The federal regulator with exclusive jurisdiction over railroad mergers has halted its active review of the proposed $85 billion combination between Union Pacific and Norfolk Southern, asking the parties to provide more detail on aspects of their revised application.
The Surface Transportation Board said the companies' filing has been accepted, but that proceedings - including the environmental review - are temporarily on hold while it gathers further information. The STB noted that the Department of Justice can offer non-binding advice as part of the process.
In a statement, the board said: "Several aspects of the revised application... are unclear or underdeveloped and require supplementation at this stage." The railroads submitted an amended application in April after an earlier proposal was returned in January.
Market reaction was swift. Shares of Union Pacific slid 4.2% in morning trading, while Norfolk Southern shares fell 5.4%.
Why the STB paused the review
The board has identified gaps in the revised filing and has formally requested supplemental material. Specifically, the STB asked the two railroads to provide additional information related to enhanced competition, market share projections and downstream merger impacts, among other topics. The regulator set a target date of July 27 for the companies to submit the requested materials.
After those materials are filed, the STB will undertake a detailed review of the evidence. The board said it will examine the submissions over the course of one year to evaluate whether the transaction serves the public interest, and then issue a decision within three months following that review period.
Timeline and potential delay
The railroads had initially planned to complete the merger by April of next year. That timeline may be pushed back, as the STB's schedule implies the agency may not render a final decision until September 2027.
A coalition of business groups, competing railroads and organized labor unions has opposed the transaction, arguing it would reduce competition and raise costs for manufacturers, farmers and consumers. Those concerns were cited by the STB in framing the need for additional detail about market impacts.
Union Pacific and Norfolk Southern did not immediately respond to requests for comment.
Next steps
The companies must supply the supplementary information requested by July 27. Once received, the STB will review the submission for up to one year and then has three months to issue its determination. The Department of Justice may provide non-binding guidance during the process, but the STB retains exclusive authority over railroad merger approvals.
The pause leaves open the pace and outcome of the regulatory process and introduces the possibility of a significant delay to the originally anticipated closing date.