Legislative Update: Rail Merger Faces Heightened Scrutiny as STB Orders Additional Information and Broad Opposition Challenges The Merger

Rail Merger Faces Heightened Scrutiny as STB Orders Additional Information and Broad Opposition Challenges The Merger

The Surface Transportation Board (STB) issued a May 28 decision accepting the revised merger application between Union Pacific and Norfolk Southern for review, but placed the proceedings and environmental review on hold pending additional information from the railroads by July 27, 2026. While the Board concluded that the revised filing technically satisfies minimum federal merger application requirements, it emphasized that key portions of the proposal remain underdeveloped, particularly regarding competition, market share analysis, gateway access, terminal railroad ownership, and the proposed “Committed Gateway Pricing” framework. The STB signaled a more skeptical regulatory approach toward major Class I rail mergers, stating that it intends to apply a rigorous “show me” standard to claims regarding competition, service reliability, supply chain impacts, labor effects, and potential downstream consolidation risks. The Board also ordered continued discovery and expressed concern about incomplete document production and the unprecedented scale of the proposed transcontinental merger.

UP and NS submitted the revised application on April 30 after the STB rejected their original December 2025 filing as incomplete. The updated proposal sought to address earlier concerns involving market-share projections, ownership and control issues tied to the Terminal Railroad Association of St. Louis (TRRA), and missing contractual documentation. However, opposition to the merger continues to grow.

The merger has faced an unusually broad and organized opposition from competitors, major shipper groups, unions, and elected officials.  BNSF and CPKC have formally opposed the merger and, along with the key shipper and labor groups, helped launch the Stop the Rail Merger Coalition in late April 2026. The coalition, of which the Vinyl Institute is a member, represents shippers moving more than half of all U.S. rail volume.  In a press statement today, the Coalition criticized UP and NS’s “extremely flawed proposal,” saying that the companies “have overstated benefits, minimized harm, and left critical questions unanswered,” said the Stop the Rail Merger Coalition, “This merger is a bad deal for American and must be rejected.”   A national poll released by the Coalition found that after being informed about the claimed impacts, about 71% of Americans opposed the merger, compared with roughly 20% in support.  A November 2025 letter, organized by the American Chemistry Council (ACC), assembled more than 60 trade groups, chambers, and businesses and urged the Board to “hit the brakes” on the deal.

More recently, in a May 22 letter, attorneys general from Montana, Florida, Iowa, Kansas, North Dakota, and South Dakota urged the STB to reject the revised application, arguing it still fails to adequately address competition concerns and the broader impacts on shippers and consumers. Led by Montana Attorney General Austin Knudsen, the coalition criticized the lack of clear market-share data and the insufficient analysis of how the merger could spur further consolidation in the rail industry. The officials also raised concerns about the handling of jointly owned rail assets and shared railcar pools, including the Kansas City Terminal Railway, TRRA, and TTX, warning that unresolved divestiture and governance questions could negatively affect freight movement and shipping costs across multiple states.

In Congress, at least 48 House members signed an early 2026 letter led by Rep. Dusty Johnson (R-SD), urging the STB to conduct a rigorous, skeptical review and flagging competition and service concerns. BNSF has reported that roughly 72 members of Congress have raised concerns or expressed opposition, while only a handful have shown explicit support for the merger.

House Appropriators Reject Deeper Trump EPA Cuts While Reducing Agency Budget and SRF Funding

The House Interior-Environment Appropriations Subcommittee approved a draft fiscal year 2027 spending bill that would provide $42 billion in discretionary funding for the EPA and the Interior Department. The measure advanced on a 7-5 party-line vote on May 21, with Democrats criticizing the proposed reductions and signaling plans to oppose additional cuts during the full committee markup scheduled for June 3. While the legislation rejects the Trump administration’s proposal to reduce EPA funding by roughly 52 percent, it would still cut the agency’s budget to approximately $7 billion, a reduction of $1.8 billion, or about 20 percent, below the fiscal 2026 enacted level.  The legislation also includes a 23 percent cut to the Drinking Water and Clean Water State Revolving Fund (SRF) programs, while President Trump’s budget proposal had requested a 90 percent cut to the SRFs. The drinking Water SRF will be cut from $1.126 billion this year to $910 million,  while the Clean Water SRF will be reduced to $1.192 billion from $1.639 billion in FY26.

The proposal also cuts funding for EPA science, environmental justice, and climate activities, while maintaining funding for the Superfund toxic cleanup program.  Rep. Chellie Pingree (D-ME), the subcommittee’s ranking member, argued that the reductions would further strain an agency that has already lost roughly one-fifth of its workforce since President Donald Trump returned to office.

EPA Releases $2.9 Billion for State Lead Pipe Replacement Efforts

On May 20, the EPA announced that approximately $2.9 billion is now available to states through the Drinking Water SRF’s Lead Service Line Replacement program to support the identification, planning, and replacement of lead service lines. The funding continues a lead pipe removal initiative launched during the Biden administration that aims to eliminate nearly 10 million lead pipes nationwide by 2037. EPA Assistant Administrator for Water Jess Kramer said the funding reflects the Trump administration’s commitment to reducing lead exposure and protecting public health by accelerating local replacement efforts. Congress slightly reduced the program’s original $3 billion allocation for fiscal 2026 by $125 million in order to support Interior Department wildland fire management programs, leaving the final funding level at approximately $2.875 billion.

