Norfolk Southern must pay $310 million in compensation after train derailment in Ohio

Norfolk Southern has agreed to pay more than $310 million to settle claims and cover costs related to the February 2023 derailment of a freight train carrying hazardous materials in an Ohio city, the federal government announced on Thursday.

The Justice Department and Environmental Protection Agency said the settlement, which still needs to be approved by a federal court, would require Norfolk Southern to improve rail safety and cover the costs of repairing the damage and health and environmental monitoring in and around East Palestine, Ohio, where the accident occurred.

On a Friday night in early February last year, 38 cars of a Norfolk Southern train derailed, 11 of which were carrying hazardous materials such as vinyl chloride, a chemical used to make plastics. Days later, emergency responders, fearing an explosion, decided to release vinyl chloride from derailed cars and burn them, sending huge dark clouds of smoke billowing over the city. Hundreds of residents were evacuated and life in eastern Palestine was turned upside down for months. There were no deaths.

Michael S. Regan, head of the EPA, said the agreement ensures that the cost of cleaning up the pollutant emissions will be paid by the company, which could help prevent similar disasters.

“I am committed to restoring community health and safety, and I am committed to holding Norfolk Southern accountable for the disaster it has inflicted on the people of East Palestine and the surrounding communities,” Mr. Regan said in a phone call with reporters. “And, folks, I’m proud to say we are delivering on those commitments today.”

The bulk of the settlement is an estimated $235 million to cover past and future environmental cleanup costs. About $15 million is a civil penalty related to allegations that the railroad violated the Clean Water Act. Norfolk Southern did not admit liability in the settlement.

“We are pleased that we were able to complete these investigations in a timely manner. This recognizes our comprehensive response to the needs of the community and our mission to be the gold standard for safety in the railroad industry,” Norfolk Southern CEO Alan H. Shaw said in a statement.

The company said it has already set aside money to cover the costs of the settlement. In total, the company expects to pay out $1.7 billion, a sum that includes a $600 million settlement for a class-action lawsuit by residents and businesses announced last month.

The accident highlighted the dangers posed by freight trains and cast a harsh light on the rail industry’s safety practices. Investigators believe the Norfolk Southern train derailed after a wheel bearing overheated. Railroads place detectors along tracks to detect overheated bearings and alert employees to stop trains to prevent accidents. But the East Palestine train failed to pass such a detector for nearly 20 miles, meaning its overheated bearing could not be identified in time.

Last year, lawmakers introduced a bill to improve railroad safety by requiring minimum distances between detectors, with some exceptions. But despite fierce opposition from industry and supporting lawmakers, the legislation failed to advance in Congress.

Mr. Regan said the safety measures set out in the settlement with Norfolk Southern were based on legislation that would require Norfolk Southern to install hot gas detectors every 15 miles on tracks that frequently transport hazardous materials, which would cover much of the company’s network. The bill in Congress would require detectors every 15 miles on major lines, with some exceptions.

In a phone call with reporters, Mr. Regan said the security measures were a “game changer.” And he claimed that Norfolk Southern’s application of the measures would demonstrate that they were “feasible, cost-effective and technologically sound.”

The EPA and Justice Department said Norfolk Southern’s safety improvements would cost more than $200 million, an amount not included in the $310 million settlement. Norfolk Southern announced a safety plan shortly after the derailment that said it would install about 200 hot storage detectors.

Under the agreement, the railroad will spend $25 million over 20 years on a public health program, most of which will go toward medical monitoring. The program will not, however, cover the cost of any treatment that might follow the tests.

“Medical monitoring is not enough,” said Jess Conard, a speech therapist who has worked as an activist in East Palestine since the derailment. “We need the certainty that our examinations, our treatments and all the follow-up services will not bankrupt us.”

David M. Uhlmann, deputy chief of enforcement at the EPA, said in an interview that the laws that formed the basis of the settlement – the Superfund law and the Clean Water Act – did not give the government the authority to recover health care costs.

The settlement does not resolve all of the regulatory and legal challenges facing Norfolk Southern.

The attorneys general of Ohio and Pennsylvania are still investigating the company, and next month the National Transportation Safety Board will release its final report on the accident, which is also expected to include recommendations for new safety rules.

Before the accident, Norfolk Southern’s safety record was already poor. But last year, its accident rate improved significantly while other major U.S. freight railroads continued to deteriorate.