By David Shepardson
WASHINGTON, July 7 (Reuters) - Union Pacific and Norfolk Southern told a U.S. government agency Tuesday they are willing to divest ownership stakes in some smaller railroads as part of their proposed $85 billion merger.
The deal would create the first U.S. coast-to-coast freight rail operator.
Union Pacific and Norfolk Southern said they would not control the Terminal Railroad Association of St. Louis (TRRA), Kansas City Terminal Railway and TTX Company after the merger. The railroads
are jointly owned with other major carriers and operated by independent management teams.
Union Pacific and Norfolk Southern said they would divest ownership interests in those smaller lines if directed by the Surface Transportation Board. They argue other major carriers are using the smaller railroads, especially TRRA, to try to stop or delay the merger.
Union Pacific and Norfolk Southern, which will file additional answers to STB questions by July 27, have said they expect to close the transaction in the first half of 2027.
The carriers say the deal would save shippers an estimated $3.5 billion annually, improve service reliability, divert freight from trucks to rail, retain shipper options and deliver broad public benefits while protecting union jobs.
A number of groups, including freight shippers who fear higher rates, have raised concerns about the proposed merger, as have attorneys general in some states.
The railroads forecast that the network would result in taking approximately 2.1 million trucks off the road, with savings that should reduce consumer prices.
The deal could reshape the country's freight rail industry, helping to streamline operations and eliminate interchange delays in hubs like Chicago.
Opposition to the transaction remains active, including lobbying efforts by major rivals BNSF Railway and Canadian Pacific Kansas City.
President Donald Trump -- who has publicly backed the merger -- earlier removed from the STB Democratic board member Robert Primus, who could oppose the consolidation, and designated Republican Patrick Fuchs as chairman, a move seen as potentially making the regulator more receptive to approving the deal.
(Reporting by David Shepardson and Sabrina Valle; Editing by Aurora Ellis)
