WATCHING WASHINGTON, NOVEMBER 2025 ISSUE: Perhaps the gutsiest-ever regulatory agency decision was the Surface Transportation Board’s (STB) 2001 imposition of a railroad merger moratorium. Its architect was then-STB Chairperson Linda J. Morgan.
Widely anticipated to fail judicial review, a federal appellate court ruled the STB—with sole statutory authority to approve rail mergers—also had power to post a 15-month stop sign “to realize broader statutory objectives.” Morgan’s disquiet? All had not gone well after the agency acted with vigor in approving numerous Class I unifications during the 1990s.
High-profile service failures followed the 1995 Burlington Northern-Atchison, Topeka & Santa Fe merger to form BNSF; the 1997 Union Pacific (UP)-Southern Pacific marriage; and the 1998 CSX-Norfolk Southern (NS) acquisition of Conrail.
“I cannot in good conscience allow further [mergers] to occur that I believe would run the risk of creating more disruption and instability,” Morgan said in defending the moratorium to develop new merger rules.
Those “new” rules remain untested 24 years later, as the sole Class I unification since—Kansas City Southern (KCS) and Canadian Pacific (CP) to form Canadian Pacific Kansas City (CPKC) in 2023—was evaluated under different rules owing to KCS’s relatively small size. CPKC also suffered post-merger service hiccups.
Time and circumstances may justify a second merger timeout to reevaluate the long-dormant rules ahead of accepting a UP-NS merger application to create the nation’s first transcontinental railroad, which might beget yet a second (BNSF-CSX). As the UP-NS merger agreement is effective until Jan. 28, 2028—and allows further time for slippage—a timeout for merger rules reevaluation is doable. POTUS Executive Orders, which otherwise freeze new rulemakings, allow them if the issue is competition.
The rail industry today is materially different than in 2001—valid cause for long-dormant merger rules to be reevaluated and rewritten without ambiguity. Such betterment will assist applicants in making their case more effectively; permit stakeholders to tailor their concerns more narrowly; and create for regulators a more transparent checklist by which to evaluate mergers.
To be more clearly defined are “pro-competitive”; “downstream effects”; “common carrier obligation”; “public interest”; and how competitive “balance” is preserved absent a second transcontinental marriage. Remarkably, NS told the STB in 2000 that requiring competitive enhancements is “apparent antagonism toward mergers.”
Merger applicants should be required to demonstrate, with specificity, the merger’s likely harm, as well as benefits, to small railroads, communities and modal competition; how they intend to attract on their lines new factories and warehouses as domestic manufacturing is revived; and how they will poach market share from non-union truckers, given rail volumes were stagnant following the 1990s merger wave. The STB might also consider regulatory incentives to counter Class I asset, headcount and service cuts that improve short-term profits at the expense of rail market share.
To assure confidence in the merger review process, there must be clear understanding of regulatory tools available to repair post-merger service failures, preserve major gateways (points allowing traffic interchange with other railroads), and to police rate increases by revenue adequate railroads. Shippers should know how their rate reasonableness challenges will be handled post-merger, and if reciprocal switching can be made an effective pro-competitive remedy, especially absent a third rail competitor.
Regrettably, STB’s diamond reputation for decisional independence is at risk courtesy of UP CEO Jim Vena’s Sept. 9 White House visit. Following POTUS 47’s earlier firing of STB merger skeptic Robert E. Primus (in court over its legality), and his post-Vena-meeting merger-support shoutout, UP made a bad-optics contribution to POTUS 47’s $300 million White House ballroom. Erecting a temporary merger stop sign to revise, strengthen, clarify and make more transparent 24-year-old merger rules ahead of considering a UP-NS merger application may also be the STB’s best image-preserving mop-up option to this unfortunate doo-doo dump.
Railway Age Capitol Hill Contributing Editor Frank N. Wilner was assistant vice president, policy, at the Association of American Railroads and a White House appointed chief of staff to Republican STB member Gus Owen, who voted in favor of the 1997 UP-SP merger. He is author of “Railroads & Economic Regulation,” available from Simmons-Boardman Books, www.railwayeducationalbureau.com/product/railroads-economic-regulation-an-insiders-account/, 800-228-9670.
