Seven state attorneys general asked federal rail regulators to kill Union Pacific’s proposed takeover of Norfolk Southern before the case reaches a hearing, arguing the railroads haven’t cleared the minimum evidentiary bar required to advance.
The letter, filed Aug. 11 with the Surface Transportation Board and led by Montana Attorney General Austin Knudsen, contends the application fails to present a prima facie case that the merger serves the public interest. Under the board’s rules, an application that fails that test can be denied outright, without the roughly year-long merits proceeding that would otherwise follow.
The filing is the latest in a wave of opposition to what would be the largest rail merger in U.S. history, creating a single transcontinental carrier with more than half the domestic Class I market.
“At a time when the railroads are prospering financially, there is no reason to create a behemoth railroad that will take more money from farmers, shippers and ultimately consumers in our States and across the country,” the attorneys general wrote.
Mr. Knudsen was joined by Brenna Bird of Iowa, Kris Kobach of Kansas, James Uthmeier of Florida, Drew Wrigley of North Dakota, Marty Jackley of South Dakota and Jonathan Skrmetti of Tennessee. All are Republicans, and most represent states whose agricultural and energy shippers depend heavily on rail.
Union Pacific and Norfolk Southern have said the combination would improve service by converting slow interline handoffs into single-line moves, pull freight off highways and strengthen supply chains. The companies have argued that the merger enhances competition on its own, without special conditions attached, and that focusing on those conditions “mistakes the tail for the dog,” according to their July 27 supplemental filing.
A narrow target
The attorneys general aimed nearly the entire letter at one piece of the application.
The board’s 2001 merger rules require applicants in a major consolidation to show the deal would enhance competition, not merely preserve it. In a decision issued May 28, the board identified Committed Gateway Pricing, or CGP, as the “sole competitive enhancement Applicants propose.”
CGP sets a formula for the rates Union Pacific and Norfolk Southern would charge rival carriers on interline movements that already run today. The states argue it cannot qualify as an enhancement under the rules because it gives no shipper access to a railroad it can’t already reach.
They also argue it would raise prices. The railroads set the CGP rate at the 70th percentile of their own rates for comparable traffic rather than at a median or below-average level, meaning most eligible customers would pay more than they do now, the letter said. It cited testimony from the railroads’ own economist acknowledging the structure creates an incentive to raise rates on the shipments used to calculate the benchmark.
The program’s reach is limited. Even after the railroads expanded it in July, CGP would apply to about 0.9% of national rail traffic, moving through four gateways—Chicago, St. Louis, Memphis and New Orleans. It excludes interline traffic with Canadian National and CPKC, intermodal and automotive shipments, storage-in-transit and railroad-owned transload facilities, and any route that already has more than one rail option at both ends. It expires at the end of the board’s oversight period, likely in five years.
The states also pointed to a concession in the railroads’ own filing: CGP “was not intended to create competition with post-merger single-line traffic,” and wouldn’t be as fast or reliable as single-line service.
“If UP and NS admit CGP would not create competitive service, we should take them at their word,” the attorneys general wrote.
Railroads and shippers pile on
Two of the four remaining Class I railroads filed formal motions for summary denial on Aug. 6, five days before the state letter.
BNSF Railway, owned by Berkshire Hathaway, put the combined carrier’s share at 50% of the domestic freight-rail market and 53% of Class I merchandise gross ton miles, and noted that Union Pacific posted the most profitable year in its 160-year history in 2025. It called CGP “a Trojan horse—a program that promises to help shippers but will actually ratchet up their prices.” Using the applicants’ own expert’s figures, BNSF said roughly 60% of eligible carloads would see no rate benefit at all, and that the July expansion increased covered traffic by about 0.6 percentage point.
CSX Transportation took a different line, building a 51-page motion around Union Pacific’s and Norfolk Southern’s prior filings. In merger cases in 2003 and 2022, both railroads argued at length that end-to-end mergers create real risks that a combined carrier will degrade rates and service on interline routes to divert freight to its own network. The board changed its precedent in 2023 to reflect those arguments.
The applicants now assert the opposite, CSX said—that foreclosure theories don’t apply to railroad pricing as a categorical matter. CSX called the reversal a threat to the integrity of the board’s process and suggested regulators consider applying judicial estoppel.
Five shipper associations filed jointly the same week: the Alliance for Chemical Distribution, American Chemistry Council, American Fuel & Petrochemical Manufacturers, The Fertilizer Institute and the National Industrial Transportation League. They argued the application fails to address the range of competitive harms, document its benefit claims or account for the next round of consolidation the deal would likely trigger.
“After three attempts, the applicants still have not demonstrated that this merger would enhance competition or serve the public interest,” said Chet Thompson, chief executive of AFPM.
What comes next
The prima facie question is narrow. The board must decide whether the applicants’ evidence, taken in the light most favorable to them, is capable of supporting a finding that the deal serves the public interest. Objectors’ own evidence isn’t considered at this stage and hasn’t been filed.
If the board finds the threshold met, the merits proceeding begins, with testimony from shippers, states and rival carriers over the coming year. Union Pacific has pressed for a decision by August 2027.
If it doesn’t, the deal ends without a hearing.
