Shares of Union Pacific (UNP) and Norfolk Southern (NSC) declined after seven state attorneys general urged federal regulators to reject their revised merger application. Officials from Montana, Iowa, Kansas, Florida, North Dakota, South Dakota, and Tennessee petitioned the U.S. Surface Transportation Board (STB) to block the deal.
The attorneys general argue the combination is not in the public interest. The deal would create the first single-line transcontinental railroad in the United States. This entity would control over 50% of the U.S. Class I freight rail market. Officials claim the reduced competition will increase costs for farmers, shippers, and consumers.
Union Pacific stock fell 3.4% and Norfolk Southern shares dropped 3.2% following the announcement. The STB previously paused its review to request additional information regarding competitive and environmental impacts.