Union Pacific said its revised application to acquire Norfolk Southern — a deal that would create a 50,000-mile rail system covering 43 states — is “comprehensive and complete.” The Class I railroad made that statement in response to criticism from rivals that have said the proposed merger to create the nation’s largest railroad and the first single-transcontinental system would upend the industry’s competitive balance.

On April 30, UP submitted an amended application to the U.S. Surface Transportation Board, three months after the federal regulator rejected its first attempt last year as “incomplete.” Since then, rival railroads have been piling on the more than 7,000-page filing, urging the STB to reject it again.

UP officials state that they have provided additional details regarding their acquisition of NS, including an updated analysis that uses actual traffic data from all six North American Class I carriers. In the past, merger analyses have only used data provided by the STB. That more detailed analysis also allowed the railroads to provide a more accurate picture of proposed capacity improvements. In fact, the railroads said they would spend less on capacity now that they had a clearer picture of what they needed to do.

“After completing the additional work requested by the STB, the facts remain clear: This merger enhances competition and delivers real public benefits that make America’s supply chain stronger,” said Union Pacific CEO Jim Vena. “Our analysis uses complete systemwide traffic data provided by all Class I railroads to identify even more opportunities for our combined railroad to grow and compete.”

Additionally, UP and NS announced that they would not move to control the Terminal Railroad Association of St. Louis. Instead, as a condition of the merger, the two Class Is would sell some of their shares to other carriers so that the combined railroad would not control more than 50 percent of it. UP presently owns 42.84 percent of the railroad and NS owns 14.29 percent, with other Class Is owning the remainder.

But not everyone supports the creation of a single, coast-to-coast railroad. The day before the revised merger application was submitted, the Stop the Rail Merger Coalition was launched to argue against it. Along with BNSF and CPKC, the coalition includes the American Chemistry Council, the American Farm Bureau Federation, the Teamsters Rail Conference, the Alliance for Chemical Distribution, the National Industrial Transportation League and the Vinyl Institute. Among the group’s chief arguments against the merger is how the last major UP acquisition — the takeover of Southern Pacific in 1996 — wreaked havoc on the rail network for months.

“This did not begin with a customer asking for a UP-NS merger to happen,” said BNSF Railway President and CEO Katie Farmer. “It’s driven by Wall Street on the promise of a big shareholder payout. It will eliminate competition, raise costs for consumers, and destabilize the supply chain that powers the American economy.”

Since then, the chorus of opposition has only grown louder. On May 8, BNSF filed a formal response to the application with the STB. In it, the rival accused UP of simply making “cosmetic changes [to the application] to gloss over the serious and fundamental competition, pricing and service concerns that were previously raised.” Another issue raised by BNSF was that UP and NS did not address the possibility of an “end game” round of mergers. According to the 2001 merger rules established by the STB, any Class I merger application would have to include analysis about not just the proposed combination, but those that could likely follow.

CPKC, CSX Transportation and Canadian National have also lined up against the merger, echoing BNSF’s concerns that the revised application is incomplete and should be rejected again — something that has never happened twice. Of the four rival Class Is, CN has appeared to hold its cards closest to the vest. In a statement, CN officials said the application was still incomplete, and that if it were approved, “remedies” would be necessary, perhaps leaving the door open for future support of the consolidation. In the past, CN has been no stranger to major merger moves, perhaps most notably trying to combine with BNSF in the late 1990s. For its part, UP has said it would pull out of the merger if the STB were to force widespread line sales or trackage rights agreements on it.

Stakeholders had until May 8 to submit comments on the revised application, and UP had until May 12 to respond, which it did, arguing that it had met the high standards expected by the STB. Now the industry waits until May 30, when the federal regulator is anticipated to make a decision on whether the application will be accepted or rejected again.

—Justin Franz