Norfolk Southern has agreed to pay $600 million in a class-action lawsuit settlement for a deadly February 2023 train crash in Ohio, but neighbors are concerned that the money will not only not meet future health needs, which could be significant, but will also be insufficient once divided.
“It’s not anywhere near my needs, let alone what the health effects will be five or ten years down the road,” said Eric Cozza, who lived only three blocks from the derailment and had 47 family members within a mile (1.61 kilometers).
More than three dozen of the freight train’s 149 cars derailed on the outskirts of East Palestine, a community of about 5,000 people near the Pennsylvania border. Several cars spilled a mixture of hazardous materials, which caught fire. Three days later, officials, anticipating an explosion, broke apart five cars containing vinyl chloride and burned the hazardous chemical, emitting thick, black plumes into the air. Officials evacuated approximately 1,500 to 2,000 residents.
If the court approves the deal, Norfolk Southern will settle any class action claims within a 20-mile (32-kilometer) radius of the derailment and any personal injury claims within a 10-mile (16-kilometer) radius for residents who choose to participate.
In addition to East Palestine and the evacuated residents, a 20-mile (32-kilometer) radius around the derailment would also include larger towns like East Liverpool and Columbiana, Ohio, and possibly a portion of Youngstown.
The settlement, which does not include or reflect an acknowledgment of culpability, wrongdoing, or negligence, accounts for a minuscule portion of Norfolk Southern’s $3 billion in revenue in the first three months of this year.
Krissy Ferguson, an East Palestine resident, described the settlement as a “heart-wrenching day.”
She told me, “I just feel like we’ve been victims over and over and over again.” “We fought and are still battling. Contamination is still spreading through the waterways. People are still sick. I believe those with the power to fight chose the easier route.
According to the corporation, people and businesses will be able to utilize settlement funds in any way they see fit, including for health treatment, property restoration, and reimbursement for any net business loss. Individuals within ten miles (16 kilometers) of the derailment may seek further compensation.
This month, the United States District Court for the Northern District of Ohio will receive the settlement for preliminary approval. Payments could start to flow by the end of the year, pending final court clearance.
Norfolk Southern has already spent more than $1.1 billion in response to the derailment, with more than $104 million going directly to East Palestine and its citizens. President Joe Biden has never declared a disaster in the town, which is a source of contention for many residents, owing in part to Norfolk Southern’s funding for the cleanup.
The railroad has committed to setting up a fund to help pay for the community’s long-term health needs, but this has yet to be confirmed.
According to the plaintiffs’ attorneys, the settlement comes after a year of extensive research and should give significant relief to the locals.
Nonetheless, East Palestine residents, such as Misti Allison, have numerous unresolved questions.
“What comes to mind is, when all of the lawyers are paid and the legal bills are accounted for, how much funding will be supplied to families? “And would that be enough to cover any of the potential future damages?” she said.
Jami Wallace, too, is concerned about reaching a settlement without knowing the long-term consequences of the accident.
“I would really like to see the numbers because, in my opinion, taking a plea deal alone is in the best interest of the attorneys,” she went on to say. “They’ll all get their money. But we, the citizens, will still have to endure.”
Consider that Cozza stated that he spent approximately $8,000 to move out of town, which, combined with medical fees from testing and the cost of replacing all of his contaminated items, depleted his meager resources. And he can’t put a price on the 10-year relationship he lost or the way his extended family was dispersed following the derailment.
Threshold Residential’s CEO estimates that the company has lost more than $100,000.
Government officials declared last week that the aftermath of the train crash does not qualify as a public health emergency due to the lack of established significant health issues and persistent chemical exposure.
The Environmental Protection Agency never accepted the designation, despite the forced evacuation of half of the town and concerns about the derailment’s long-term health repercussions.
The chairman of the National Transportation Safety Board recently stated that her agency’s research revealed that the venting and burning of vinyl chloride was unnecessary because the chemical’s manufacturer was confident that no harmful reaction happened within the tank cars. Ohio’s governor and the local fire chief, who were involved in the decision, claim they never received this information.
Although the National Transportation Safety Board will not complete its full investigation into the accident’s cause until June, it has stated that a trackside sensor’s failure to identify an overheating wheel bearing on one of the railcars in time most certainly caused the crash.
The EPA has predicted that this year will see the completion of the cleanup in East Palestine.
The railroad reported preliminary first-quarter earnings of 23 cents per share on Tuesday, reflecting the cost of the $600 million settlement. Without the settlement, the railroad claimed it would have earned $2.39 per share.
Although Norfolk Southern is “becoming a more productive and efficient railroad,” railroad CEO Alan Shaw, who is fighting for his job against an activist investor seeking to revamp the railroad’s operations, acknowledged that more work remains.
Ancora Holdings is aiming to persuade investors to back its nominations for Norfolk Southern’s board of directors, as well as its plan to replace Shaw and the rest of the management team, at the railroad’s annual meeting on May 9. According to Ancora, the company’s profitability has trailed behind those of the other big freight railroads for years, and investors are questioning Shaw’s leadership.
The railroad stated Tuesday that, while volume increased 4% in the first quarter, revenue declined 4% due to lower fuel surcharge revenue and changes in the mix of commodities it handled.
Shares of Norfolk Southern Corp., based in Atlanta, remained virtually unchanged throughout the morning but had risen 23% in the last year, with the majority of that increase occurring when news of Ancora’s effort to restructure the railroad broke.
