Six GOP State Attorneys General Push STB to Block $85B Union Pacific–Norfolk Southern Merger

Why Six GOP Attorneys General Are Urging the STB to Reject the UP–Norfolk Southern Deal

A group of Republican state attorneys general has formally asked the Surface Transportation Board to reject the proposed $85 billion merger between Union Pacific and Norfolk Southern. In a letter to STB Chair Patrick Fuchs, Vice Chair Michelle Schulz, Member Richard Kloster and Member Karen Hedlund, the attorneys general warn that the deal would reduce competitive options for shippers, raise costs for businesses and ultimately increase prices for consumers. The letter follows similar objections from chemical, fertilizer and industrial shipper groups.

The transaction is already deep in regulatory review. On May 28, the STB accepted the revised major merger application for consideration, held the process in abeyance while an environmental review moves forward, and ordered the railroads to submit supplemental information by July 27. UP and NS submitted additional commitments on that date, describing them as going beyond those provided in any prior rail merger. Those commitments include expanding Committed Gateway Pricing, preserving Class I rail options for so-called 3-to-2 and 2-to-1 shippers, offering temporary alternative service if integration causes service problems, and creating a new rate relief process.

The attorneys general argue that those promises do not solve the core problem. They describe Committed Gateway Pricing as the only competitive enhancement proposed, but say it does not give any shipper access to a new railroad. Instead, they argue, CGP sets a pricing formula for certain interline movements with BNSF and CSX that already occur today, allowing some existing interlining to continue after the merger. They also contend that CGP would set rates at the 70th percentile of UP and NS's own rates for comparable traffic, meaning many eligible shippers would pay more than they currently do.

The letter warns that too much is at stake for agriculture, mining, forestry and manufacturing. The attorneys general say competitive rail underlies the global competitiveness of the American economy, and that past rail mega-mergers have delivered fewer routing options, higher captive freight costs and supply chain disruptions to rural America. The merger remains pending before the STB.

The CGP Fight: Does the Merger Create Competition or Just Preserve the Status Quo?

The Statutory Test: Rail-to-Rail Competition, Not Just Commitments

Under the STB's major merger rules, approval requires applicants to show that the deal will produce new or enhanced rail-to-rail competition, or other competitive benefits, and that those benefits outweigh the harms. The attorneys general argue UP and NS have not cleared that bar. They say CGP merely calculates rates for certain interline movements with BNSF and CSX that already exist, rather than creating a new single-line competitive option. In their reading, the merger would preserve the current routing environment instead of enhancing it.

That distinction is especially important because Board-approved mergers receive immunity from antitrust challenges. If the STB accepts the public-interest case, shippers lose the ability to challenge the consolidation through normal antitrust channels. The opponents are therefore asking the STB to treat enhanced competition as a strict legal requirement, not as a label that can be satisfied by expanded but existing interline commitments.

Why the AGs Call CGP a Preservation Measure, Not a New Offer

The most detailed criticism is that CGP would set rates at the 70th percentile of UP and NS's own rates for comparable traffic, not at a median or below-average level. The attorneys general say most eligible shippers would receive a CGP price higher than what they currently pay. They also cite the railroads' own statements that CGP would not be competitive: it would not be single-line service and would not be as fast or reliable as single-line service. From the AGs' perspective, that makes CGP a continuation of existing interline options with a pricing formula attached, not a new competitive benefit.

UP and NS describe the same program differently, as a significant expansion that doubles eligible shipments and functions like thousands of haulage agreements in one enforceable commitment. The STB will have to decide which characterization is closer to the statutory standard. The dispute is not whether CGP is an improvement over no commitment; it is whether it is enough to offset the market power of a combined railroad that opponents say would hold more than 50 percent market share.

What the Opposition Signals for the STB's Decision

Opposition from six Republican state attorneys general is notable because it crosses familiar political fault lines on regulatory review. The letter joins objections from shipper groups including the Alliance for Chemical Distribution, the American Chemistry Council, The Fertilizer Institute and the National Industrial Transportation Group. Together they frame the decision as a rural freight issue: agriculture, mining, forestry and manufacturing depend on competitive rail, and past rail mergers have reduced routing options and raised captive costs.

That framing may increase pressure on the STB to impose conditions, require further supplemental filings, or reject the application if the competition benefits are not demonstrated. Because the application is already in review and supplemental information was due July 27, the next phase will likely focus on whether the expanded commitments satisfy the public-interest test, rather than on whether the merger is financially attractive to the railroads.

What the STB Review Means for Shippers, Competitors and the Railroads

For shippers, competitors and investors, the pending STB review has specific implications.

• Rail shippers on UP or NS routes: Model how a 70th-percentile CGP rate would compare with your current contract. The AGs argue most eligible shippers would pay more, so current interline arrangements with BNSF and CSX may become the relevant benchmark.
• Agriculture, mining, forestry and manufacturing customers: Engage trade associations now. The shipper coalition has already made captive freight costs the central argument, and the STB is weighing whether the deal meets the statutory public-interest standard.
• BNSF and CSX: Review how CGP would govern current interline movements after the merger. The AGs' letter treats CGP as preserving existing interchange options rather than creating new competition, so the terms of those arrangements may become a focus of STB review.
• UP and NS investors: Treat the $85 billion transaction as unresolved. The STB has required supplemental information and is considering opposition from six state attorneys general and multiple shipper groups; a rejection or conditioned approval could materially change integration assumptions.
• Regulatory watchers: The next substantive indication will be whether the STB finds the July 27 supplemental commitments sufficient to continue the full merger review, or requests additional evidence on rail-to-rail competition.