The $85 billion merger is back on track, but Washington just slowed the train

Union Pacific and Norfolk Southern got the news they had been waiting for on Tuesday, wrapped in a warning they had been dreading. The Surface Transportation Board lifted the hold it placed on its review of their $85 billion merger in late May, restarting the process that would create America's first modern coast-to-coast freight railroad and reduce the six remaining Class I carriers to five.

The board was quick to stress that resuming the review is not the same as blessing the deal. It accepted the supplemental information the railroads filed in July, which included new customer protections such as service guarantees and fixed pricing agreements that the applicants say go beyond anything offered in a prior rail merger. But it also delivered a rebuke, finding that the companies had filtered out data they deemed immaterial before submission, in several instances stripping substantial portions of the underlying analysis. The full, unfiltered workpapers are now due back by 28 August.

The procedural schedule tells its own story. Rivals including BNSF and CSX, along with shipper groups such as the Freight Rail Customer Alliance and the National Grain and Feed Association, had pushed for the longest evidentiary period the law allows, arguing a transcontinental combination demands maximum scrutiny. The board largely agreed, rejecting a truncated timeline. Participants must file notice by 4 September, the Departments of Justice and Transportation submit preliminary comments by 3 December, and responses and protests are due by 16 February.

The board also denied the railroads' request for a fast-track proceeding on divesting control of the Terminal Railroad Association of St. Louis, saying it belongs within the larger case. The first deal judged under the STB's tougher 2001 merger rules will be judged slowly, and in full.