## Republican Members Urge Review of Union Pacific and Norfolk Southern Merger

Republican members of Congress today urged the Surface Transportation Board to conduct a thorough review of the proposed merger of Union Pacific and Norfolk Southern to ensure that the historic deal creates substantial benefits for shippers.

Rep. Dusty Johnson of South Dakota, in a letter to STB Chairman Patrick Fuchs and members Michelle Schultz and Karen Hedlund, encouraged the regulator to "conduct a rigorous and comprehensive review of the proposed merger...to ensure it enhances competition and is clearly in the public interest."

The letter, co-signed by 46 members of Congress, states, "We also want to underscore at the outset that the responsibility to demonstrate clear, measurable, and substantial benefits for domestic manufacturers, agricultural producers, the energy sector, and the American consumer – all of whom rely on an efficient, competitive, and cost-effective freight rail system – rests squarely with the applicant railroads.

"Absent such a showing, the Board should not permit this transaction to proceed."

Johnson, who sits on House committees on agriculture and transportation, wrote that elected officials are hearing concerns over the merger application by UP (NYSE: [UNP](https://finance.yahoo.com/quote/UNP/)) and NS (NYSE: [NSC](https://finance.yahoo.com/quote/NSC/)) and its "lack of serious and meaningful commitments to enhance competition and protect against service meltdowns. In light of this, the Board must consider with extreme care the potential risks posed by this transaction to determine whether it meets the public interest test."

The STB rejected the railroads’ initial merger application as incomplete. The companies have said they plan to re-file by March.

In November dozens of GOP state senators and representatives told the STB that the merger would hurt competition and raise prices; state attorneys general from nine red states said the merger effects could affect national security.

The letter comes as shippers and other stakeholders increasingly voice their opposition to the merger, which would create the first coast-to-coast freight railroad operating more than 50,000 miles of track in 43 states.

The letter referenced the new, tougher merger rules drawn up in the early 2000s that stipulate a consolidation must not only preserve competition but enhance it. This ‘higher bar’ has never been tested, so there is uncertainty about how it will be applied by the STB, and what, exactly, defines enhanced competition.

"The new rules place a significant burden on would-be merging parties to demonstrate how the transaction would, among other requirements, enhance competition for rail shippers, ensure reliable rail service, and be in the interest of the public," Johnson wrote.

It’s known that the regulator has collected more information ahead of the formal filing than for any previous merger. Specialists from the Massachusetts Institute of Technology have been brought in to help analyze the more than 100 million separate data points under consideration.

## The Competitive Landscape

What is most striking about this article is not what it says, but what it assumes.

The piece faithfully reports that 46 members of Congress have urged the Surface Transportation Board to conduct a "rigorous and comprehensive review" of the proposed Union Pacific–Norfolk Southern merger. Their demand is straightforward: the railroads must demonstrate "clear, measurable, and substantial benefits" to shippers and the broader economy. Absent such proof, the letter warns, the Board should reject the transaction.

This framing appears reasonable. It reflects the Surface Transportation Board’s statutory obligation to ensure that major rail consolidations serve the public interest. It acknowledges the heightened merger standards adopted after the disruptive rail consolidations of the 1990s. It recognizes that the burden of proof rests squarely on the applicants.

But the article, like the congressional letter it reports, evaluates the merger almost entirely within the internal logic of the rail industry itself. It treats the transaction as though its primary competitive consequences will unfold among railroads—Union Pacific, Norfolk Southern, BNSF, CSX, and CPKC—when in fact the merger’s primary competitive arena lies elsewhere.

The true competitor is not another railroad. It is the Interstate Highway System.

This omission is not trivial. It is foundational.

Freight railroads operate on infrastructure they own, maintain, and finance themselves. Every mile of track, every bridge, every signal system, and every intermodal terminal represents private capital at risk. Railroads internalize their infrastructure costs completely.

Motor carriers do not.

Trucking operates largely on publicly funded highways whose costs are only partially recovered through fuel taxes and registration fees. The federal diesel fuel tax has remained nominally unchanged since 1993. In real terms, adjusted for inflation and infrastructure wear, its cost recovery value has steadily eroded. Pavement damage, congestion, and maintenance costs are broadly socialized across the public.

This asymmetry is the defining structural feature of modern freight competition in the United States.

Yet neither the congressional letter nor the article acknowledges it.

Instead, the debate is framed narrowly around whether the merger will enhance or reduce rail competition. This question, while legally necessary, is economically incomplete. Railroads today do not dominate freight markets. Trucks do. Rail’s primary challenge is not excessive market power, but declining modal share driven in part by structural infrastructure pricing imbalances and operational coordination challenges.

The UP–NS merger directly addresses one of rail’s most persistent operational disadvantages: interchange friction. When freight moves across multiple rail carriers, service reliability suffers. Variance increases. Accountability diffuses. Shippers, facing uncertainty, shift to trucks—even when rail would otherwise be more efficient.

Single-line service reduces that friction. It aligns incentives. It improves reliability. It makes rail more competitive with trucking, not with other railroads.

By evaluating the merger exclusively through the lens of rail-to-rail competition, policymakers risk overlooking its most important systemic implication: its potential effect on rail’s ability to compete with trucking at all.

The merger is not occurring in a vacuum. It is occurring within a freight system defined by asymmetric infrastructure ownership, fragmented rail coordination, and publicly funded highway competition.

A “rigorous and comprehensive review,” as Congress rightly demands, must account for those realities. Otherwise, regulators risk preserving fragmentation in the name of competition—while leaving the deeper structural imbalance that shapes American freight untouched.