EPA Delays TSCA Chemical Reporting Rule for Third Time  

The EPA announced a third delay to a Biden-era Toxic Substances Control Act (TSCA) reporting rule that requires manufacturers and importers to submit unpublished health and safety data for 16 high-priority chemicals under review for potential health and environmental risks. Under a May 22 final rule, EPA extended the reporting deadline by another year, moving the compliance date from May 22, 2026, to May 21, 2027, while the agency continues reconsidering the scope and requirements of the underlying rule. EPA stated the delay will allow additional time to evaluate concerns raised by industry regarding the rule’s breadth, reporting obligations, treatment of byproducts and impurities, and protection of confidential business information. The rule was originally adopted in December 2024 as part of the Biden administration’s broader effort to strengthen chemical data collection needed for TSCA risk evaluations and risk management actions.

TSCA has faced ongoing tensions between industry groups, environmental advocates, and regulators over EPA’s approach to chemical oversight. Industry organizations supported the extension and continue to challenge the original rule in federal court, arguing that the requirements are overly broad, administratively burdensome, and insufficiently targeted toward chemicals that present the greatest real-world exposure risks.   EPA indicated it is considering modifications to align the rule with President Donald Trump’s deregulatory executive orders and Administrator Lee Zeldin’s “Powering the Great American Comeback” initiative.

East Palestine Rail Safety Measures Added to Bipartisan Infrastructure Package

The House Transportation and Infrastructure Committee advanced its five-year surface transportation reauthorization bill, the BUILD America 250 Act (H.R. 8870), by a bipartisan 62-2 vote following a lengthy markup session before the Memorial Day recess. The legislation would authorize approximately $580 billion for highway and rail programs through fiscal year 2031 and serves as the successor framework to the 2021 bipartisan infrastructure law, which expires in fiscal 2027.

One of the contentious developments during the markup involved the addition of a rail safety provision linked to the 2023 East Palestine, Ohio, derailment. Rep. Troy Nehls (R-TX) successfully added the amendment despite opposition from Transportation and Infrastructure Committee Chairman Sam Graves (R-MO). The amendment closely mirrors rail safety legislation introduced earlier this year by Rep. Chris Deluzio (D-PA) and would require railroads to implement additional safety measures following concerns raised after the East Palestine incident.

President Donald Trump publicly backed the amendment, urging lawmakers to adopt the language. The committee ultimately approved the rail safety provision on a 54-11 vote, although several Republicans opposed it, highlighting lingering divisions within the party over federal rail safety mandates and industry regulation. The inclusion of the rail safety language could complicate the bill’s path forward as House leadership works to maintain bipartisan support ahead of floor consideration.

Conservative Frustration Grows as Reconciliation, Housing, and Other Priorities Face a Shrinking Legislative Calendar 

Tensions between House and Senate Republicans have intensified after Senate Republicans failed to advance the Trump-backed ICE funding package before the Memorial Day recess, reinforcing longstanding concerns among House conservatives about relying on the Senate to follow through on border security and immigration priorities. Many House Republicans believe they were pressured earlier this year into accepting a “two-track” strategy that separated broader Department of Homeland Security funding from the reconciliation package intended to provide additional resources for ICE and border enforcement. Conservatives had warned at the time that delaying comprehensive DHS funding would weaken leverage and create opportunities for Senate Republicans to slow or dilute enforcement priorities. Several House Republicans now argue that those concerns have been validated after Senate Majority Leader John Thune (R-SD) postponed a vote amid internal Senate objections to President Donald Trump’s proposed $1.776 billion “anti-weaponization fund.”

The dispute is further hardening House conservatives’ skepticism toward Senate leadership and could complicate future negotiations on immigration, appropriations, and reconciliation priorities. Republicans are facing growing political pressure as congressional leaders struggle to advance key parts of President Donald Trump’s agenda while voters remain focused on cost-of-living concerns such as housing affordability and inflation. With limited legislative time remaining before extended summer and fall recesses, GOP lawmakers must also contend with several major deadlines, including FISA reauthorization, government funding negotiations by Sept. 30, and two separate reconciliation packages.  At the same time, Republican leadership is being pulled into repeated procedural fights over Iran war powers resolutions pushed by Democrats.

In a rare display of bipartisan momentum, the House overwhelmingly passed a revised version of the 21st Century ROAD to Housing Act (H.R. 6644) by a 396-13 vote on May 20, after securing support from President Donald Trump and making several late changes to the legislation. The package aims to address housing affordability, expand housing supply, and promote homeownership ahead of the midterm elections, making it one of the few major bipartisan economic measures moving through Congress. The House version moved closer to the Senate-passed bill but still contains significant differences, including changes to provisions limiting Wall Street ownership of single-family homes and the addition of community banking deregulation measures championed by House Financial Services Committee Chairman French Hill (R-AR). While Senate Banking Committee Chair Tim Scott (R-SC) and Sen. Elizabeth Warren (D-MA) acknowledged the House bill improved during negotiations, both indicated additional work remains before a final agreement can be reached.

