U.S. Board to Consider Ordering Rail Sales

The Surface Transportation Board, seeking to end severe rail service problems in Texas and the Gulf Coast, said it will consider whether to order sale of parts of the newly merged Union Pacific and Southern Pacific railroads to competitors. If the board eventually concludes that major sales are needed, it will mark one of the rare instances in which federal regulators have ordered even a partial breakup of a rail merger. There is no guarantee that the board--the successor to the old Interstate Commerce Commission--will take any action, and its order technically would set a procedural schedule only. But it represents a chance for competitors and disgruntled customers to force action on the grounds the merger gave too much market power to a railroad that may not be able to handle it. The railroad, which has apologized for its meltdown in service, issued a statement calling the board’s order “the proper response” to a formal petition from competitors. The Union Pacific statement cast the order as a routine matter, required under board rules. The board holds two days of hearings beginning today.