UP and CN Reach Landmark Settlement and Strategic Operating Agreement

On July 22, 2026, Union Pacific Railroad Company (UP) and Canadian National Railway (CN) announced a series of binding Memoranda of Understanding (MOUs) that could significantly reshape the competitive and operational landscape of North American freight rail. The agreements simultaneously resolve CN's concerns regarding UP's application to merge with Norfolk Southern Railway Company (NS) by securing CN's commitment not to oppose the transaction, while also establishing expanded trackage and operating rights for both UP and CN across key rail corridors and gateways.

The development comes as the Surface Transportation Board (STB) continues its review of UP's application. The agreements between UP and CN are expected to become an important component of UP and NS's (Applicants) competitive-access and public-interest case as the proceeding advances.

Key Terms of the UP-CN Agreements

The overall framework consists of two interconnected components: 1) a bilateral network expansion agreement that is independent of the acquisition outcome; and 2) an acquisition-related settlement agreement that would become effective upon STB approval and closing of UP's acquisition of NS.

1. Cross-Border and Chicago Network Enhancements

Separate from the proposed NS acquisition, UP and CN agreed to reciprocal operating arrangements intended to improve network efficiency and expand service opportunities. Under the agreement, UP will gain expanded operating rights over CN's Elgin, Joliet & Eastern Railway (EJ&E) corridor in Chicago, IL. Access to the EJ&E outer beltway would provide UP with a more efficient route around Chicago, reducing exposure to inner-city congestion and improving fluidity for transcontinental traffic. CN will receive new trackage rights over UP's network between Memphis, TN and Eagle Pass, TX. The arrangement provides CN with a more direct route to a key U.S.-Mexico border crossing and strengthens the railroad's ability to compete for Canada-Mexico intermodal and carload traffic.

2. Acquisition Settlement and Competitive Access Commitments

Contingent upon STB approval and consummation of UP's acquisition of NS, CN has agreed not to oppose the proposed acquisition. In exchange, the Applicants have agreed to a series of competitive-access measures intended to preserve customer options and address areas where rail competition could otherwise be reduced.

Terminal Railroad Ownership Transfers

CN will acquire NS's ownership interests in both the Terminal Railroad Association of St. Louis (TRRA) and the Kansas City Terminal Railway Company (KCT). These transfers are designed to address terminal-access and ownership-concentration concerns at two of the nation's most strategically significant rail hubs.

Expanded Midwest and Kansas City Access

CN will receive overhead trackage rights between Tuscola, IL and East St. Louis, IL, along with rights to serve customers between St. Louis, MO and Kansas City, MO. In addition, CN will obtain use of UP's Neff Yard, giving the railroad a direct operational presence in the heart of Kansas City for the first time.

Competitive Access Remedies for 2-to-1 and 3-to-2 Shippers

CN will gain access to shipper facilities where the proposed UP acquisition would otherwise reduce Class I rail competition from two carriers to one or from three carriers to two, subject to commercial and operational feasibility. These provisions are intended to preserve competitive transportation options for affected customers.

Regulatory Implications

The agreements represent a meaningful development for UP and NS as they pursue STB approval. By securing the non-opposition of one of North America's largest Class I railroads and addressing potential concerns related to terminal ownership, competitive access, and gateway preservation, the Applicants have strengthened their regulatory position.

At the same time, the UP-CN settlement does not predetermine the outcome of the STB's review. The Board must still evaluate whether the proposed acquisition is consistent with the public interest and whether the transaction adequately preserves competition, protects gateways, and avoids unreasonable market concentration. Shippers, competing railroads, labor organizations, and regulatory observers continue to scrutinize the proposed transaction and the effectiveness of the negotiated remedies.

Ultimately, the UP-CN agreements may provide an early indication of how major industry participants believe competitive concerns associated with the proposed acquisition can be addressed. Whether the STB concludes that these measures sufficiently mitigate broader competitive and public-interest concerns remains one of the central questions in the ongoing review of UP's application to acquire control of NS.