BNSF to STB: UP+NS Application ‘Remains Fundamentally Incomplete’

Railway Age

BNSF on May 8 submitted comments to the Surface Transportation Board “sharply criticizing” Union Pacific’s amended application for its proposed acquisition of Norfolk Southern, saying the submission “remains fundamentally incomplete and fails to address the Board’s prior directives.” BNSF argues that the application fails to address key competition and industry impact issues and should be rejected or require a longer review process.

The nine-page filing (download below), prepared by Daniel T. Donovan, P.C. of Washington, D.C. law firm Kirkland & Ellis LLP, “underscores that the revised application largely repackages earlier deficiencies, omits key information on competition, market share, and governance of critical rail assets, and relies on unsupported assumptions about public benefits—while continuing to shift the burden of analysis onto regulators and stakeholders. Among other things, UP argues the merger will drive growth by shifting freight from truck to rail, pointing to projected $3.5 billion cost savings for shippers.” 

“Those so-called ‘savings’ are largely based on the existing price difference between truck and rail that shippers can already capture without a merger,” a BNSF spokesperson said.

BNSF believes the amended application mostly repeats the initial proposal with superficial changes, lacking new commitments or conditions to protect competition or shippers. UP and NS continue to deny potential competitive harms despite evidence of significant market control, with the merged entity projected to hold 50% of U.S. rail freight and 53% of Class I merchandise gross ton-miles, exceeding thresholds associated with presumed harm. BNSF calls truck-to-rail conversion projections flawed, lacking tangible benefits like lower rates or service improvements, raising concerns about increased prices and reduced competition. UP and NS employ a strategy of minimal upfront disclosure, planning to address deficiencies during review, which violates regulatory rules and undermines transparency.

UP and NS have neglected detailed analysis of geographic and product market effects, including how freight flows and competition would shift post-merger, BNSF noted. The application omits comprehensive impact assessments of future industry consolidation, despite regulatory expectations to evaluate downstream effects and industry structure changes, and exaggerates truck-to-rail diversion benefits, ignoring historical trends and recent merger outcomes that show limited conversions and increased rates. UP and NS do not commit to passing efficiencies or cost savings to shippers, implying the deal would primarily benefit Wall Street investors at the expense of customers.

BNSF added that the application is incomplete regarding control of key entities like the Terminal Railroad Association (TRRA), TTX, and Kansas City Terminal Railway (KCT). UP and NS have not provided definitive control proposals, ownership transfer plans, or contractual arrangements, instead relying on vague intentions. Though they claim they will divest or relinquish control of TRRA and TTX, they have not identified buyers, prices or specific terms, making their promises speculative and non-compliant with regulatory requirements. Saying that 50% ownership does not equate to control is inconsistent with legal standards, as control is fact-based and would likely give UP/NS effective influence over KCT and other entities, which could impact the approval process.

Further, BNSF believes, UP and NS fail to propose concrete solutions for 2-to-1 shipper points, where loss of competition is likely, such as at Illinois locations, and have not advanced negotiations or provided draft agreements, violating disclosure rules. They do not sufficiently address the long-term industry structure or downstream effects, including how future mergers could further concentrate market power and impact public benefits. Their analysis of geographic and product market impacts is superficial, ignoring how freight shifts could harm local communities and reduce transportation alternatives.

UP and NS, BNSF concluded, have not met discovery obligations, producing limited documents and delaying responses, which hampers the review process. Their incomplete work papers and missing data hinder thorough evaluation, necessitating a longer procedural schedule. Their  strategy of withholding information and making minimal disclosures undermines the regulatory process and supports the need for extended review time.

“In public, UP and NS shrug off their obligation to address the downstream effects of the merger, dismissing the analysis as impossible and redefining the Board’s requirements to suit their narrative,” BNSF’s comments noted. “The documents UP and NS produced recently … tell quite a different story. Applicants simply do not want to share it. Applicants need to confront the market imbalances this merger will create, and their downstream consequences. The Board would have to grapple with that imbalance for decades. By shielding their ‘end game’ assessments, UP and NS fail to give the Board even the most basic tools to wrestle with those industry-shaping issues.”

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