Norfolk Southern reaches $600M settlement in Ohio derailment class-action lawsuit

Norfolk Southern Corp. has reached a $600 million agreement to resolve a consolidated class action lawsuit related to the train derailment that took place in East Palestine, Ohio, in February 2023, although some residents are questioning the amount.

The derailment led to the release of vinyl chloride monomer, a PVC feedstock. If approved by the court, the agreement will resolve all class action claims within a 20-mile radius from the derailment and, for those residents who choose to participate, personal injury claims within a 10-mile radius from the derailment, officials with Atlanta-based NS said in an April 9 news release.

The settlement "furthers the work Norfolk Southern has done to make it right in East Palestine and the surrounding communities, while providing finality and flexibility for settlement class members," they added.

The agreement "does not include or constitute any admission of liability, wrongdoing or fault. Norfolk Southern continues to pursue all applicable insurance coverage with respect to this agreement," officials said. In a statement separate from the one in the financial results, officials said the agreement "is designed to provide finality and flexibility for settlement class members."

"Individuals and businesses will be able to use compensation from the settlement in any manner they see fit to address potential adverse impacts from the derailment. This could include health care needs and medical monitoring, property restoration and diminution and compensation for any net business loss. In addition, individuals within 10 miles of the derailment may, at their discretion, choose to receive additional compensation for any past, current or future personal injury from the derailment."

A railroad spokesman declined to comment further on the settlement when reached by Plastics News. A spokesman for the Ohio Environmental Protection Agency also declined to comment to PN. A spokesman for the National Transportation Safety Board, which is investigating the derailment, told PN that issues surrounding any settlements or legal activity "are outside the scope of NTSB's investigation."

The settlement wasn't welcomed by all of those involved. In a statement to PN, area resident Hilary Flint said that the settlement "is a slap in the face to community members affected by the East Palestine train derailment."

"There are 452,719 people within the 20-mile radius, meaning that each person would only receive $1,325," said Flint, who serves as communications director for the Beaver County Marcellus Awareness Community. "Once you factor in the astronomically high attorney fees, affected residents will likely be taking home less than [$1,000].

"How is that supposed to replace our homes? Our belongings? Our health? $600 million is just 4.9 percent of Norfolk Southern's 2023 operating revenue. This settlement isn't justice and we won't stand for it."

Since the accident, NS has provided $104 million in community assistance to East Palestine and surrounding areas in Ohio and Pennsylvania, including $25 million for a regional safety training center, $25 million in planned improvements to East Palestine's city park, $21 million in direct payments to residents and $9 million to local first responders. The railroad additionally provided $4.3 million to support upgrades to drinking water infrastructure and $2 million for community-directed projects.

An April 9 story from the Reuters news service said that NS also faces lawsuits filed by shareholders, the state of Ohio and the U.S. Justice Department. The story also said that some details of the settlement still need to be finalized, including setting an allocation formula and how to efficiently process claims and distribute funds.

Lawyers suing Norfolk Southern hope to get initial payments distributed by the end of 2024, according to the Reuters story. Claims will consider factors such as location relative to the derailment, household membership, the length of any displacement and exposure to contaminants, lawyers said in the story.

According to NTSB's official account of the accident, an eastbound Norfolk Southern train had a derailment of rail cars on its main track in East Palestine. Eleven derailed tank cars carrying hazardous materials soon ignited, fueling fires that damaged another 12 rail cars that didn't derail. First responders implemented a 1-mile evacuation zone surrounding the derailment site that affected up to 2,000 residents. There were no reported fatalities or injuries.

Three days after the derailment, Ohio Gov. Mike DeWine and railroad officials decided to drain the cars and burn off the VCM rather than risk a massive explosion that could have sent shrapnel up to a mile away. The burnoff caused massive clouds of black smoke and ash, as well as chemical odors.

Ongoing air, water and soil testing in the East Palestine area have shown that the area is safe, with no dangerous levels of chemicals present. To date, NS has removed at least 400 million pounds of solid waste and more than 46 million gallons of wastewater from the area.

The VCM being transported was owned by materials firm Oxy Vinyls LP. In July 2023, NS filed a complaint against Oxy Vinyls, Dow Inc. and the owners of other chemicals involved in the accident. In the complaint, NS wanted those firms and other chemical shippers to pay for the cost of the cleanup.

Oxy Vinyls spokeswoman Celina Cardenas said at the time that the NS lawsuit "is a meritless disinformation campaign masquerading as a legal filing." Oxy Vinyls could not be reached for further comment.

NTSB's final meeting on the cause of the derailment will be held June in East Palestine. During the public meeting, NTSB board members will vote on final findings, probable cause, and recommendations.

NTSB Chair Jennifer Homendy is planning two community meetings, June 24 and 25, at East Palestine High School. The meetings will provide an opportunity for the public to ask about the NTSB and its investigative process.