Norfolk Southern to compensate East Palestine residents for loss of property value

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In response to the train derailment incident that occurred on February 3, Norfolk Southern railroad has announced the establishment of a fund to compensate homeowners in East Palestine for the decline in their property values. The derailment resulted in the spillage of toxic chemicals, causing significant damage to the local community. Members of the U.S. Senate, along with Norfolk Southern CEO Alan Shaw, made the announcement on Wednesday, coinciding with the approval of bipartisan rail safety legislation by the Senate Commerce Committee.

Ohio Senators Sherrod Brown and JD Vance spearheaded the rail safety legislation, aimed at preventing future train disasters. The bill received support from both Republicans and Democrats and was approved by the committee. A letter dated May 9, addressed to Senator Brown, outlined Norfolk Southern CEO Alan Shaw’s commitment to establishing the compensation fund immediately, foregoing the need for protracted litigation.

Shaw explained that the fund would be utilized to compensate homeowners within a 5-mile radius of the derailment site, whose properties were sold for less than their appraised value prior to the incident. To assess the local property market and develop a detailed plan, Norfolk Southern has already enlisted the services of Alvarez & Marsal.

The train derailment on February 3 resulted in the release of toxic chemicals, including vinyl chloride, butyl acrylate, ethylhexyl acrylate, and ethylene glycol monobutyl ether. Concerned about the possibility of explosions, federal and state officials set the vinyl chloride tanks on fire, leading to the emission of a massive plume of thick black smoke. Additionally, other chemicals seeped into local streams, resulting in the death of fish and contamination of the Ohio River. As a precautionary measure, some residents were evacuated and have been residing in hotels until they receive assurance of the safety of their homes.

Federal and state officials have repeatedly stated that it is safe for evacuated residents to return to the area. Extensive air testing conducted in the town and inside hundreds of homes has not detected any concerning levels of contaminants. The state authorities have also confirmed that the local municipal drinking water system remains unpolluted, and bottled water is available for those with private wells while testing is being carried out.

Senator Ted Cruz of Texas, a member of the Senate Commerce Committee, took credit for securing Norfolk Southern’s commitment to the property value compensation fund. He hailed this development as a significant step toward achieving justice for the affected homeowners and families. However, Senator Cruz expressed his inability to support the rail safety bill due to concerns that it grants excessive power to U.S. Transportation Secretary Pete Buttigieg and the Biden administration, potentially leading to restrictions on the transportation of American energy products.

In contrast, Senator Maria Cantwell of Washington, a Democrat and the chair of the Commerce Committee, voiced her support for the Railway Safety Act of 2023. She commended the legislation for its inclusion of provisions mandating the installation of more hot box sensors on rail tracks to detect defects similar to those believed to have caused the East Palestine derailment.

A preliminary report from the National Transportation Safety Board indicated that the accident was most likely caused by an overheated bearing on the train’s 23rd rail car, the first to derail, as well as the wheels. The train’s system for detecting overheated bearings recorded increasing temperatures as it approached East Palestine.

Apart from the provisions related to hot box sensors, the Railway Safety Act of 2023 includes requirements for two-person crews on all trains, higher fines for safety violations by the U.S. Department of Transportation, and expanded HAZMAT training grants for local first responders through increased fees assessed to railroads. The bill also introduces new safety requirements and procedures for