BNSF–Union Pacific merger conditions dispute hits STB

The BNSF–Union Pacific merger conditions dispute is back in front of regulators, with BNSF Railway accusing Union Pacific of falling short on competitive access commitments tied to UP’s 1996 acquisition of Southern Pacific and to two quarry customers in Texas and Arkansas, as reported by Trains PRO.

This is reported by the railway transport news portal Railway Supply.

How the BNSF–Union Pacific merger conditions dispute began?

In February 2024, BNSF moved to secure access to two customers located on Union Pacific trackage, arguing that Union Pacific’s compliance with UP/SP merger commitments should guarantee competitive options at these sites. The request covered Colorado Materials’ Uvalde Quarry in Blewett, Texas, located off the former Southern Pacific Sunset Route west of San Antonio, and Granite Mountain Quarries near Little Rock, Ark. Before Union Pacific acquired Southern Pacific in 1996, both quarries were served by the two predecessor railroads.

Don’t miss…Amtrak train cleaning in Hampton Roads: fast turnarounds

Under the regulatory conditions attached to the UP–SP merger, BNSF was given the right to serve so-called “2-to-1” customers that previously had access to both UP and SP, as well as new customers at those 2-to-1 locations, which is why BNSF now argues it should be able to provide competitive access to quarries on UP trackage in Texas and Arkansas.

Quarries, 2-to-1 customers and merger commitments

BNSF says Union Pacific has blocked it from reaching the Uvalde Quarry and Granite Mountain Quarries and maintains that UP insists the two facilities are not eligible under the merger agreements between the carriers. In separate filings submitted last week to the Surface Transportation Board (STB), BNSF contends that Union Pacific documents show the Texas and Arkansas locations should qualify for competitive service from BNSF under the UP/SP merger conditions that were designed to protect 2-to-1 customers.

In its argument to the Board, BNSF presents the standoff as part of a broader pattern in which Union Pacific limits competition while formally operating under those merger conditions. The railroad told the STB that UP has “aggressively sought to limit” BNSF’s ability to provide the replacement competition that UP agreed to as a condition for the UP/SP Merger in 1996.

BNSF further argues that Union Pacific’s refusal to allow access to the two quarries “is emblematic of a broader pattern of conduct” aimed at eroding the competition-preserving bargain that UP struck to obtain Board authority for the UP/SP Merger and at preventing UP’s rail customers from receiving competitive service from BNSF.

The company notes that over the last quarter-century it has repeatedly and successfully sought to enforce its own and its customers’ rights under those conditions in the face of what it describes as UP’s continued efforts to limit competition by restricting BNSF access.

STB review, UP/NS plans and Union Pacific’s response

BNSF also links the current fight to Union Pacific’s intent to pursue a merger with Norfolk Southern, saying the way UP handles access to the Texas and Arkansas facilities should be taken into account in any future review of that deal, a topic also examined by Railway Supply. “Given UP’s intent to pursue a merger with Norfolk Southern, its compliance with past merger commitments is now a matter of heightened public and regulatory importance,” BNSF told the STB. The railroad says the Board and rail customers should take note of how UP has handled the UP/SP conditions so far and warns that there is “every reason to believe” Union Pacific will take a similar approach to any conditions placed on a potential UP/NS Merger, should the Board ultimately approve it.

The dispute has returned to the Surface Transportation Board following a June decision by the regulator. In that ruling, the STB said it was not convinced that BNSF had the right to reach the quarry customers as part of the conditions granted during the UP–SP merger, but it allowed BNSF to reopen the cases if it could provide additional historic information about which railroads had served the quarries, as detailed in an earlier Trains.com report. BNSF’s latest filings, which cite Union Pacific documents about the Uvalde Quarry and Granite Mountain Quarries, are intended to supply that information and reopen the cases so the Board can revisit BNSF’s access rights.

Union Pacific, for its part, maintains that BNSF is asking for more access than what is covered in settlement agreements between the two railroads. Company spokeswoman Kristen South said in an email that earlier in the summer — before UP’s intent to pursue a Norfolk Southern merger was announced — the Surface Transportation Board decided there was not sufficient information to support BNSF’s case, but gave the railroad a chance to return and present again. “BNSF has taken the opportunity to do so and we plan to participate fully, presenting our case to the STB,” South said. She added that Union Pacific’s focus remains “delivering the service we sold to our customers,” and reiterated that in both quarry cases BNSF is asking to expand on more than what was agreed upon under the UP/SP merger-related settlements.

News on railway transport, industry, and railway technologies from Railway Supply that you might have missed: