WASHINGTON, July 29 (Reuters) - Union Pacific's ( UNP )

proposed purchase of smaller rival rail operator Norfolk

Southern ( NSC ) will need to be approved by the Surface

Transportation Board in Washington, an independent federal

agency that oversees competition and other areas of importance

in the rail industry.

The $85 billion deal announced on Tuesday would create the

nation's first coast-to-coast freight rail operator and reshape

the movement of goods from grains to autos across the U.S.,

which are issues of focus for the board.

Below are details of the board and what it will examine for

the Union Pacific ( UNP ) deal.

What is the Surface Transportation Board?

Created in 1996, the agency reviews railroad mergers, rates,

service issues and big construction projects. It replaced the

Interstate Commerce Commission, which was established in

1887.

STB chairman Patrick Fuchs has said he wants the agency to

update the board's regulatory framework to improve competition

and reduce regulatory barriers.

The board rarely rejects mergers outright, but in 2021 it

rejected Canadian National's plan to place Kansas City

Southern in a temporary "voting trust" that would have allowed

Kansas City Southern shareholders to receive the deal's

consideration without having to wait for full regulatory

approval. That, and a higher bid from another Canadian railroad,

helped end Canadian National's bid.

What is the process for a railroad merger?

Approval could easily take a year or more. Applicants first

file a notice saying they intend to apply for a merger approval.

The application for the merger is then filed three to six

months after that. The STB then will decide if it is complete or

not, before opening for public comments and responses for 90

days.

It could then spend another year, hold a hearing, and get

rebuttals and additional filings. Once the evidence is closed,

the board will typically take another 90 days to issue a written

opinion that generally includes an oversight period.

The Attorney General also has authority to weigh in on large

railroad mergers, giving the Justice Department a potential say

in the merger.

What does the board usually recommend for a rail merger?

The STB's approval of the acquisition of Kansas City

Southern Railway Company by Canadian Pacific Railway Limited

came after a seven-day hearing and included an unprecedented

seven-year oversight period and contained many conditions to

address environmental impacts, preserve competition, protect

railroad workers, and promote efficient passenger rail.

What factors will the Board look at for the Union Pacific ( UNP )

deal?

The deal is the first to be considered under rules adopted

in 2001 that will "substantially increase the burden on

applicants to demonstrate that a proposed transaction would be

in the public interest," and would require them to show how the

deal will increase competition in key areas. The board will also

look at how shippers of products view the deal and its impact on

unions.

The largest U.S. rail union, the International Association

of Sheet Metal, Air, Rail and Transportation Workers, said it

intends to oppose the Union Pacific ( UNP ) deal in proceedings before

the Surface Transportation Board on Tuesday.

It fears the deal could reduce worker safety and job

security, and downgrade service quality.