EPA Recycling and Composting Pilot Program Moves Forward in The House

On May 21, the House Energy and Commerce Committee unanimously approved the bipartisan Recycling Infrastructure and Accessibility Act (H.R. 2145), advancing the legislation to the House floor after a 45-0 vote. Sponsored by Rep. Mariannette Miller-Meeks (R-IA), the bill would establish an EPA pilot program designed to expand recycling and composting infrastructure, particularly in rural communities. The legislation would provide grants to improve curbside collection and processing systems while also giving the EPA additional authority to collect national recycling data and improve tracking of recycling rates. Supporters argued the measure would strengthen domestic recycling systems, improve resource recovery, and support economic and manufacturing interests. The Senate previously passed its companion measure (S. 351) in December, increasing the likelihood of further congressional action on the proposal. Committee Ranking Member Rep. Frank Pallone (D-NJ) described the legislation as an important step toward improving recycling accessibility and data collection nationwide.

Trade Court Pressures Trump Administration Over Delayed Tariff Refunds

The United States Court of International Trade (USCIT) is increasing pressure on the Trump administration over the pace of refunds tied to tariffs that were invalidated earlier this year. CIT Judge Richard Eaton ordered the administration and the plaintiffs to submit briefs by June 4 explaining whether the court should reinstate stricter deadlines for refunding tariffs collected under the International Emergency Economic Powers Act (IEEPA). The dispute follows the Supreme Court’s February ruling that President Donald Trump unlawfully imposed certain tariffs under IEEPA authority, after which the trade court ordered the government to reimburse importers for the duties paid. Earlier this year, Judge Eaton temporarily relaxed refund deadlines after U.S. Customs and Border Protection (CBP) argued it needed additional time to manage the enormous scale of repayments, which total more than $160 billion.

Since then, CBP has implemented its Consolidated Administration and Processing of Entries (CAPE) refund system and processed the simplest refund claims, with the agency stating that approximately $20.6 billion is now ready for repayment to companies. However, the government has not fully explained how it plans to handle more complex disputes involving tariffs connected to anti-dumping and countervailing duty proceedings, which collectively represent tens of billions of additional dollars in potential refunds. Judge Eaton also ordered CBP Commissioner Rodney Scott to appear in person at a June 9 hearing, signaling growing judicial frustration with the agency’s pace and scope of compliance.

USMCA Talks Intensify as U.S. Pushes Stricter Manufacturing Rules

Trade tensions and future revisions to the United States-Mexico-Canada Agreement (USMCA) top the agenda during this week’s U.S.-Mexico trade talks as both countries prepare to begin the agreement’s formal six-year review process.  The first of three rounds runs from May 27- 29 in Mexico City, with additional negotiating sessions planned for June 16-17 and the week of July 20.  The talks come as the three USMCA parties prepare for a critical July 1 decision on whether to continue the agreement or allow it to sunset in 2036 under the pact’s review mechanism.  So far, the USTR has not mentioned any scheduled talks with Canada.

Deputy U.S. Trade Representative Jeff Goettman is leading the U.S. delegation for the initial talks, which are expected to focus heavily on economic security issues and rules-of-origin requirements for key industrial goods. According to USTR, the broader goal of the negotiations is to ensure the agreement continues benefiting U.S. manufacturers, agricultural producers, workers, service providers, and businesses across multiple sectors.

The negotiations also reflect broader political and economic tensions shaping North American trade policy. The USTR Jamieson Greer said the U.S. aims to maintain tariffs on many goods from Mexico and Canada. Mexican President Claudia Sheinbaum stated that USTR Greer ultimately did not travel to Mexico City as previously expected because he remained in Washington for a Cabinet meeting, though she said he would remain in close communication with Mexican Economy Secretary Marcelo Ebrard.

The upcoming negotiating rounds are expected to address not only technical trade provisions but also larger strategic concerns related to supply chains, manufacturing competitiveness, and regional economic security.  Greer stated that the U.S. continues to have significant trade disagreements with Canada, particularly over Ottawa’s refusal to accept President Donald Trump’s tariffs on Canadian automobiles, steel, and aluminum. Greer criticized Canada for retaliating with its own tariffs on U.S. goods and contrasted Canada’s approach with that of other major trading partners, which he said have instead pursued trade negotiations and concessions with Washington. The tensions come amid broader strains in U.S.-Canada economic relations, including actions by several Canadian provinces to remove U.S. liquor products from store shelves and reports that Prime Minister Mark Carney said Canada’s military is exploring the purchase of Swedish early-warning aircraft from Saab rather than U.S.-based Boeing.  The Trump administration is also escalating its criticism of Canada’s new streaming content regulations, framing the measures as discriminatory trade barriers.