WATCHING WASHINGTON, FEBRUARY 2026 ISSUE: Call them the “menses horribiles.” They’ve not been kind to the desired wedlock of Union Pacific (UP) and Norfolk Southern (NS), and worse for UP CEO Jim Vena, whose results-driven assertiveness collided with his official-Washington naiveite.
Vena is under the glare because it isn’t NS CEO Mark George who boldly predicted a “99.999%” probability of merger approval; used crude language to disparage those adversely critiquing the merger application; or engaged in personal lobbying of the POTUS, widely interpreted as attempted intimidation of Presidentially nominated and Senate-confirmed rail regulators.
Vena journeyed to the White House in September to pursue favor from a POTUS infamous for humiliating those kneeling before him—Intel having been fleeced of a 10% equity stake and U.S. Steel affording the POTUS a right to veto major corporate decisions. Perhaps corporate heritage fogged Vena’s vision. Vena predecessor Drew Lewis was Ronald Reagan’s Transportation Secretary. Once serving on UP’s board were George W. Bush’s Transportation Secretary Andrew Card and Vice President Dick Cheney. UP ran a “funeral train” to transport the body of President George H.W. Bush from Houston to College Station, Tex., for burial.
POTUS 47 couldn’t grant Vena’s merger approval wish, as the law since 1920 allows only the independent Interstate Commerce Commission (ICC) and its successor Surface Transportation Board (STB) to rule on rail merger applications. Equally instructive, Vice President J.D. Vance, with cognitive ability superior to POTUS 47’s, has openly criticized “concentration in the corporate sector.”
So, who flubbed the dub? The attorneys responsible for the rejected application didn’t recently tumble off a turnip wagon with mail-order law degrees. More probable is that their UP and NS handlers—intoxicated with a sense of corporate dominance and inclined not to reveal much that might be useful to merger opponents—restricted the attorneys’ ability to prepare an application fully responsive to STB merger rule requirements.
Consider:
• Although STB’s so-called “new” rules for major railroad mergers have yet to be used since their 2001 publication, they are not puzzling to the outside legal counsel responsible for the merger application.
• The rules were developed by former ICC and then STB Chairperson Linda J. Morgan. At her STB term expiration, Morgan joined UP’s Washington law firm, Covington & Burling, which successfully superintended UP mergers with Chicago & North Western in 1995 and Southern Pacific in 1996—both winning then-regulator Morgan’s support.
• Covington & Burling’s lead attorneys for those mergers were the late Arvid Roach and now retired J. Michael Hemmer—the latter subsequently becoming UP’s senior vice president for law. Tutored in merger application preparation by the two was young Covington & Burling attorney Michael L. Rosenthal, now heading the firm’s Transportation Practice Group still representing UP.
• Representing NS are attorneys Ray Atkins and William A. Mullins. Atkins is a former Covington & Burling attorney, formerly STB general counsel, also a Ph.D. economist and now with the law firm Sidley & Austin. Mullins was an ICC chief of staff and later represented Kansas City Southern.
• While Rosenthal, Atkins and Mullins are unrivaled in background and experience to write an exceptional merger application, they are dependent on client authority to disclose fully accurate data, some of which those in the C-suite claim to be privileged. Such disclosure is essential to avoid STB from again stamping their work “incomplete.” (Attorneys do not tattle on clients, so there may be other explanations, but we are doubtful fault lies with Rosenthal, Atkins and Mullins.)
Among what the STB seeks in a revised application are, for example, evidence-based explanations of how the applicants intend to grow intermodal units by some 12% (1.4 million diverted from motor carriers; 450,000 from competing railroads). Notable is that intermodal’s compound annual growth rate has been flat for 10 years, and rail analyst Rick Paterson predicts another “lost decade of volume growth.” And should BNSF and CSX seek marriage if UP and NS merge, they also will be pressed to project a boost in intermodal volume.
The revised application requires greater transparency as to what headwinds applicants face and how they intend to overcome them to achieve the merger benefits they claim. Headwinds to intermodal growth include battery improvements allowing EV trucks to compete with rail on long-haul routes; increased use of driverless tractor trailers already operating on a 600-mile route between Ft. Worth and El Paso; Congress’ decades-long unwillingness to increase highway user charges to levels that recover fully the costs of bridge and pavement damage caused by big trucks; lawmaker liberalization of truck size and weight limits; and willingness of intermodal marketing companies to invest billions in facilities expansion. Trade tensions, diminished hiring and weaker consumer spending also lurk.
To be considered on the rail side are what transportation consultant Michael Weinman (PTSI Transportation) terms “friction factors” (minor annoyances driving customers elsewhere). They include problems navigating rail websites; the pain of negotiating volume rates; difficulty tracking loads; first- and last-mile delays; cargo theft and damage; and shortages of container chassis.
As for St. Louis switching, history adds context. In 1912, the Justice Department invoked the Sherman (Antitrust) Act against Terminal Railroad Association of St. Louis (TRRA), which held financial control of Mississippi River rail crossings and lighterage service. Rather than order divestiture, the SCOTUS ruled TRRA must act with neutrality in its pricing and service, finding large size and monopoly not necessarily evil.
Another issue deserving of greater transparency in a resubmitted application is whether merger benefits outweigh the costs, and whether projected service improvements and traffic growth can alternatively be achieved through partnerships. Merger proponents say single-line service streamlines high-volume interchange and significantly reduces ton-mile costs; that partnerships can dissolve; that incentives are never aligned; and when two separate railroads interchange freight cars, it can take hours or days.
Proponents of partnerships say pre-blocking can reduce physical transfers to just one hour; that if partnerships fray, they can be improved; and mergers may enlarge a firm to where it cannot be managed efficiently—the bureaucracy becoming too large and communications breaking down.
History, again, can be a guide. A precursor to Precision Scheduled Railroading (PSR) occurred in 1931 when six small railroads—Central of New Jersey, Reading, Western Maryland, Pittsburgh & West Virgina, Wheeling & Lake Erie and New York, Chicago & St. Louis (Nickel Plate)—partnered to challenge successfully the single-line service of railroads New York Central, Pennsylvania and Baltimore & Ohio between origin points of New York, Philadelphia and Baltimore, and destination points of Chicago and St. Louis. Known as the Alphabet Route for the waybill acronyms (CNJ, RDG, WM, P&WV, W&E and NKP), trains eastbound and westbound were built incrementally through precision scheduled physical transfers.
Decades ago, on the eve of a previous “largest rail merger in history,” the SCOTUS observed, “If not handled properly, [Penn Central] could seriously disrupt and irreparably injure the entire railroad system.” The same applies today, with the independent STB disregarding calls to rubber stamp a merger on the basis of high-level political connections and heeding six-decade-old SCOTUS advice to be methodical.
That Vena, a respected and competent railroader, is not Washington savvy is not atypical of CEOs. Solace may be found in the words of 16th century Scottish sea captain Sir Andrew Barton:
I am not hurt,
I am not slain;
I’ll lay me down and bleed a-while,
and then I’ll rise and fight again.
