Union Pacific said on Tuesday it would buy smaller rival Norfolk Southern in an $85 billion deal to create the first U.S. coast-to-coast freight rail operator and reshape the movement of goods from grains to autos across the country.

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.