A coalition of seven Republican state attorneys general is urging the Surface Transportation Board to reject Union Pacific's proposed acquisition of Norfolk Southern, contending that the railroads have failed to demonstrate that the transaction would serve the public interest or enhance rail-to-rail competition.

The STB is the independent federal agency responsible for the economic regulation of freight railroads, including review of mergers between Class I railroads — the largest freight operators by revenue. There are currently six Class I railroads serving North America, and the proposed transaction would reduce that number to five.

In a letter filed with the STB's public record on Aug. 11, the attorneys general argued that the railroads' revised application — supplemented in July — depends on a proposed pricing remedy that would preserve only a narrow segment of existing competitive options while potentially driving up rates for shippers.

States Challenge Pricing Proposal

The letter was signed by Montana Attorney General Austin Knudsen, who 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.

This marks the third such filing aimed at blocking the proposal, which would create the first U.S. transcontinental freight railroad by combining Union Pacific's western U.S. network with Norfolk Southern's eastern operations. The objection follows President Donald Trump's earlier endorsement of the merger during an Oval Office meeting with UP Chief Executive Jim Venna. In November 2025, the top law enforcement officials from Florida and Ohio joined the current seven attorneys general in opposing the merger. A subsequent scrutiny letter in February dropped Florida and Ohio from the signatory list.

The current objection focuses on Union Pacific's (NYSE: UNP) and Norfolk Southern's (NYSE: NSC) proposed Committed Gateway Pricing, or CGP, arrangement. The plan is designed to establish rate protections for certain existing interline movements involving BNSF Railway (NYSE: BRK-B) and CSX Transportation (NASDAQ: CSX) through Chicago, St. Louis, Memphis, and New Orleans.

However, the states contend that CGP creates no new rail option for shippers. Instead, they argue, it would merely allow some current interline movements to continue after the merger — an outcome they characterize as the preservation of an existing option rather than the enhancement of competition mandated by the STB's merger criteria. Under merger rules adopted by the STB in 2001 following the last major wave of railroad consolidation, transactions involving Class I railroads must demonstrate that they enhance competition, not merely that they cause no harm.

Rate Concerns Dominate Critique

The officials also challenge the formula proposed for CGP rates. According to the letter, UP and NS would set rates at the 70th percentile of their own comparable traffic rates, rather than at a median or below-average benchmark.

That approach, the coalition argued, means many eligible shippers could face higher prices than they currently pay. The letter further cites the applicants' own expert evidence as acknowledging that the mechanism could incentivize higher rates on the traffic lanes used to calculate the CGP benchmark.

The states also noted that UP and NS have stated CGP service would not match post-merger single-line service in terms of speed or reliability and was not designed to compete with it. "If UP and NS admit CGP would not create competitive service, we should take them at their word," the attorneys general wrote.

Narrow Reach, Temporary Protection

Even under the railroads' revised proposal, the coalition said CGP would apply to only 0.9% of U.S. rail traffic. The arrangement excludes Canadian National (NYSE: CNI) and CPKC (NYSE: CP) interline traffic, automotive and intermodal shipments, storage-in-transit and railroad-owned transload movements, dimensional loads, and routes where more than one rail option already exists at both ends.

Moreover, the protection would be temporary, expiring at the end of the STB's oversight period, which the states estimated would likely span five years. That limited scope, the coalition argued, cannot counterbalance a deal that would produce a railroad controlling more than half of the U.S. Class I rail market.

Call for Outright Denial

The attorneys general emphasized that rail competition is particularly critical for agriculture, mining, forestry, and manufacturing — sectors whose customers may rely on a limited number of rail transportation options. They warned that further consolidation could result in fewer routing choices, higher rates for captive shippers, and supply-chain disruptions, especially in rural markets.

Echoing the approach of a recent filing by industrial shippers, the letter asks the STB to determine that UP and NS have failed to make the required prima facie showing — meaning "on its face" — that the merger serves the public interest, and to deny the revised application on that basis.

The filing adds a new state-government challenge to the railroads' effort to defend the proposed combination on the grounds of claimed operating efficiencies and customer benefits. The significance of the objection lies in the fact that the top law enforcement officials from seven states are asserting that the detrimental effects of an historic consolidation would outweigh the benefits the railroads have said would speed rail freight and modernize the U.S. supply chain.