800 326 9054The Surface Transportation Board has unanimously decided to reject Union Pacific and Norfolk Southern’s initial application for a proposed merger, after finding the submission to be incomplete.
The board on Friday said the two companies’ merger proposal lacked information necessary for it to consider their plan to create the nation’s first coast-to-coast railroad company. Still, UP and NS are allowed revise and resubmit their application, which could commence a new review from the board in the future, according to a press release.
“The board’s decision to reject the application should not be read as an indication of how the board might ultimately assess any revised application or future informational needs, should applicants decide to submit a revised application,” reads the board’s final decision.
The board found that the initial 6,700-page proposal the two companies filed on Dec. 19 is missing future several key market share projections — particularly around merger-related growth and diversions — and copies of schedules and other contractual documents, according to a press release.
In addition, the companies’ merger plan involves the acquisition of the Terminal Railroad Association of St. Louis, one of two terminal railroads operating in the St. Louis gateway (the other is already wholly owned by UP, according to one comment before the board). While the companies had classified this as a “minor transaction” under the plan, the board found that it should have been instead deemed a “major transaction.”
A Union Pacific spokesperson confirmed to Agri-Pulse by email on Friday that the company will provide the additional information the board requested.
The two railroads’ plan to create one unified company with approximately 50,000 miles of track has drawn interest from some shippers excited by the prospect of fewer delays, but concern from others about potential anticompetitive effects. BNSF and CSX — two other major railroads — have also opposed the idea.
Union Pacific CEO Jim Vena on Thursday, one day before the board’s decision, defended the proposed merger at the winter meeting of the Midwest Association of Rail Shippers. In a press release following the meeting, Vena responded to criticism raised by other major railroads, saying, “While our opponents appear to be stuck in the past, we are taking a bold step that will reinvigorate the rail industry and make the entire U.S. supply chain stronger.”
“We are not content to compete for share of a shrinking railroad industry,” Vena said. “America needs strong, innovative railroads to shoulder the weight of a growing U.S. economy, and we are going to deliver.”
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*Sourced from Agri-Pulse.