Union Pacific and Norfolk Southern confirmed that they are in “advanced” merger talks that would create a single U.S railroad with service stretching from the East to the West Coast.

The Associated Press reported last week that the companies were discussing a tie-up but neither company acknowledged that until Thursday morning.

The potential merger would combine the largest and smallest of the country’s six major freight railroads.

Independent railroad analyst Tony Hatch said that the disclosure by the railroads suggests that negotiations are further along than previously thought.

“What people will interpret out of that is that they have, one way or another, figured out what the benefits are,” Hatch said, adding that those benefits, such as efficiency, would be passed on to customers. That will be key for getting regulatory approval under the Surface Transportation Board’s enhanced competition clause.

There’s widespread debate over whether such a merger would be approved by the STB, which has established a high bar for consolidation in the crucial industry.

That’s largely because of the aftermath of an industry consolidation nearly 30 years ago that involved Union Pacific. Union Pacific merged with Southern Pacific in 1996 and the tie-up led to an extended period of snarled traffic on U.S. rails. Three years later, Conrail was divvied up by Norfolk Southern and CSX, which led to more backups on rails in the East.

To be approved, any major rail merger must show it will enhance competition and serve the public interest under rules established in 2001, in the wake of that pair of mergers.