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Union Pacific and Norfolk Southern on May 12 filed a 46-page response (download below) with the Surface Transportation Board refuting comments filed separately by BNSF, CN and Canadian Pacific Kansas City challenging their merger application’s completeness and accuracy. UP and NS said they “provided all necessary actual and projected traffic, revenue and market share data as required by the Board’s rules and Decision No. 9.”
UP and NS supplemented their STB response filing with a May 13 posting on their joint merger website: The amended application, filed April 30, directly responded to STB requests, meeting every requirement head on. It makes previous merger details public, removes any possibility of TRRA (Terminal Railroad Association of St. Louis) control and presents market share data in a transparent, fully supported case—leveraging 100% actual traffic data from all six North American Class I railroads, rather than sample data, for the first time in modern rail history.”
Summary: “APPLICANTS’ REPLY TO COMMENTS ON COMPLETENESS OF AMENDED APPLICATION”
UP and NS state they “updated all projections to reflect merger effects and traffic diversions and used complete 100% Class I traffic files for accuracy. [We] provided actual market shares and revenues in the same format as the original application, and projected long-term market shares considering traffic diversions, with data supported by experts Dr. Bailey, Dr. Israel, and Mr. Hunt.” This “ensured transparency and comparability with original data, updating all projections to include anticipated growth. [We] addressed challenges from CPKC and CN regarding data granularity, aggregation, and presentation, clarifying that data was complete and appropriately organized, included all schedules and exhibits from the merger agreement, and corrected minor technical discrepancies per Board guidance.”
UP and NS said they have “demonstrated that their market impact analysis, including competition effects and diversion impacts, fully complies with the Board’s requirements. Dr. Bailey’s analysis incorporates projected diversions and growth, balancing potential harms and efficiencies. The analysis uses data from 2019-2024, supplemented with non-Class I data, to evaluate competition at specific points and corridors. Traffic diversions are recognized as pro-competitive benefits, not harms, aligning with economic principles. The methodology reflects a forward-looking approach, considering both horizontal effects and efficiencies. Disagreements from CN and CPKC are methodological and expert-based, not indicative of incompleteness. [We] did not model proposed conditions directly into the economic analyses, citing practical data limitations, but provided a consistent framework tying data, operating plans and projections.”
Regarding control of the Terminal Railroad Association of St. Louis (TRRA), UP and NS stated they “are not seeking control of TRRA and committed to conditions preventing control. [We] will condition approval on divesting or relinquishing control of TRRA interests. No application for control of TRRA was filed because [we] do not seek control. The Board’s decision did not require a separate control application since the transaction is not seeking control. [Our] commitments ensure [we] will not control TRRA, satisfying the Board’s criteria. This approach aligns with the Board’s rules and avoids unnecessary filings, with conditions enforceable through approval conditions.”
UP and NS assert their amended application “is comprehensive, addressing all issues raised by the Board and stakeholders. [We] followed all directives, including updating data, correcting errors and adding supplemental analyses, responding to stakeholder comments by providing additional information and clarifications. The application includes all schedules, exhibits, and analyses necessary for the Board’s review. Disputes over data granularity, modeling assumptions and methodology are considered procedural and expert disagreements, not deficiencies. [We are] committed to ongoing process adherence and will submit corrected or additional data as needed.”
UP and NS emphasized their “adherence to procedural rules and data integrity,” stating that they “have followed the Board’s guidance on making post-submission changes. All projections and analyses are supported by expert testimony and detailed underlying data. The application’s structure and data presentation meet regulatory standards and facilitate review. [We] are prepared to address any remaining concerns during the evidentiary phase through further expert testimony and data submissions.”
“CN and CSX suggest the application process allows scrutiny of the merger’s impact on TRRA, but they do not explain why concerns cannot be addressed during the Board’s review of the Amended Application,” UP and NS said. “TRRA and its owners are parties of record and can comment on related issues. CN and CSX argue that the Board cannot rely solely on [our] commitments to prevent control of TRRA. They claim ownership issues could be prevented by BNSF, CN, and CSX through existing agreements or law. [We] have committed not to acquire control of TRRA and plan to address ownership through divestments or transfers. Divestment mechanics can be negotiated during the proceeding, satisfying Board conditions before merger completion. [Our] commitments and conditions address concerns about TRRA control, satisfying regulatory requirements.”
