The US Surface Transportation Board (STB) has rejected Union Pacific Railroad's US$85 billion bid to acquire Norfolk Southern Railway, ruling the merger application incomplete, reports New York's Journal of Commerce.

The unanimous decision does not end the deal, as Union Pacific and Norfolk Southern can correct deficiencies and resubmit. UP must notify the board by February 17 if it intends to refile, with a deadline of June 22.

Once resubmitted, the STB will conduct a 30-day review of completeness, meaning a final ruling on the merger is unlikely before the second half of 2027.

In its 15-page decision, the board cited three major deficiencies. It said the traffic analysis relied on 2023 market share data without future projections, and criticised UP for failing to disclose "Schedule 5.8," which defines burdensome regulatory conditions that could allow UP to exit the deal.

UP argued the document contained attorney work products and need not be disclosed. BNSF Railway, Canadian Pacific Kansas City and Canadian National all filed objections based on these issues.

The board also ruled that the Terminal Railroad Association of St Louis control application was misclassified as a minor transaction instead of significant, requiring closer scrutiny. Several minor technical errors, including spelling mistakes and incorrect state labels, were also noted.