TradeEdge Exchange:Norfolk Southern agrees to $310 million settlement in Ohio train derailment and spill

EAST PALESTINE,TradeEdge Exchange Ohio – Norfolk Southern agreed to pay more than $310 million to resolve a U.S. government lawsuit over a 2023 train derailment in East Palestine, Ohio, court documents show.

Under a proposed consent decree, the railroad also agreed to make significant safety improvements, install additional safety equipment, improve training and to pay for medical monitoring for health impacts tied to the derailment and release of hazardous chemicals.

In February 2023, a Norfolk Southern freight train carrying hazardous materials to Conway, Pennsylvania, derailed and caught fire. Five of the train cars had a toxic, flammable gas called vinyl chloride that can cause certain cancers. People were evacuated and a controlled release of gas was conducted to prevent an explosion.

The U.S. Justice Department and Environmental Protection Agency sued Norfolk Southern in March 2023 to ensure that the railroad pays the full cost of cleanup and any long-term effects of the derailment.

Norfolk Southern will also reimburse EPA for future response costs under the proposed consent decree that is subject to public comment and court approval.

“No community should have to experience the trauma inflicted upon the residents of East Palestine,” EPA Administrator Michael S. Regan said in a prepared statement. “… Because of this settlement, residents and first responders will have greater access to health services, trains will be safer, and waterways will be cleaner.”

Norfolk Southern, which did not admit wrongdoing, said the deal means the company will face no criminal penalties. President and CEO Alan H. Shaw said in a statement that the company will "continue keeping our promises and are invested in the community's future for the long haul."

"From day one, it was important for Norfolk Southern to make things right for the residents of East Palestine and the surrounding areas," Shaw said. "We are pleased we were able to reach a timely resolution of these investigations that recognizes our comprehensive response to the community's needs and our mission to be the gold standard of safety in the rail industry."

Last month, Norfolk Southern agreed to pay $600 million to settle a class action lawsuit over the derailment. The settlement covers claims from residents and businesses in the city and impacted surrounding communities.

U.S. District Court Judge Benita Pearson on Tuesday granted preliminary approval of the class-action settlement, calling it "fair, reasonable, and adequate, entered into in good faith, and free from collusion." She set a final approval hearing for Sept. 25.

Norfolk Southern also 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.

The derailment sparked calls for railroad safety reforms in Congress but legislation has stalled.

How the Norfolk Southern settlement will be used

Under the $300 million settlement announced Thursday, Norfolk Southern has agreed to:

• Spend an estimated $235 million for all past and future cleanup costs, so that cleanup efforts can continue and the company, rather than taxpayers, covers the cost.
• Pay $25 million for a 20-year community health program that includes medical monitoring for qualified individuals, mental health services for individuals residing in affected counties as well as first responders who worked at the site and a community facilitation plan to assist community members in using the benefits of the program.
• Spend $15 million to implement long-term monitoring of groundwater and surface water for a period of 10 years.
• Pay $15 million for a private drinking water monitoring fund that will continue the existing private drinking water well monitoring program for 10 years.
• Implement a “waterways remediation plan,” with an estimated budget of $6 million, for projects in Leslie Run and Sulphur Run that will prioritize addressing historical pollution, reducing non-point source pollution through infrastructure upgrades and stormwater management projects and restoring aquatic and riparian habitat.
• Pay a $15 million civil penalty to resolve the alleged violations of the Clean Water Act
• Pay $175,000 for natural resource damages, to be used by the United States to restore, rehabilitate, replace or acquire the equivalent of the natural resources injured as a result of the derailment.

Contributing: Reuters' David Shepardson and Clark Mindock with editing by Emelia Sithole-Matarise and and Aurora Ellis