The U.S. Surface Transportation Board has rejected Union Pacific and Norfolk Southern’s initial merger application as “incomplete,” telling the two Class I railroads that if they want to become North America’s largest railroad, they’ll need to try again. 

The unanimous bombshell decision was announced late Friday and is likely to delay UP’s effort to acquire NS. Although the board rejected the initial application, it provided no insight into the final decision on the merger — if UP and NS opt to try again.

“Today’s decision is based solely on the incompleteness of the December 19 application and should not be read as an indication of how the Board might ultimately assess any future revised application,” STB officials said in a press release. 

Among the issues the STB identified in the initial application was an incomplete market analysis. For example, UP and NS stated that it would take three years for the benefits of increased traffic from the merger to be realized. However, the application did not provide an analysis of what those traffic levels would be; it only showed what they would be on the first day of the combination. 

Additionally, applicants are legally required to provide copies of “Any contract or other written instrument entered into, or proposed to be entered into, pertaining to the proposed transaction.” However, UP and NS only included an “Agreement and Plan of Merger,” not the full contract. 

The STB’s decision will likely be seen as a win for BNSF Railway, Canadian National, CPKC, and CSX Transportation, which have all been speaking out against the UP-NS combination for weeks. One of their chief complaints was that the merger application was incomplete, meaning they couldn’t fully evaluate it. 

—Justin Franz