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Norfolk Southern agrees to $1B in settlements for East Palestine

The derailment contaminated air, water and soil near the site

Sen. J.D. Vance, R-Ohio, has sought to drum up support for a rail safety measure.
Sen. J.D. Vance, R-Ohio, has sought to drum up support for a rail safety measure. (Bill Clark/CQ Roll Call)

Norfolk Southern Corp. on Thursday agreed to spend about $1 billion on cleanups, monitoring and compensation to victims to settle lawsuits by the Justice Department and affected residents over the railroad operator’s February 2023 train derailment in East Palestine, Ohio.

That includes the proposed resolution of a class action suit, in which Norfolk Southern promises to pay $600 million for compensation for injuries resulting from exposure to harmful chemicals.

A DOJ official said Norfolk Southern is not expressly admitting liability or wrongdoing with these settlements, including in the class action suit.

The Justice Department filed suit in March 2023 on behalf of the EPA in the U.S. District Court for the Northern District of Ohio over the train derailment, which released hazardous chemicals into the surrounding air, soil and water.

The DOJ complaint said that hazardous materials were emitted into the air and spilled onto the ground, contaminating local waterways and flowing miles downstream, and noted that the company’s operating costs on safety-related measures had dropped in previous years.

The settlement with the government will require the rail company to spend an estimated $235 million for all past and future clean up costs, $25 million for a 20-year community health program, $30 million on groundwater and private drinking water monitoring, and pay a $15 million civil penalty, according to an EPA news release. The proposed settlement is subject to a public comment period and final court approval.

“We have reached an unprecedented resolution to that suit,” Acting Associate Attorney General Benjamin C. Mizer said Thursday on a call with reporters. “This resolution cannot undo the damage that was done last February. But we hope that this settlement will be an important step forward in protecting the community, helping it heal and preventing a tragedy like this from happening again.”

EPA Administrator Michael S. Regan said on the call that the penalties will cover federal agencies’ expenditures, and that Norfolk Southern will likely spend an additional $200 million to comply with other rail safety requirements set out in the deal. That includes installation of hot bearing detectors — a tool to measure temperatures following a National Transportation Safety Board preliminary report that linked the derailment to an overheated wheel bearing — and increased staffing to monitor data from track-side sensors.

The class action settlement agreement would resolve all such claims within a 20-mile radius of the derailment as well as personal injury claims within a 10-mile radius. The class action settlement has been approved by the court, a Norfolk Southern spokesperson said, but residents still need to opt in.

Together with other response costs and rail safety enhancements, Norfolk Southern estimated that it will spend more than $1 billion to address the contamination and other harms caused by the East Palestine derailment and improve rail safety and operations.

“If you would take a look at what we have codified and locked in that Norfolk Southern will be required to do from a real safety standpoint, you’ll see that they are going above and beyond,” Regan said. “I think it’s safe to say that it is a game changer for the industry … we have gone to the fullest extent of the statutory authority that Congress has given us based on the facts that we see.”

Resident reaction

Some residents near the derailment site are worried that it isn’t enough, especially as concerns over long-term health impacts grow.

Hilary Flint, campaign specialist for the Clean Air Action Fund, and who lived roughly 4 miles away from the derailment site, said her payout from the class action settlement would be less than her medical bills over the past year.

Flint relocated after the derailment, but returned to her home last week for work. She said in a text message that she’s been off work for a week with bronchitis, and that her younger siblings who live in the area are still struggling with respiratory issues.

“For my family we’d AT MOST be receiving less than $20k per person,” Flint said in a text. “But after this last instance and now me being bedridden for almost a whole week I have to consider finding a different job. This derailment has derailed our lives in many ways … $20k isn’t going to solve the issues it’s created for me.”

Flint said her family will be opting out of the class action settlement and pursuing an individual suit against Norfolk Southern, and added that others that have health issues following the derailment told her they also intend to opt out.

“Honestly, I still think Norfolk Southern is getting off pretty easy,” she said. “In 5-10 years we will look back at this with even more disgust.”

Eyes on Congress

A few weeks before the lawsuit was filed, Norfolk Southern CEO Alan Shaw testified in the Senate that the company would fully restore environmental and economic conditions in the Ohio community. The railroad operator said on its website that it has spent $107 million total in community support to East Palestine so far, and that the final truckload of impacted soil has been removed from the derailment zone and transported offsite.

The House passed legislation Tuesday that included language to exempt Norfolk Southern Railroad’s payments to residents impacted by the East Palestine train derailment from federal taxes. Similar language is also in the broader tax bill being discussed in the Senate.

Lawmakers are still struggling to pass broader rail safety legislation following the derailment, including provisions to increase fines for wrongdoing by rail carriers and require railroads to operate with at least two-person crews. Meanwhile, a group of Republicans is mulling legislation that would undo a Biden administration rule finalized last month to mandate that freight trains have two crew members on board unless railroads can prove that one-person operations would be just as safe.

Although Sen. J.D. Vance, R-Ohio, said last year he had whipped enough GOP votes to pass the rail safety bill, the measure has yet to be considered on the floor. House Transportation and Infrastructure Chair Sam Graves, R-Mo., said he wouldn’t take up the legislation in committee until the NTSB releases its final report on the derailment.

Sen. Sherrod Brown, D-Ohio, has blamed the delay on the railroad lobby. According to OpenSecrets data, Norfolk Southern spent $2.3 million on federal lobbying last year, up from $1.8 million in 2022.

Regan said on the call that many provisions from the rail safety bill are included in the settlement, including language related to expanded compliance for high hazard flammable trains.

A Norfolk Southern spokesperson said in an email earlier this year that it “supports legislation to enhance the safety of the freight rail industry,” including provisions that would provide for industry-funded training for first responders, enforce stricter standards for tank car designs and accelerate the phaseout of older tank cars.

“There are other aspects of the proposed legislation that we support in principle,” the spokesperson said. “Establishing performance standards, maintenance standards, and alert thresholds for safety sensors is one example.”

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