By Esther Fung
A federal regulator is pushing pause on its review of the blockbuster merger between Union Pacific and Norfolk Southern, imperiling the timetable of their $71.5 billion railroad deal.
The Surface Transportation Board on Thursday said it needed more information to "thoroughly evaluate" the two railroads' revised application for a merger that would create a transcontinental rail giant.
"There are several aspects of the revised application that are unclear or underdeveloped and require supplementation," the board said. The board said it has accepted the application but paused the merger-review proceeding, including an environmental review, and will later establish an appropriate schedule for the remainder of the proceeding.
The deal, announced last July, has faced resistance from customers and rivals who argue that the tie-up would raise freight prices and reduce competition. The companies, on the other hand, say marrying their two networks would speed up shipping and make supply chains more efficient.
Current merger rules for U.S. railroads compel applicants to show how a combined company would enhance competition and affect service, among other factors. The board has the power to accept or reject the merger.
The move by the regulator to freeze the review process addresses concerns by other parties that the two railroads could release information slowly, compressing the time stakeholders have to process the complex aspects of the merger.
The board ordered the two railroads to submit more details in the next 60 days, such as how competition would be enhanced and what would change for shippers that have fewer railroads to choose from.
The two railroads control tracks on opposite sides of the Mississippi River. A merger of this scale and complexity, where a coast-to-coast freight-rail network would be run by a single operator, hasn't happened before.
Executives from the two railroads have said that the merger merits include reducing bottlenecks at interchange terminals which would speed up long-haul cargo deliveries. They expect more shippers to divert cargo to rail from trucks and projected that the deal will take 2.1 million trucks off the road.
The proposed deal has drawn skepticism from several lawmakers and rail customers. They have said that the combined company could concentrate too much market power, stifle competition and lead to higher prices and poorer service.
Other railroads are against it, saying that the rail industry is consolidated enough and that the proposed merger would fuel more mergers in the industry and result in even fewer railroad operators.
According to the regulator's timeline, it typically would make a decision to approve or reject a merger within 15 months after it accepts the merger application. Union Pacific Chief Executive Jim Vena said previously he expected a decision in 2027.
As part of the deal, Union Pacific must pay a $2.5 billion breakup fee to Norfolk Southern if the Surface Transportation Board rejects the merger or if the regulatory conditions imposed are too burdensome to complete the deal.
Write to Esther Fung at esther.fung@wsj.com
(END) Dow Jones Newswires
May 28, 2026 08:55 ET (12:55 GMT)
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