WASHINGTON (Reuters) -Union Pacific's proposed purchase of smaller rival rail operator Norfolk Southern 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.

Union Pacific acquires Norfolk Southern, forming the first U.S. transcontinental railroad. Read the latest stock analysis on the merger here.

Union Pacific and Norfolk Southern could announce a tentative merger agreement as early as this week, according to a published report. Bloomberg cited sources familiar with the talks in its report on Friday.