UP-NS Merger Faces Growing Wall of Republican AG Opposition

Seven Republican attorneys general say the UP-NS merger’s competition remedy covers less than 1% of rail traffic — here’s the latest on America’s biggest rail deal.

The proposed $85 billion Union Pacific-Norfolk Southern merger — already the most scrutinized transaction in American transportation history — faced its most politically inconvenient week yet, as seven Republican state attorneys general filed a letter with the Surface Transportation Board arguing the railroads’ competition remedy would cover less than 1% of US rail traffic.

The Latest Objection

In a letter entered into the STB’s public record August 11, the attorneys general — from Montana, Florida, South Dakota, Tennessee, Kansas, North Dakota, and Ohio — argued the railroads’ revised application relies on a pricing remedy preserving only a narrow slice of existing competitive options while potentially raising rates for shippers. The proposed Competitive Gateway Pricing formula would set rates at the 70th percentile of UP and NS’s own comparable traffic rates, rather than a median or below-average benchmark, and by the coalition’s own math would apply to just 0.9% of US rail traffic. The AGs noted UP and NS have themselves admitted the remedy “would not create competitive service,” writing: “If UP and NS admit CGP would not create competitive service, we should take them at their word.”

A Widening Coalition

This follows earlier warnings from six state AGs in May calling the merger application “incomplete,” and from a separate coalition asking the Department of Justice to scrutinize the deal in February. Five US shipper groups — including the American Chemistry Council and The Fertilizer Institute — have also urged the STB not to approve the merger. The railroads forecast the combined network would remove approximately 2.1 million trucks from the road, but by their own projections would control 50% of US Class I freight rail traffic, with even higher shares for specific commodities and corridors. President Trump has publicly backed the deal and previously removed a Democratic STB board member seen as likely to oppose it. The STB review process is expected to take 12 to 18 months.

What This Means for Shippers

Build long-term rail contract planning around genuine uncertainty. With opposition escalating rather than fading and the STB review still likely a year or more from resolution, shippers with lanes touching either UP or NS territory should model both approval and rejection scenarios rather than assuming a predictable timeline.

The 0.9%-of-traffic figure is worth internalizing directly. If the AGs’ math holds, the vast majority of shippers currently relying on UP-NS interline competition should not expect the proposed remedy to meaningfully preserve competitive alternatives post-merger — worth flagging in any procurement risk assessment now.

Political alignment doesn’t guarantee outcome. Despite presidential support and a reshaped STB board, opposition from within the president’s own party signals this remains a genuinely contested regulatory decision — not a rubber-stamp approval shippers should assume is coming.

FAQ

What is Competitive Gateway Pricing (CGP)?

CGP is the pricing remedy UP and NS proposed to preserve some competitive rail options after their merger — but according to opposing attorneys general, it would apply to only 0.9% of US rail traffic and wouldn’t match post-merger single-line service on speed or reliability.

How much of US rail traffic would the combined UP-NS control?

By the railroads’ own projections, the merged company would control 50% of US Class I freight rail traffic, with even higher shares for specific commodities and corridors.

When will the STB decide on the merger?

The Surface Transportation Board’s review process is expected to take approximately 12 to 18 months, with the outcome remaining genuinely contested given opposition from state attorneys general, shipper groups, and rival railroads.

Sources

• The Loadstar, The Wall Around the UP-NS Merger Keeps Getting Higher
• FreightWaves, Mega Rail Deal Under Fire: 7 State AGs Warn UP-NS Merger Could Drive Up Shipping Costs
• Logistics Management, Six State AGs Oppose UP-NS Merger, Call Proposed Competitive Benefits Insufficient