Norfolk Southern in Deal to Resolve federal East Palestine Derailment Claims

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(Norfolk Southern, 23.May.2024) — Norfolk Southern Corporation (NYSE: NSC) has reached an agreement on a consent decree with the following U.S. agencies: the Department of Justice (DOJ), the Environmental Protection Agency (EPA), and the Department of the Interior (DOI) to resolve all their claims and investigations arising from the derailment in East Palestine, Ohio.

The agreement, which is subject to court approval, builds on the significant financial commitments that the company has already made toward environmental remediation, community-based programs, and safety-related enhancements.

“From day one, it was important for Norfolk Southern to make things right for the residents of East Palestine and the surrounding areas,” said Alan H. Shaw, president and CEO of Norfolk Southern. “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. We will continue keeping our promises and are invested in the community’s future for the long-haul.”

Consent Decree Terms

Under the agreement, Norfolk Southern will formalize several commitments to address environmental remediation, health monitoring, and rail safety. Those include:

  • Paying a $15mn civil penalty and reimbursing the EPA for its full response expenses, which are approximately $57mn through 30 Nov. 2023, as well as subsequent response costs.
  • In addition to completing clean-up of the derailment site, implementing several environmental remediation projects to address pre-existing pollution and to improve water quality in the region. This is estimated to cost $7mn.
  • Continuing monitoring of groundwater and surface water bodies estimated to cost $10mn to $15mn. Additionally, a drinking water monitoring program will be established, which is estimated to cost $15mn over 10 years.
  • Establishing a $25mn Community Health Program that will provide medical exams and mental health services for the community and first responders for up to 20 years.
  • $244mn to be spent on safety initiatives through 2025, as part of the company’s Six Point Safety Plan and investments in safety infrastructure, technology, and training.

The financial impacts associated with the above have either been previously estimated as part of the total $1.7bn recognized in response to the incident through 31 Mar. 2024, or are included as part of the company’s ongoing financial outlook, including those surrounding capital expenditures and overall 2024 outlook. The company continues to pursue insurance reimbursements and third-party claims.

Comprehensive Response to Date

As detailed by the DOJ and EPA in the consent decree, Norfolk Southern has developed, coordinated, and performed one of the most comprehensive incident responses in recent history. At the core of that response are significant investments that have been realized to date, including:

  • Approximately $780mn in environmental response and remediation costs.
  • A recently announced $600mn class action settlement, which along with the community health program under the consent decree with DOJ and EPA, fulfills Norfolk Southern’s promise to address long-term healthcare for residents of East Palestine and surrounding areas.
  • Direct financial support and commitments of $107mn to the community through its Family Assistance Center and investments in the citizens, businesses, and life of the East Palestine and surrounding Ohio and Pennsylvania communities.

To learn more about Norfolk Southern’s commitment and ongoing remediation efforts in East Palestinevisit NSMakingItRight.com.

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