UP and NS Complete Fourth Merger Filing - Make Sure Your Voice is Heard

Dear BNSF Customers,

Yesterday, Union Pacific and Norfolk Southern submitted additional materials to the Surface Transportation Board (STB) in support of their proposed merger. This filing represents the fourth attempt by UP and NS to advance their merger application. While the companies describe the filing as containing new customer protections and competitive safeguards, our review indicates that the transaction's fundamental competitive concerns remain unresolved and these "new" commitments do not address the harms of the merger or provide shippers any meaningful protections.

More than a year after first announcing the transaction, UP and NS still have not demonstrated how combining two major railroads into a single carrier controlling 50% of U.S. freight rail traffic would preserve - much less enhance - competition as required by the STB's merger rules. Instead, the proposals highlighted yesterday are complex regulatory processes with temporary outcomes that would be unavailable to most rail customers.

For example, UP and NS continue to position Committed Gateway Pricing (CGP) as a major competitive enhancement. Yet even with the latest changes, the program would apply to only a small fraction (less than 1%) of rail shipments, would expire after a limited period of time and - according to the application itself - would result in higher rates for the majority of customers who are able to use it. It is not accurate to characterize a temporary program of limited eligibility that raises supply chain costs as enhancing competition in any way. Even in its adjusted form, CGP fails to remedy any of the competitive impacts of a merger that would consolidate roughly half of the nation's freight rail market under a single railroad.

The newly proposed service-triggered switching and rate-related conditions are similarly ineffective. For the limited number of customers that may qualify, all these proposals do is create uncertain pathways to expensive litigation with UP in pursuit of limited relief long after significant competitive harm or substantial service problems have already occurred. In other words, these programs do not prevent customers from experiencing higher rates, fewer transportation options or merger-related disruptions. Nor do they change the underlying market concentration created by the proposed transaction.

The latest filing also continues to rely on inflated truck-to-rail conversion and shipper-savings claims that have been central to the merger narrative since it was first announced. At the same time, however, UP and NS appear to acknowledge that some of the substantial growth they previously described as the core public benefit may be less certain than originally presented. The inability to achieve their unrealistic growth projections means merger costs will be funded by those customers who remain with fewer competitive options.

Importantly, yesterday's filing does not automatically move the merger into the next phase of review. The STB must still evaluate the supplemental information and determine the path forward. The Board still has important decisions to make regarding whether the application is ready to proceed to the critical full merits review.

If that merit review begins, customer engagement remains critically important. We appreciate the many customers who have already filed Notices of Intent to Participate and taken steps to ensure their perspectives are represented in the record. For those who have not yet done so, we strongly encourage you to consider filing a Notice of Intent to Participate. Doing so preserves your ability to participate in the proceedings if it moves forward and does not require you to take a position today or commit to future filings. It simply ensures your options remain open and your voice can be heard should the process advance.

The STB can only fully evaluate the real-world implications of this transaction if it hears directly from the customers, businesses and communities that rely on competitive rail transportation. The decisions made in this proceeding could shape the freight rail landscape for decades to come. We encourage you to make sure your perspective is part of that discussion.

Thank you for your continued partnership and for remaining engaged in this important process. We will continue to keep you updated as the situation evolves and additional information becomes available.

Sincerely,

Tom G. Williams
Executive Vice President & Chief Marketing Officer