Norfolk Southern Corp. announced plans to create a fund for residents near the site of February’s East Palestine, Ohio, train wreck that would cover any decline in home values since the toxic derailment.
About 50 of the rail operator’s cars derailed, with some carrying hazardous chemicals that spilled into waterways.
Residents were evacuated as emergency personnel burned off some of the chemicals to avert an uncontrolled explosion.
In March, the U.S. filed a lawsuit against Norfolk Southern over environmental damage.
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The company has pledged to pay for the cleanup, and in a letter to the Senate Committee on Commerce, Science and Transportation on Tuesday, CEO Alan Shaw assured it would continue to clean up the site “until the job is done.”
He wrote to senators that Norfolk Southern has paid more than $15 million directly to affected residents, compensated first responder agencies and supported local businesses.
Furthermore, Shaw said it announced total accrued charges for the derailment of nearly $400 million, which does not include anticipated costs for funds relating to declining property values, long term health care or water treatment.
“It is also critical to recognize that Norfolk Southern is undertaking these efforts and expenses without any judicial or investigatory finding of fault. In fact, the NTSB has yet to determine a cause of the derailment,” Shaw said. “There is a likelihood that other parties will bear some responsibility for the February 3 derailment, but the judicial and investigatory processes move at a measured pace. Making it right the right way means respecting the legal process while taking care of the immediate needs of all affected.”
The National Transportation Safety Board said in March that it continues to work with the investigative parties to determine what exactly caused the derailment and to evaluate the emergency response efforts.
An initial probe in February found a wheel bearing had overheated, but did not reach the temperature threshold that railroad company Norfolk Southern had set for an alarm to go off until just before the wreck.
Crew members had no indication the train was in trouble until that alarm sounded; then, they saw fire and smoke and alerted dispatch.
Shaw also said that his company has not waited for the judicial process to be completed before working on the structure of the real property fund to compensate homeowners, and it had already contracted with Alvarez & Marsal to evaluate the local property market and develop a plan.
He expects eligible homeowners for this compensation to include those with homes within an approximately 5-mile radius of the derailment and who sell their homes for less than their property’s pre-February 3 appraised value.
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Those who sell their homes for less than the aforementioned pre-appraised value will be compensated with the understanding that they will execute a release of any future claims for property value diminution from the property fund once established and will have substantially complied with the terms of the fund.
Norfolk Southern expects that it will be able to begin making payments to eligible homeowners within a year.
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“Norfolk Southern understands that any diminution of the value of East Palestine homes as a result of the derailment is a significant potential harm to homeowners and a strong consideration of the suit filed by Attorney General Yost as well as the recently consolidated putative class action,” Shaw concluded. “I further commit to you that Norfolk Southern will coordinate with Attorneys General Yost and Henry as the initial payments are made and the real property fund is implemented…”
Later Wednesday, the Senate committee will debate broad, new rail safety legislation in response to the wreck in Ohio and other derailments that followed.
Shares of Norfolk Southern Corp., based in Atlanta, slid nearly 4% in premarket trading.
The Associated Press contributed to this report.
