Norfolk Southern has already spent more than $1.1 billion on its response to the derailment, including more than $104 million in direct aid to East Palestine and its residents. Partly because Norfolk Southern is paying for the cleanup, President Joe Biden has never declared a disaster in East Palestine, which is a sore point for many residents. The railroad has promised to create a fund to help pay for the long-term health needs of the community, but that hasn’t happened yet.
The plaintiffs’ attorneys said the deal is the result of a year of intense investigation of the derailment, and should provide meaningful relief to residents.
“This resolution comes shortly after the one-year anniversary of the disaster and will provide substantial compensation to all affected residents, property owners, employees and businesses residing, owning or otherwise having a legal interest in property, working, owning or operating a business for damages resulting from the derailment and release of chemicals,” said Seth A. Katz of Burg Simpson Eldredge Hersh & Jardine, P.C., M. Elizabeth Graham of Grant & Eisenhofer P.A., Jayne Conroy of Simmons Hanly Conroy LLC and T. Michael Morgan of Morgan & Morgan, P.A.
The railroad also announced preliminary first-quarter earnings of 23 cents per share Tuesday to reflect the impact of the settlement.
Railroad CEO Alan Shaw, who is fighting for his job against an activist investor who wants to overhaul the railroad’s operations, said Norfolk Southern is “becoming a more productive and efficient railroad. There is still more work to be done to achieve industry-competitive margins.”
The railroad said even though volume was up 4% during the quarter, its revenue fell by 4% because of lower fuel surcharge revenue and changes in the mix of shipments it handled.
Ancora Holdings is trying to persuade investors to support its nominees for Norfolk Southern’s board at the railroad’s May 9 annual meeting.
Last week federal officials said that the aftermath of the train derailment doesn’t qualify as a public health emergency because widespread health problems and ongoing chemical exposures haven’t been documented.
The Environmental Protection Agency never approved that designation after the February 2023 Norfolk Southern derailment even though the disaster forced the evacuation of half the town of East Palestine and generated many fears about potential long-term health consequences of the chemicals that spilled and burned. The contamination concerns were exacerbated by the decision to blow open five tank cars filled with vinyl chloride and burn that toxic chemical three days after the derailment.
The head of the National Transportation Safety Board said recently that her agency’s investigation showed that the vent and burn of the vinyl chloride was unnecessary because the company that produced that chemical was sure no dangerous chemical reaction was happening inside the tank cars. But the officials who made the decision have said they were never told that.
The NTSB’s full investigation into the cause of the derailment won’t be complete until June, though that agency has said that an overheating wheel bearing on one of the railcars that wasn’t detected in time by a trackside sensor likely caused the crash.
The EPA has said the cleanup in East Palestine is expected to be complete sometime later this year.
Shares of Norfolk Southern Corp., based in Atlanta, fell about 1.3% before the opening bell Tuesday.
