BNSF Seeks 824 Miles in Fight Over Union Pacific-Norfolk Southern Merger Terms
Key Facts
The review of the Union Pacific-Norfolk Southern merger is moving toward a dispute over access rights to the two networks, after three major railroads urged the U.S. Surface Transportation Board to reject the deal and said they would seek conditions if the board approves it. The companies are BNSF, CPKC and CSX, while short-line railroads have filed similar requests. Their demands center on granting competitors rights to operate over tracks and access stations serving key markets. Union Pacific CEO Jim Vena criticized the demands at an investor conference, saying, "The idea of giving up rail lines for no reason runs counter to the basic principle of how business is run." Norfolk Southern said it would respond to the issues raised in the regulatory record.
BNSF is seeking rights to operate over 824 miles of Norfolk Southern track as part of a corridor linking Chicago to Bethlehem, Pennsylvania, and container terminals in the eastern part of the state. It also wants a neutral switching company to serve facilities on the Gulf Coast. CSX is seeking access to Kansas City via a Union Pacific line, as well as operating rights on Norfolk Southern lines in eastern Pennsylvania. Its demands also include access to Norfolk Southern’s intermodal terminal at the Port of Virginia, via Norfolk Southern and the Norfolk and Portsmouth Belt Line. The requests put the operating details of tracks and stations at the center of the dispute over the deal’s effect on competitors’ ability to serve shippers.
On September 18, the board rejected requests by several parties to dismiss the amended merger application without reviewing it. It said its decision did not resolve the merits of the deal or endorse any party’s position, and that parties could renew their arguments in comments. The board had accepted the amended application for review on May 28, then paused proceedings pending additional information the companies submitted on July 7 and 27. On August 18, the board lifted the pause and resumed the procedural schedule after deeming the additional information sufficient to continue the review. The rejection of the dismissal requests therefore allows the case to proceed, without constituting a ruling in favor of the merger.
Competition concerns add another dimension to the access requests. The Associated Press reported that critics, including chemical companies, agricultural groups and competing railroads, fear shipping prices for customers could rise if Union Pacific gains nationwide monopolistic power. BNSF CEO Katie Farmer said the deal "did not start with a request from a customer" and was driven, in her description, by a promise of a large return for shareholders. The merger would reduce the number of major U.S. freight railroads to five, according to the report. Union Pacific’s CEO, meanwhile, said some shipments could shave a day or two off delivery times if they no longer needed to be handed off between two railroads.
The deal agreement includes financial limits that could affect negotiations over conditions. The Associated Press reported that Union Pacific could consider walking away if the board demands concessions exceeding $750 million. Under specified circumstances in the agreement, Norfolk Southern would be entitled to a $2.5 billion termination fee if the deal falls apart. Those provisions add weight to any regulatory demands involving operating rights or network operating arrangements. But the decision on whether to accept the deal and on what terms remains with the board, which has yet to complete its assessment of the merger’s merits.
The review comes as Norfolk Southern reported rail operating revenue of $3.5 billion in the third quarter of 2026, a quarterly record, up 14% from the same period a year earlier. The company said revenue increased by $423 million, with freight volume growing 3% year over year. In trading, Norfolk Southern shares closed at $338.23 on October 22, compared with $328.09 in the previous session, while Union Pacific shares closed at $298.09, versus $287.87. The board’s deadline for opening comments is November 18, 2026, with replies due by February 16, 2027. The regulatory process remains open to arguments from supporters and opponents before a decision on the deal.