UP and NS addressed their revisedapplication’s completeness regarding 2-to-1 and 3-to-2 shipper facilities, “with focus on the sufficiency of disclosures. CN claims the application omits some shipper facilities; the Board does not require all to be identified. Dr. Bailey expanded competition analysis to include specific shipper facilities. Criticisms relate to merits, not completeness, as rules do not mandate full identification. BNSF states the application fails to fully develop solutions for 2-to-1 shippers. [We] have committed to ensuring no 2-to-1 shipper loses access to two Class I railroads. No contracts are required to address these commitments; only underlying transaction contracts are needed. The Board’s precedent allows negotiations of divestments during the process, not necessarily at application submission.”
“[Our] completeness regarding control over other rail entities, including KCT (Kansas City Terminal) and TTX, is addressed,” UP and NS stated. “BNSF and CPKC argue the application lacks authority requests for control of KCT. [We] clarify [our] ownership would not give control of KCT; 50% ownership does not imply control. Concerns about TTX ownership are addressed; [we] own up to 50%, and the Board’s jurisdiction is not over TTX control. Interested parties can raise issues during the merits phase, not at completeness stage.”
Regarding the downstream effects from potential future mergers, “BNSF, CN, CPKC and CSX claim the application lacks sufficient downstream effects analysis,” UP and NS noted. [We] have addressed these effects per regulatory requirements, and responded to pre-merger speculation about future mergers, which is beyond the scope of the current review. [Other] parties can present their positions during the merits phase.”
Regarding “sufficiency of measures to promote competition, including Committed Gateway Pricing (CGP) CN and CSX argue the application lacks enough measures to enhance competition. This is a merits issue, not a completeness concern. [Our] CGP program is detailed and designed to improve competition. Disagreements about the program’s adequacy are merits issues, not application completeness.” Further, “vertical competition concerns, such as foreclosure, are addressed in the application. CSX claims the application does not sufficiently address vertical foreclosure. The application includes comprehensive analysis by Dr. Israel. The document addresses potential vertical foreclosure risks. Parties will have opportunities to examine these issues during the merits phase.”
UP and NS said they have offered “proposals for measures if public benefits do not materialize. CSX claims only one measure—extending the CGP program—is proposed. [We] disagree but acknowledge the measure, indicating merit-based issues. [Our] application discusses the necessity of the merger to achieve claimed benefits. Extensive witness testimony supports the benefits, and some benefits could not be achieved without merger.” As well, the revised application’s addresses how downstream effects and service impacts will be handled: “BNSF, CN, CPKC and CSX argue the application is incomplete regarding downstream effects. [We] have addressed these effects per regulations and responded to pre-merger speculation about future mergers. Parties can critique these issues during the merits phase.”
Addressingcomments from public agencies about local impacts, “NYDOT, New Jersey Transit and NYC Sanitation raised specific concerns,” UP and NS noted. “[We] provided additional information and corrections. Concerns about NS’s Southern Tier Route [in New York State], NJ Transit lines and Metro-North service are addressed. The application includes discussions on impacts, with some omissions acknowledged and to be corrected. These comments do not question the application’s completeness.”
Regarding the application’s completeness on blocked highway/rail grade crossings and fixed charges, “comments claim the application omits these issues,” UP and NS stated. “[We] address blocked crossings through environmental review submissions and explain that fixed charges will be modest and manageable. Financial statements demonstrate the merged system’s ability to finance new debt and investments. These are merit issues, not completeness concerns.”
Finally, UP and NS said they have addressed “the impact of discovery disputes and compliance with procedural rules. Disputes over discovery pace and workpaper access are not related to completeness. [We] responded promptly to questions and corrected minor issues. Compliance with Decision No. 13 is confirmed; it does not affect application completeness. The Board’s decisions recognize temporary issues do not undermine completeness.”
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