The Pacific Railroad Act of 1862 was passed to connect the "Union", as in the northern states in the civil war, to the pacific - specifically California. It was "An Act to aid in the construction of a railroad and telegraph line from the Missouri river to the Pacific Ocean, and to secure to the government the use of the same for postal, military, and other purposes."

The north, central and southern routes had been surveyed and a report to congress in 1855 defined the routes. Debate in congress over which route to fund held up the start until the southern states succeeded from the north. Of the two remaining routes, the route to California was the more desirable because of the desire to keep California (with it's gold production and growing economy) in the Union. At the time there was still a huge concern that the western states could join the confederency. Making a solid link to the Union would hopefully help keep them a part of the Union.

Long story short, the transcontinental railroad was connecting the "Union" to the "Pacific", so the railroad took that name.