STB Rejects $85 Billion Union Pacific-Norfolk Southern Merger Application as 'Incomplete'
January 16, 2026 · by Fintool Agent
The Surface Transportation Board has unanimously rejected Union Pacific-0.44% and Norfolk Southern's-0.05% historic merger application, dealing a significant setback to the companies' plan to create America's first transcontinental railroad. The regulator ruled the 7,000-page filing "incomplete" late Friday, citing missing market share projections and the failure to submit the complete merger agreement.
What the STB Found Missing
The decision identifies critical deficiencies in what the companies called "the most thoroughly planned merger in railroad history."
No Future Market Share Projections: Union Pacific and Norfolk Southern project the merger will generate traffic growth, including 2 million truckloads diverted from highways annually, with full benefits realized three years post-closing. However, the application only presented 2023 actual market shares as "projected" figures—simply adding together each railroad's existing share without accounting for anticipated merger-related growth, diversions, or market changes.
"The market impact analyses must necessarily project market shares beyond the transaction's consummation date, and therefore the application does not include the projected market shares as required," the STB wrote in its 15-page decision.
Incomplete Merger Agreement: Federal regulations require applicants to provide "any contract or other written instrument entered into, or proposed to be entered into, pertaining to the proposed transaction." The companies submitted only an "Agreement and Plan of Merger," omitting schedules and documents that define their specific obligations.
The STB noted the missing documents are "expressly made part of the merger agreement" and are essential to understanding the transaction's full scope.
Ask Fintool AI AgentMarket Reaction
The decision came after market close Friday, limiting immediate price action:
| Company | Friday Close | Change |
|---|---|---|
| Union Pacific (unp)-0.44% | $229.49 | -0.44% |
| Norfolk Southern (nsc)-0.05% | $290.63 | -0.05% |
| CSX (csx)-0.14% | $36.25 | -0.14% |
The full market reaction will come Monday as investors assess the delay's impact on the deal timeline and likelihood of ultimate approval.
Opponents Claim Vindication
The rejection validates concerns raised by competing Class I railroads, which filed extensive comments criticizing the application's deficiencies.
BNSF Railway, owned by Berkshire Hathaway, led the opposition and specifically challenged the market share methodology. BNSF's filings noted the application "does not incorporate the over 2 million new units that UP and NS project they will attract elsewhere" into its market share calculations.
Canadian National+0.89% filed a motion on January 12 seeking to compel additional disclosure, arguing the application "failed to outline the full extent of competitive harms" and accused the applicants of not being "upfront with their assessment."
CPKC CEO Keith Creel had called the merger "unprecedented in scale and scope" and warned it "would pose extraordinary and far-reaching risks to customers, rail employees and broader supply chains."
Union Pacific's Response
Union Pacific signaled it will address the deficiencies rather than abandon the deal.
"Union Pacific will provide the additional information requested by the Surface Transportation Board," the company said in a statement Friday.
The companies had previously acknowledged the thoroughness of the review process. In a January 15 press release defending the merger, Union Pacific stated: "The comprehensive nearly 7,000-page application to the Surface Transportation is available for public review and includes detailed operating plans, market analysis and integration information."
Ask Fintool AI AgentWhat Happens Next
The STB has directed Union Pacific and Norfolk Southern to notify the board by February 17, 2026 whether they intend to file a revised application and, if so, when.
Any revised application will undergo another 30-day completeness review before the STB can begin its substantive evaluation of the merger's competitive impacts.
Critical Dates:
- February 17, 2026: Deadline to notify STB of refiling plans
- TBD: Revised application submission (subject to 30-day completeness review)
- 2027: Original target closing date (now likely delayed)
The STB emphasized this is a procedural ruling, not a judgment on the merger's merits: "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."
Why It Matters
The rejection adds months—potentially a year or more—to the regulatory timeline for what would be the largest railroad combination in history.
For Union Pacific and Norfolk Southern, the delay increases deal risk and extends the period of regulatory uncertainty. The companies originally projected closing by early 2027.
For shippers, the delay extends the status quo. The merger promises to convert 10,000 interline lanes to single-line service, eliminating costly handoffs between railroads—but those benefits remain theoretical until approval.
For competitors, the rejection provides more time to build opposition and raises questions about whether the companies can successfully address the STB's concerns.
For investors, the focus shifts to whether the deficiencies are easily fixable (suggesting a short delay) or symptomatic of deeper issues that could threaten ultimate approval.
Ask Fintool AI AgentRelated Companies: Union Pacific (unp)-0.44% | Norfolk Southern (nsc)-0.05% | CSX (csx)-0.14% | Berkshire Hathaway (brk.b) | Canadian National (cni)+0.89% | Canadian Pacific Kansas City (cp)+0.18%