midwest, would see a boost in accessibility by rail, particularly in regions where trucking dominates because handoffs between railroads are too expensive. For example, the application cites data that indicates nearly 500 million tons of steel, grain, lumber, chemicals, and other products terminate or originate in the “watershed” market region. This accounts for approximately 45% of the total divertible marketplace for the U.S. and the proposed merger would likely reduce the need to rely on trucking for such shipments. See Application Vol. I, at 245-48.
• Labor Unions. UP and NS project that there could be approximately 900 net new union jobs by the third year following the merger. SeeUP and NS White Paper, at 3. However, labor unions appear to be split on their support for the proposed transaction, with some expressing significant concerns related to uncertainty regarding job protections for union members following the merger.

What is the standard of review for a railroad merger?

The STB is required to review the UP/NS application under a new set of rules– the “major railroad merger rules” – which require the applicants to affirmatively demonstrate that the proposed combination will enhance competition. This is the first time the Board will evaluate a merger under the new standard (adopted in 2001) rather than the prior standard applicable to a Class I railroad merger, which only required the parties to demonstrate the transaction would avoid competitive harms. Thus, applicants must demonstrate that the merger will enhance, not just avoid harm to, competition. If the merger is approved by the STB, UP and NS have stated that it will take up to three years to fully consolidate their rail operations.

Why did the STB reject UP/NS’s initial merger application?

Preliminary STB Review for Completeness. The application was subject to an initial 30-day review by the STB to determine whether it contained all of the information required by STB regulations to evaluate its potential impacts. The STB provided interested stakeholders with an opportunity to comment on the completeness of the application and the applicants with an opportunity to respond. See Board Decision, STB Docket No. FD 36873 (served Dec. 19, 2025). Several other Class I railroads and shipper associations filed comments urging the STB to reject the application as incomplete for various reasons. UP and NS urged the STB to accept the application as complete, a which determination would have initiated the extensive substantive review phase of the proceeding (which is anticipated to last more than a year) pursuant to a procedural schedule issued by the Board.

Application Incomplete. Based on its initial review of the application and the public comments filed by interested stakeholders, the STB determined that the application was incomplete in two respects (as described further below) and therefore rejected the application without prejudice to the applicants’ ability to refile the application to correct the deficiencies.

• Deficient Market Share Projections. First, the STB determined that the application failed to provide the market share projections for the combined railroad that are required by STB regulations to evaluate the transaction’s impact on rail service competition (including intermodal competition, intramodal competition, product competition and geographic competition) both within regions of the US and the nation as a whole. The applicants argued that their methodology for providing market share projections (which essentially involved adding the respective market shares of UP and NS in relevant lanes and commodity groups for the 2023 base year period) was consistent with STB regulations and prior precedent. The STB found this argument unconvincing since other parts of the application projected market share increases of approximately 15-26% depending on service type and the anticipated diversion of 1.8 million annual carloads of rail and truck traffic to the combined system upon full integration of their operations by year three. Therefore, the Board concluded that the application must provide detailed market share projections beyond the anticipated closing date.
• Incomplete Merger Agreement and Related Documents. Second, the STB determined that the applicants failed to provide a full copy of their merger agreement and all related exhibits, schedules and other contracts and written instruments. In particular, UP and NS failed to provide a copy of Schedule 5.8 to their merger agreement, which defines the materially burdensome regulatory conditions that might be imposed by the STB which would give UP the contractual right to walk away from the transaction. Although the applicants argued that this schedule was covered by applicable privileges and not relevant to the Board’s substantive review of the transaction, the STB accepted the argument of other Class I railroads that the failure to include this schedule and other related agreements or documents incorporated into the merger agreement rendered the application incomplete.

What are the next steps in the STB’s process?

The STB has directed UP and NS to notify the Board by February 17, 2026, whether and when they anticipate refiling the application to correct the deficiencies noted in the Board’s latest decision. The Board is requiring the applicants to refile a complete application (instead of incorporating any portion of its prior application filing by reference) in order to ensure there is no confusion about which version of the application would be subject to review. Any refiled application must be submitted by June 22, 2026.

At this point, UP and NS have not officially confirmed whether they intend to refile the application. Although the Board’s decision imposes some administrative burden on the applicants and will delay the overall merger review process by several months (depending on when the applicants elect to refile their application), it is not clear whether these relatively minimal cost and timing delays (when compared to the overall value of the transaction) would convince UP and NS to abandon their proposed merger. The Board’s decision also provided further guidance to the applicants on more minor “technical deficiencies” that could be corrected in any refiled application. Therefore, it is relatively likely in our view that any refiled application – as long as it provides the two categories of information identified in the Board’s rejection decision –will be accepted as complete by the Board and would kick off the substantive review process.

How can you participate?

We are actively monitoring the progress of the proposed merger for several clients. Interested stakeholders can participate directly in the proceeding to influence the STB’s review. The filing of a Notice of Intent to Participate in the proceeding would not obligate any party to actively participate and merely allows the filing party to be on the service list for other pleadings and decisions issued by the Board. Those directly impacted should be evaluating whether it is in their interest to oppose the merger and to seek conditions (either from the applicants and/or from the STB) in order to protect their interests. Interested stakeholders can file comments in the STB docket, request conditions, and seek discovery to evaluate the merger’s impacts.

If the applicants refile the merger application, the Board will set a deadline for (1) Notices of Intent to Participate and (2) public comment. Steps you can take now include:

1. Identifying the merger’s impact on your business
2. Evaluating whether to take a position in support of or opposition to the merger and whether to seek conditions
3. File a Notice of Intent to Participate to preserve your right to comment
4. Consider whether to submit comments
5. Evaluate opportunities to coordinate strategically with other stakeholders

To the extent any interested stakeholder may be impacted by the proposed consolidation of UP and NS operations, the Hogan Lovells rail team would be glad to discuss how you might be able to participate in the STB merger review proceeding directly or indirectly if the application is refiled.

Congress has signaled its intent to play an active role in shaping the outcome of the proposed UP–NS merger, with committees already preparing for hearings and exploring potential legislative avenues to assert oversight in the process. This heightened scrutiny underscores the political dimension of the transaction, as lawmakers weigh the merger’s impact on competition, labor, and regional economies. Hogan Lovells is well-positioned to guide clients through this evolving landscape, leveraging its relationships and expertise to ensure that stakeholders’ interests and perspectives are effectively conveyed to members of Congress as part of the broader review.

Authored by Ed Fishman, Emily Kimball, Allisa Newman, Ivan Zapien, Michael Bell and Jamie Wickett.