Norfolk Southern will pay modest $15 million fine as part of federal settlement over Ohio derailment

Many East Palestine residents feel this settlement doesn't do nearly enough to a company that just reported a $527 million profit in the fourth quarter of last year.
Train Derailment Ohio
Posted at 10:39 AM, May 23, 2024

The federal government agreed to a modest $15 million fine for Norfolk Southern over last year's disastrous derailment in East Palestine, Ohio, and the railroad promised to pay more than $300 million to complete the efforts to improve safety that it announced after the crash and address community health concerns.

The Environmental Protection Agency and Justice Department announced the agreement Thursday — two days after a federal judge signed off on the railroad's $600 million class action settlement with residents whose lives were disrupted. In addition to the civil penalty, Norfolk Southern agreed to reimburse the EPA an additional $57 million in response costs and set up a $25 million health care fund to pay for 20 years of medical exams in the community. The railroad will also pay $25 million to $30 million for long-term monitoring of drinking water and groundwater.

“This settlement is historic in many ways. And will begin to make up for some of the damage caused to the residents of East Palestine. And it would absolutely push the industry in the direction that we would like for the industry to go,” EPA Administrator Michael Regan said. “Again, if some of these provisions that we’ve secured and locked in had been in place, we may not even be where we are today. ”

Smoke above derailed trains cars.

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But the railroad won't face criminal charges, and this latest settlement won't add anything to Norfolk Southern's roughly $1.7 billion in total costs related to the derailment because the Atlanta-based company was already anticipating those costs.

Many East Palestine residents feel this settlement doesn't do nearly enough to a company that just reported a $527 million profit in the fourth quarter of last year even with the derailment costs.

“Honestly, no amount can ever make this right, but it should be at least enough to hurt them a little bit. I’m sure that’s not going to hurt their bottom line at all,” Jami Wallace said.

The safety improvements Norfolk Southern promised to follow through on include adding about 200 more trackside detectors to spot mechanical problems. It has also promised to invest in more than a dozen advanced inspection portals that use an array of cameras to take hundreds of pictures of every passing railcar. The railroad estimated that those improvements will cost $244 million through 2025.

Smoke rises from a derailed Norfolk Southern train in East Palestine, Ohio, on Feb. 4, 2023.

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A bill in Congress that would require Norfolk Southern and the rest of the major freight railroads to make more significant changes has stalled, although the industry has promised to make improvements on its own.

Norfolk Southern officials said they believe the relatively small size of this settlement reflects how much the railroad has already done, including paying $780 million in cleanup costs and providing $107 million in aid to residents and the communities affected.

“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," CEO Alan Shaw said. "We will continue keeping our promises and are invested in the community’s future for the long haul.”

Drone video taken by the Columbiana County Commissioner's Office of train derailment in East Palestine, Ohio, on Feb. 6, 2023

Science and Tech

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After Thursday's announcement, the only remaining federal investigation is the National Transportation Safety Board's probe into the cause of the Feb. 3, 2023, derailment. That agency plans to announce its conclusions about what went wrong that night at a hearing in East Palestine on June 25. Republicans in Congress have said they might be willing to look at rail safety reforms after that report.

The NTSB has said previously that the derailment was likely caused by an overheating bearing that wasn't caught in time by the trackside detectors the railroad relies on to spot mechanical problems. The head of the NTSB also said that the five tank cars filled with vinyl chloride didn’t need to be blown open to prevent an explosion because they were actually starting to cool off even though the fire continued to burn around them.

The railroad is still working to resolve a lawsuit Ohio filed against it after the derailment.