Norfolk Southern Faces $15 Million Fine for East Palestine Derailment, Pledges Over $300 Million for Safety and Health

The federal government has imposed a $15 million fine on Norfolk Southern for last year’s catastrophic derailment in East Palestine, Ohio. Additionally, the railroad has committed to paying over $300 million to enhance safety measures and address community health concerns. This agreement, announced on May 23 by the Environmental Protection Agency (EPA) and the Justice Department, follows a federal judge’s approval of a $600 million class-action settlement for residents affected by the derailment.

In addition to the civil penalty, Norfolk Southern will reimburse the EPA $57 million in response costs and establish a $25 million health care fund for 20 years of medical exams in the community. The railroad will also allocate $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.”

Regan emphasized that the fine is the maximum allowed under the Clean Water Act, and the railroad has agreed to cover all cleanup costs. However, Norfolk Southern will not face criminal charges, and this settlement will not increase the company’s approximately $1.7 billion total costs related to the derailment, which the Atlanta-based company had already anticipated.

Many residents of East Palestine believe the settlement is insufficient. They point to Norfolk Southern’s substantial $527 million profit in the fourth quarter of last year, despite the derailment costs, and CEO Alan Shaw’s $13.4 million total compensation.

“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,” said resident Jami Wallace.

Conversely, resident Misti Allison found it encouraging to see the investigations and lawsuits nearing resolution, with cleanup expected to be completed later this year. “I think this is a great step, but let’s continue to make sure the community is made whole,” Allison said.

Norfolk Southern has pledged to implement several safety improvements, including adding around 200 more trackside detectors to identify mechanical problems and investing in over a dozen advanced inspection portals equipped with cameras to inspect each passing railcar. These upgrades are estimated to cost $244 million through 2025.

Despite these commitments, a bill in Congress requiring more extensive changes from Norfolk Southern and other major freight railroads has stalled. However, the industry has promised to undertake these improvements independently.

Norfolk Southern officials believe the relatively modest size of the settlement reflects the company’s extensive efforts to address the disaster. To date, they have spent $780 million on cleanup and provided $107 million in aid to affected residents and communities.

“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 stated. “We will continue keeping our promises and are invested in the community’s future for the long haul.”

The only remaining federal investigation is the National Transportation Safety Board’s (NTSB) probe into the cause of the derailment, which occurred on February 3, 2023. The NTSB plans to announce its findings at a hearing in East Palestine on June 25. Republicans in Congress have indicated they might consider rail safety reforms following the report.

Preliminary findings from the NTSB suggest the derailment was caused by an overheating bearing that trackside detectors failed to identify in time. Additionally, the NTSB head mentioned that the five tank cars filled with vinyl chloride did not need to be blown open to prevent an explosion, as they were already cooling down despite the surrounding fire.

Norfolk Southern is still addressing a lawsuit filed by Ohio following the derailment.