Update: Broad Opposition Calls for STB to Reject UP-NS Application

Dear BNSF Customers,

A significant development has occurred over the last week in the review of the proposed Union Pacific-Norfolk Southern merger. Six major rail customer organizations have asked the Surface Transportation Board (STB) to deny the merger application now, on the grounds that it fails to satisfy the STB's threshold requirements for moving forward with the proceeding. The filings - one made by the Alliance for Chemical Distribution, American Chemistry Council, American Fuel & Petrochemical Manufacturers, National Industrial Transportation League and Fertilizer Institute, and one made by the National Grain and Feed Association, echo similar filings made by BNSF, other railroads, and a group of Republican state attorneys general. These filings follow months of requests from the STB for additional information, as well as multiple supplemental submissions from the applicants. They also reiterate important questions about whether the proposed merger would provide customers with meaningful new competitive options or ultimately diminish competition across key freight markets.

The rail customer groups argue that, even after several rounds of revisions, the application shows that the merger is not in the public interest and should be rejected now, without the need to conduct a lengthy proceeding on its merits. These organizations represent some of the nation's largest rail users, whose members ship millions of carloads annually and depend on competitive freight rail service. They contend that the application relies on overstated benefits while failing to adequately address the substantial harm the transaction would have on competition, customer choice and service over the long term.

BNSF's filing focuses on what we believe remains a central issue: competition. The STB has repeatedly emphasized that major mergers must do more than preserve the status quo; they must enhance competition. Our position is that the competitive commitments proposed by UP and NS neither protect existing competitive options nor create meaningful new rail options for most customers, and therefore do not meet that standard. The filing from the state attorneys general, who are tasked with preserving competitive options for their citizens, makes a similar point: "A merger that creates a 50%+ market share railroad cannot make a prima facie showing that it enhances competition without providing much more."

These filings reflect concerns expressed by a broad range of stakeholders, including railroads, national shipper organizations, rail labor groups, elected officials and local communities. Together, these stakeholders represent industries, workers and communities across the country that depend on a competitive freight rail network. They have urged regulators to carefully evaluate whether the proposed transaction meets the Board's public-interest and competition standards.

More broadly, we believe customers should pay close attention to what this debate reveals about the importance of competition. The key question is not usually which railroad prevails in a particular dispute, but whether customers emerge with meaningful transportation alternatives that actually function in the real world. For shippers making long-term investments in facilities and supply chains, competitive options can provide greater flexibility and resilience while reducing dependence on a single railroad.

The STB has not yet ruled on these requests to summarily deny the merger application. The STB may ultimately decide to conduct a full proceeding to decide whether the UP and NS merger is in the public interest, with more opportunity for you and other stakeholders to comment on the merits of the proposed merger. Regardless of the procedural path the STB chooses, we have every confidence in the STB's ability to conduct a thoughtful and comprehensive review of the facts and determine the appropriate path forward. BNSF remains committed to supporting a freight rail system that promotes competition, customer choice, service reliability and continued investment. We believe the appropriate standard is whether the transaction delivers clear, demonstrable benefits to those who depend on the nation's freight rail system every day.

Thank you for your continued engagement and partnership. We will continue to keep you informed as the STB evaluates these filings and determines how the process will move forward.

Sincerely,

Tom G. Williams
Executive Vice President & Chief Marketing Officer