Norfolk Southern Agrees to $600 Million Settlement for 2023 East Palestine Train Derailment
Norfolk Southern has reached a $600 million settlement to resolve class-action lawsuits related to the February 2023 train derailment in East Palestine, Ohio, addressing environmental and personal injury claims.
Highlights
- Norfolk Southern’s stock rose following the announcement of a $600 million settlement for the East Palestine, Ohio derailment lawsuit.
- The February 2023 derailment near the Ohio-Pennsylvania border triggered significant environmental and health concerns.
- The company reported $1.1 billion in total costs related to the accident during its January 2024 earnings call.
Shares of Norfolk Southern (NSC) increased during intraday trading after the company revealed a $600 million settlement intended to resolve class-action lawsuits linked to the February 2023 train derailment in East Palestine, Ohio.
The proposed settlement, pending court approval, covers class-action claims within a 20-mile radius of the derailment site and personal injury claims within 10 miles. East Palestine is located near the Ohio-Pennsylvania state line.
The derailment caused a large-scale fire and necessitated a controlled burn of hazardous chemicals leaked during the accident, sparking ongoing health concerns among local residents more than a year later.
Despite criticism from residents and regulators over its handling of the incident, Norfolk Southern has committed over $100 million towards repairs and community support efforts.
CEO Alan Shaw described 2023 as "historically challenging," with the company incurring approximately $1.1 billion in costs related to the derailment.
In addition, Norfolk Southern reported preliminary Q1 2024 revenues of $3 billion and adjusted earnings per share of $2.49, factoring in the settlement and other one-time expenses. The company also anticipates a $50 million to $100 million revenue impact in Q2 due to the recent collapse of Baltimore’s Francis Scott Key Bridge, affecting port operations.
Once approved by the U.S. District Court for the Northern District of Ohio, settlement payments could begin by the end of 2024. Norfolk Southern emphasized that the agreement does not represent any admission of liability or fault.
Norfolk Southern shares traded up 1.7% at $254.58 as of early afternoon trading, marking a 25% increase compared to the previous year when the derailment’s effects weighed heavily on the stock.
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