Norfolk Southern has reached a settlement in a class-action lawsuit related to a train derailment in Ohio in February 2023. Under the agreement, the company will pay $600 million. However, residents are concerned that this amount may not be sufficient to cover the significant future health needs resulting from the incident. Additionally, there is apprehension that once the settlement is divided among the affected parties, the individual payouts may not be substantial.
Eric Cozza, a resident who lived only three blocks away from the derailment site and had 47 family members living within a mile, expressed his concerns about the lack of consideration for his needs and the potential long-term health effects.
On the outskirts of East Palestine, a town with almost 5,000 residents near the Pennsylvania state line, a freight train experienced a derailment causing over three dozen of its 149 cars to become off-track. This incident led to the spilling of hazardous materials, which subsequently caught fire. Fearing the possibility of an explosion, officials made the decision to blow open five cars filled with vinyl chloride, a toxic chemical, resulting in the release of thick, black plumes of smoke into the air. As a precautionary measure, approximately 1,500 to 2,000 residents were evacuated from the area.
Norfolk Southern has announced that if the court approves the agreement, it will effectively resolve all class action claims within a 20-mile radius of the derailment. Additionally, residents who opt to participate will have their personal injury claims settled within a 10-mile radius of the incident.
The area affected by the derailment spans a radius of 20 miles (32 kilometers), encompassing not only East Palestine and its evacuated residents but also nearby towns like East Liverpool, Columbiana, Ohio, and potentially even parts of Youngstown.
Norfolk Southern generated a staggering $3 billion in revenue during the first three months of this year alone. It is important to note that the recent settlement does not imply any admission of liability, wrongdoing, or fault on their part.
Krissy Ferguson, a resident of East Palestine, described the settlement as a day that deeply affected her emotions.
“We’ve been victimized repeatedly,” she expressed with a heavy heart. “Our fight isn’t over; we’re still battling. The contamination continues to seep into the creeks, and people are still falling ill. It’s disheartening to see those in power taking the easy way out instead of standing up for what’s right.”
Individuals and businesses will have the freedom to utilize the settlement funds as they deem necessary, according to the company’s announcement on Tuesday. This includes using the compensation for healthcare expenses, property restoration, and reimbursement for any financial losses incurred. Furthermore, individuals residing within a 10-mile radius of the derailment site have the option to pursue further compensation if they so desire.
The U.S. District Court for the Northern District of Ohio is expected to receive the settlement for preliminary approval later this month. If the court gives its final approval, payments could start arriving by the end of the year.
Norfolk Southern has already invested over $1.1 billion in its efforts to address the derailment, providing more than $104 million in direct assistance to East Palestine and its residents. The fact that Norfolk Southern is covering the costs of the cleanup has resulted in President Joe Biden not declaring a disaster in the town, which continues to be a source of frustration for many.
The railroad has made a commitment to establish a fund that will assist in covering the community’s long-term healthcare needs. However, the details of this fund have yet to be finalized.
According to the attorneys representing the plaintiffs, this agreement comes after a thorough investigation lasting a year and is expected to bring significant relief to the residents involved.
Misti Allison, a resident of East Palestine, has numerous unanswered questions.
She expressed concern over the allocation of funds for families after the payment of legal fees and expenses. She pondered if the amount provided would be sufficient to cover any future damages.
Jami Wallace is also concerned about the implications of the derailment without having a clear understanding of its long-term effects.
“I’m really curious about the numbers because, in my view, accepting a plea deal only benefits the attorneys,” she expressed. “They will all get their fees, but it’s us, the residents, who will continue to endure the consequences.”
Cozza revealed that he had to spend approximately $8,000 to relocate and cover medical expenses for the tests. Additionally, he had to replace all his contaminated belongings, which depleted his modest savings. The emotional toll of losing a 10-year relationship and the disarray caused within his extended family due to the derailment is immeasurable.
According to the CEO of Threshold Residential, one of the largest employers in town, his business has suffered a loss of more than $100,000.
According to federal officials, the aftermath of the train derailment does not meet the criteria for a public health emergency. They stated that there is currently no evidence of widespread health issues or continuous exposure to harmful chemicals.
Despite the forced evacuation of half the town and the concerns about the long-term health effects of the derailment, the designation was never approved by the Environmental Protection Agency.
According to the head of the National Transportation Safety Board, the investigation conducted by her agency revealed that the venting and burning of the vinyl chloride was unnecessary. This is because the chemical producer was confident that no dangerous reaction had taken place inside the tank cars. However, the officials responsible for making the decision, including Ohio’s governor and the local fire chief, claim that they were never informed about this.
The NTSB expects to complete its full investigation into the cause of the derailment by June. According to the agency, the crash was likely caused by an overheating wheel bearing on one of the railcars. Unfortunately, this issue was not detected in time by a trackside sensor.
The EPA anticipates finishing the cleanup in East Palestine by the end of this year.
The railroad reported its preliminary first-quarter earnings on Tuesday, indicating a profit of 23 cents per share. However, this figure includes the cost of a $600 million settlement. If we exclude the settlement, the railroad would have generated a higher profit of $2.39 per share.
Norfolk Southern CEO Alan Shaw, who is currently defending his position against an activist investor seeking to revamp the railroad’s operations, expressed his belief that the company is making significant strides in becoming a more productive and efficient railroad. He also acknowledged that there are further improvements to be made.
Ancora Holdings is seeking to convince investors to back its nominees for Norfolk Southern’s board, as well as its proposal to replace Shaw and the rest of the management team at the railroad’s upcoming annual meeting on May 9. Ancora argues that the company’s profits have consistently fallen behind those of other prominent freight railroads over the years, raising concerns about Shaw’s leadership.
The railroad announced on Tuesday that despite a 4% increase in volume during the first quarter, the company experienced a 4% decline in revenue. This was primarily due to a decrease in fuel surcharge revenue and shifts in the types of shipments handled.
Norfolk Southern Corp., headquartered in Atlanta, saw its shares remain relatively stable in the morning. However, over the past year, the stock has surged by 23%, with a significant portion of this growth occurring following the revelation of Ancora’s efforts to revamp the railroad.
