Norfolk Southern has agreed to pay $600 million in a class-action lawsuit settlement for a fiery February 2023 train derailment in eastern Ohio, but local residents worry the money not only won’t go far enough to cover future health needs that could be tremendous but also won't amount to much once divvied up.
“It’s not nowhere near my needs let alone what the health effects are going to be 5 or 10 years down the road,” said Eric Cozza, who had 47 family members living within one-mile of the derailment.
More than three dozen of the freight train's 149 cars derailed on the outskirts of East Palestine, a town of almost 5,000 residents near the Pennsylvania state line. Several cars spilled a cocktail of hazardous materials that caught fire. Three days later, officials, fearing an explosion, blew open five cars filled with vinyl chloride and burned the toxic chemical — sending thick, black plumes of smoke into the air. Some 1,500 to 2,000 residents were evacuated.
Norfolk Southern said the agreement, if approved by the court, will resolve all class action claims within a 20-mile (32-kilometer) radius of the derailment and, for residents who choose to participate, personal injury claims within a 10-mile (16-kilometer) radius of the derailment.
A 20-mile (32-kilometer) radius around the derailment would include not only East Palestine and the people who had to evacuate but also larger towns like East Liverpool and Columbiana, Ohio, and possibly at least part of Youngstown.
The settlement, which doesn’t include or constitute any admission of liability, wrongdoing or fault, represents only a small slice of the $3 billion in revenue Norfolk Southern generated just in the first three months of this year.
East Palestine resident Krissy Ferguson called the settlement a “heart-wrenching day.”
“I just feel like we’ve been victimized over and over and over again,” she said. “We fought and we’re still fighting. And contamination is still flowing down the creeks. People are still sick. And I think people that had the power to fight took an easy way out.”
The company said Tuesday that individuals and businesses will be able to use compensation from the settlement in any manner they see fit, including for health care needs, property restoration and compensation for any net business loss. Individuals within 10 miles (16 kilometers) of the derailment may choose to pursue additional compensation.
The settlement is expected to be submitted for preliminary approval to the U.S. District Court for the Northern District of Ohio this month. Payments could begin to arrive by the end of the year, subject to final court approval.
Norfolk Southern has already spent more than $1.1 billion on its response to the derailment, including more than $104 million in direct aid to East Palestine and its residents. Partly because Norfolk Southern is paying for the cleanup, President Joe Biden has never declared a disaster in the town, which remains a sore point for many.
The railroad has promised to create a fund to help pay for the long-term health needs of the community, but that hasn’t been finalized yet.
The plaintiffs' attorneys said the deal follows a year of intense investigation and should provide meaningful relief to residents.
“We believe this is a fair, reasonable and adequate result for the community on a number of levels, not the least of which is the speed of the resolution, and the overall amount of the awards residents can expect, which will be significant for those most impacted by the derailment,” said Seth A. Katz of Burg Simpson Eldredge Hersh & Jardine, P.C., M. Elizabeth Graham of Grant & Eisenhofer P.A., Jayne Conroy of Simmons Hanly Conroy LLC and T. Michael Morgan of Morgan & Morgan, P.A.
Still, East Palestine residents like Misti Allison have many unanswered questions.
“What goes through my head is, after all the lawyers are paid and the legal fees are accounted for, how much funding will be provided for families? And is that going to be enough for any of these potential damages moving forward?” she said.
Jami Wallace, too, worries about having a settlement without knowing the long-term impact of the derailment.
“I would really like to see the numbers because in my opinion, taking a plea deal only is in the best interest of the attorneys,” she said. “They’re all going to get their money. But we’re the residents that are still going to be left to suffer.”
Consider that Cozza said he spent about $8,000 to move out of town and that along with medical bills from tests and the cost of replacing all his contaminated belongings exhausted what little savings he had. And he can't put a price on the 10-year relationship he lost or the way his extended family was scattered after the derailment.
The CEO of one of the biggest employers in town, Threshold Residential, estimates that his business has lost well over than $100,000.
Last week federal officials said that the aftermath of the train derailment doesn’t qualify as a public health emergency because widespread health problems and ongoing chemical exposure haven’t been documented.
The Environmental Protection Agency never approved the designation despite the forced evacuation of half the town, and the fears about the long-term health consequences of the derailment.
The head of the National Transportation Safety Board said recently that her agency’s investigation showed that the venting and burning of the vinyl chloride was unnecessary because the producer of the chemical was sure no dangerous reaction occurred inside the tank cars. Officials who made the decision — Ohio’s governor and the local fire chief leading the response — have said they were never told that.
The NTSB’s full investigation into the cause of the derailment won’t be complete until June, but the agency has said that an overheating wheel bearing on one of the railcars, which wasn’t detected in time by a trackside sensor, likely caused the crash.
The EPA has said cleanup in East Palestine is expected to be completed this year.
The railroad announced preliminary first-quarter earnings of 23 cents per share Tuesday, which reflects the cost of the $600 million settlement. Without the settlement, the railroad said it would have made $2.39 per share.
Railroad CEO Alan Shaw, who is fighting for his job against an activist investor aiming to overhaul the railroad's operations, said Norfolk Southern is “becoming a more productive and efficient railroad” but acknowledged there is more work to do.
Ancora Holdings is trying to persuade investors to support its nominees for Norfolk Southern's board and its plan to replace Shaw and the rest of the management team at the railroad's May 9 annual meeting. Ancora says the company's profits have lagged behind the other major freight railroads for years and the investors question Shaw's leadership.
The railroad said Tuesday that even though volume was up 4% during the first quarter, company revenue fell by 4% because of lower fuel surcharge revenue and changes in the mix of shipments it handled.
Shares of Norfolk Southern Corp., based in Atlanta, were essentially flat throughout the morning but have jumped 23% over the past year with most of that increase coming after news of Ancora's campaign to overhaul the railroad broke.