The Floor Transportation Board has turned down the long-shot efforts of opponents to carry a fast finish to Union Pacific-Norfolk Southern merger plans.
The board introduced late immediately (Friday, Sept. 18) that it had denied three motions — filed on Aug. 6 by BNSF Railway (NYSE: BRK-B), CSX (NASDAQ: CSX), and a coalition of shipper associations — that known as for abstract denial of the UP-NS merger utility on the grounds that the 2 railroads had not met the prima facie, or first look, normal in assist of the merger.
“Whereas the motions and associated feedback increase vital questions and points,” the board stated in a launch, “the Board decided that further proof and argument will assist its decision-making on this consequential transition of first impression. As such, the board workout routines its discretion to permit this continuing to proceed.”
In its five-page resolution, the board famous that the motions had argued that the UP (NYSE: UNP)-NS (NYSE: NSC) utility was fatally flawed due to the constraints of its major methodology of assembly the requirement to boost competitors, the Dedicated Gateway Pricing program. The coalition of six shipper organizations additionally claimed that the applying’s plans to deal with working issues ensuing from the unification of the 2 railroads was poor.
Union Pacific and Norfolk Southern, of their response, famous that to make a prima facie case, the applying was solely required to supply details that, if seen of their most favorable gentle, supported the requirement that the transaction was within the public curiosity.
Amongst different factors, the UP-NS response additionally stated the merger would improve competitors as a result of different railroads should reply to the advantages created by the merger — and that the motions have been an try and “litigate the deserves” of the applying earlier than the opponents’ feedback confronted the scrutiny of a full continuing.
In saying it might be aided by “a extra full report,” the board famous that analysis of the applying would be the first utility of the key merger guidelines adopted by the STB in 2001. It additionally stated those that filed motions and feedback ought to “renew any challenges or arguments concerning the deserves of the Transaction of their opening feedback.” Beneath the schedule beforehand outlined by the board, such challenges or feedback are due Nov. 18.
The choice, the board stated within the launch, “doesn’t replicate any dedication of the deserves of the proposed transaction, neither is it an endorsement of Candidates’ arguments, analyses, or positions.”
Events react
Union Pacific welcomed the choice.
“We’re happy the Floor Transportation Board unanimously rejected our opponents’ challenges to the merger utility,” spokeswoman Robynn Tysver stated in an electronic mail. “Union Pacific and Norfolk Southern submitted an unprecedented quantity of proof displaying this transaction is sweet for our workers, prospects, and America. Our opponents’ makes an attempt to keep away from overview of this deal will not be based mostly on details however concern of competitors.”
BNSF spokesman Zak Andersen stated in a press release that the railroad continues to consider the UP-NS utility is just not within the public curiosity, however added, “we respect the Board’s want to additional develop the report, and are inspired by its acknowledgment that the motions made by BNSF and others increase vital questions and points that may proceed to be raised throughout the deserves section of the method. We’re additionally inspired that it was acknowledged throughout the resolution what the vast majority of stakeholders have been saying all alongside; the applying lacks transparency and depth whereas providing mitigating circumstances of little profit to deal with the scope of aggressive harms we consider this merger represents.”
At CSX, spokesman Austin Staton stated, “Whereas we’re disenchanted with the result of Friday’s resolution, we admire the Board’s recognition of the vital questions and points that the varied prima facie challenges offered. Our place is unchanged, and we stay up for offering further proof and argument in our Nov.18 feedback.”
An official with one of many six shipper teams that filed a movement to disclaim, the American Gas & Petrochemical Producers, stated in a press release that the STB resolution a “procedural step” and stated the board “expressly said … vital questions concerning the candidates’ proposal stay unresolved.”
Rob Benedict, the group’s vice chairman of petrochemicals and midstream, additionally stated “AFPM continues to have critical issues that the merger might cut back competitors, diminish service for freight rail prospects and improve transportation prices all through the availability chain. … Union Pacific and Norfolk Southern nonetheless have substantial work to do to exhibit that this proposal would improve competitors and serve the general public curiosity because the Board’s overview continues.”
Amongst these submitting feedback in assist of the motions have been CPKC, a coalition of rail unions, and the Rail Passengers Affiliation, which supported the movement from the shipper teams whereas making its personal arguments concerning passenger points.
A CPKC spokesman reiterated feedback by Chief Government Keith Creel at a latest investor convention that “this regulatory physique goes to make their resolution based mostly on the reality. And I don’t assume the reality ever goes to allow a sure to that merger.”
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