When a company’s proposal can’t meet a legal standard, it has only one move: argue for a lower standard.
That’s exactly what is happening with Union Pacific’s (UP) proposed $85 billion mega-merger with Norfolk Southern (NS), now under review by the federal Surface Transportation Board (STB).
Federal law requires railroad mergers to be in the “public interest.” That’s a different, tougher standard than applies to mergers in other industries because of the essential role rail plays in the American economy. In the 1980s and 1990s, financially struggling railroads spurred a massive wave of consolidation. Keeping rail lines active was generally in the “public interest,” so it made sense for the federal regulator to approve those mergers.
But by 2001 only seven large railroads (called “Class I’s”) remained, and crippling service problems had accompanied the deal that created what is now the Union Pacific Railroad. The STB recognized that further concentration would raise real competition and service concerns. In a smart move, the STB listened to shippers and updated its rules to require that any future Class I mergers demonstrably “enhance” rail competition. Competition is already limited, so further mergers would face a higher bar to meet the public interest standard.
This is the legal and competitive backdrop for the UP/NS application. The railroads filed their merger application in December 2025. The STB rejected it as facially incomplete. UP and NS tried again on April 30th of this year. The board accepted that version as minimally sufficient but immediately froze review, calling key parts of the application “unclear or underdeveloped” and ordering UP and NS to fill in the gaps before review would commence. The board also hinted that UP and NS needed to offer more to enhance competition.
Seven states – Montana, Florida, Iowa, Kansas, North Dakota, South Dakota, and Tennessee – asked the STB to reject the application as failing to meet the public interest standard on its face (the prima facie standard in legal jargon). We do not hesitate to stand up to powerful, well-financed corporate interests and won’t hesitate to do so again when a proposed action will harm our citizens, especially farmers and manufacturers working to get their products to market. Our request to reject the application was echoed by large shipper organizations, rail unions, and other railroads.
UP and NS’s response to our request that the STB reject the merger is telling. In addition to repeating shop-worn arguments about how merging two of the remaining four American Class I railroads will somehow benefit consumers, UP and NS asserted for the first time (sheepishly in a footnote), that they don’t have to show that their proposed deal “enhances competition.” It’s hard to say whether this is a veiled threat to challenge the STB’s 2001 rules in court or an effort to persuade the STB to lower the bar. What can be said for certain is that this is a tell-tale sign that even UP and NS recognize that their proposed merger does not “enhance” competition. Again, lawyer’s trick—if you can’t meet the required standard, argue for a lower standard.
For now, the STB has decided to wait until later to decide whether the mega-merger, on its face, enhances competition and is in the public interest. The board was hesitant to reject it outright now because the issues “involve significant factual questions” and application of its 2001 merger rules “for the first time.” Nevertheless, the board emphasized that its decision isn’t “any determination on the merits of the Transaction nor is it an endorsement of Applicants’ arguments, analyses, or positions.”
Board member Richard Kloster, recently appointed by President Trump, provided more color. In a statement accompanying the STB’s decision, Kloster referenced “significant, compelling arguments” against the merger that UP and NS “will need to address in detail.” He called the UP/NS application lacking in “transparency and depth” and said the railroads “do not offer a very robust plan” for protecting competition. He rightly described UP and NS as “letting the line out slowly” – trickling out token concessions to see what they can get away with. Kloster’s statement corroborates the public interest concerns that stakeholders have raised since the merger’s announcement.
We cannot fault the board for wanting to be thorough and deliberate, but we’ve already seen enough. A UP/NS merger doesn’t serve farmers. It doesn’t serve shippers. It doesn’t serve the industries that President Trump’s America First policies have revitalized. It serves UP’s bottom line. Inflated prices will lead to extra profits. The STB should reject it.
Austin Knudsen is the Montana Attorney General; Kris Kobach is theKansas Attorney General; Brenna Bird is the Iowa Attorney General; James Uthmeier is the Florida Attorney General; and Drew Wrigley is the North Dakota Attorney General.