Norfolk Southern has agreed to pay $600 million in a class-action lawsuit related to the February 2023 fiery train derailment in eastern Ohio.
The company said the settlement, if approved by the court, would resolve all class action claims within a 20-mile radius of the derailment, and for residents who choose to participate, personal injury claims within a 10-mile radius of the derailment.
About 50 cars of the freight train, which had approximately 150 cars and three locomotives, derailed on the outskirts of East Palestine, near the Pennsylvania state line, with some cars carrying hazardous materials. The evacuation affected 1,500 to 2,000 of the city’s approximately 4,800 to 4,900 residents.
Norfolk Southern said Tuesday that individuals and businesses will be able to use compensation from the settlement in any way they see fit to address the potential adverse impacts of the derailment, which could include health care needs, property restoration and compensation for any net business loss. Persons within 10 miles of the derailment may, at their discretion, elect to receive additional compensation for any past, present or future personal injuries from the derailment.
The company said the settlement does not include or constitute an admission of liability, wrongdoing or fault.
The settlement is expected to be submitted for preliminary approval to the US District Court for the Northern District of Ohio later in April 2024. Payments to class members under the settlement could begin by the end of the year, subject to final court approval.
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. In part because Norfolk Southern is paying for the cleanup, President Joe Biden has never declared a disaster in East Palestine, a sore spot for many residents. The railroad promised to set up a fund to help pay for the community’s long-term health care needs, but that has yet to happen.
Lawyers for the plaintiffs said the deal was the result of a year-long intensive investigation into the derailment and should provide significant relief to residents.
“This resolution comes shortly after the one-year anniversary of the disaster and will provide significant compensation to all affected residents, property owners, employees and businesses who reside, own or otherwise have a legal interest in property, work, own or operate a damaged business resulting from derailments and chemical releases,” said Seth A. Katz of Burg Simpson Eldredge Hersh & Jardine, PC, M. Elizabeth Graham of Grant & Eisenhofer PA, Jane Conroy of Simmons Hanly Conroy LLC and T. Michael Morgan of Morgan and Morgan, Pennsylvania
The rail company also announced preliminary first-quarter earnings of 23 cents per share on Tuesday to reflect the impact of the settlement.
Railroad CEO Alan Shaw, who is running for office 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 a lot of work to do to achieve competitive margins in the industry.”
The rail company said that although volume rose 4% in the quarter, its revenue fell 4% due to lower fuel surcharge revenue and changes in the mix of freight it handles.
Ancora Holdings is trying to convince investors to support its candidates for the Norfolk Southern board at the railroad’s annual meeting on May 9.
Last week, federal officials said the fallout from train derailment does not qualify as a public health emergency because widespread health problems and ongoing chemical exposures have not been documented.
The Environmental Protection Agency has never approved this designation since the February 2023 Norfolk Southern derailment, although the disaster forced the evacuation of half a city in eastern Palestine and gave rise to many fears for potential long-term health effects from the chemicals that spilled and burned. Pollution fears were exacerbated by the decision to blew up five tank cars filled with vinyl chloride and burning this toxic chemical three days after the derailment.
The head of the National Transportation Safety Board said recently that her agency’s investigation showed that venting and incinerating the vinyl chloride was unnecessary because the company that produced the chemical was sure there was no dangerous chemical reaction going on inside the tanks. But the officials who made the decision said they were never told that.
The NTSB’s full investigation into the cause of the derailment it won’t be finished until Junealthough the agency said that an overheated wheel bearing on one of the cars, which was not detected in time by a trackside sensor, probably caused the crash.
The EPA said the cleanup in East Palestine is expected to be completed later this year.
Shares of Atlanta-based Norfolk Southern Corp. fell about 1.3 percent in premarket trading Tuesday.
