Ohio sues Norfolk Southern over economic damage caused by train derailment

Ohio filed a civil federal lawsuit against Norfolk Southern Corp. that seeks to ensure residents and the state receive long-term compensation for lost taxes and economic and environmental damage caused by the February toxic train derailment in East Palestine.

Local, state and federal authorities are overseeing water and air quality testing and Norfolk Southern’s disposal of the toxic waste unleashed by a spill of more than 1 million gallons of hazardous chemicals after the Feb. 3 derailment of a 150-car train in the village of 5,000 near the Pennsylvania border.

The 58-count civil lawsuit filed Tuesday by Attorney General Dave Yost accuses the railroad of faulty oversight and violations of state and federal laws on air and water pollution and hazardous waste, with the ensuing damage posing substantial economic and long-term threats to human health and the environment.

“The derailment has caused substantial damage to the regional economy of the state of Ohio, its citizens, and its businesses,” the lawsuit charges. “The stigma and economic impacts on the region will be felt for years to come. The people and businesses of Ohio, and the state itself, have lost substantial economic activity, business income, taxes, and fees as a direct and unavoidable consequence of Norfolk Southern’s conduct and the derailment.”

Ohio is entitled to recover the lost taxes and other economic consequences suffered, the lawsuit reads. The state seeks to also recover response costs, redress damages to natural resources, residential losses, and is seeking a declaratory judgment order holding Norfolk Southern responsible and providing injunctive relief, civil penalties, and damages.

Yost said he could not yet put a price tag on local and state damages. As a formality, the complaint names federal damages of $75,000, although the damages are expected to far exceed that minimum as the situation in East Palestine continues to unfold.

The litigation charges the railroad’s derailment rate has doubled over the last 10 years, with at least 20 involving chemical releases. “The derailment was entirely avoidable and the direct result of Norfolk Southern’s practice of putting its own profits above the health, safety, and welfare of the communities in which Norfolk Southern operates,” the lawsuit reads.

The company has vowed to cover all costs, but Yost said the litigation will ensure the company is legally held accountable. “The fallout from this highly preventable incident may continue for years to come, and there’s still so much we don’t know about the long-term effects on our air, water and soil,” Yost said.

Yost met earlier in the week with railroad officials and said they remain cooperative.

“We are making progress every day cleaning the site safely and thoroughly, providing financial assistance to residents and businesses that have been affected, and investing to help East Palestine and the communities around it thrive,” Norfolk Southern said in a statement after the lawsuit was announced.

“We are also listening closely to concerns from the community about whether there could be long-term impacts from the derailment,” the statement said. The company is discussing with Yost the development of three additional programs.

The company said it intends to address long-term health risks through the creation of a medical compensation fund, will work “to provide tailored protection for home sellers if their property loses value due to the impact of the derailment” and has provided $24 million in “community support to date.”

Norfolk Southern CEO Alan Shaw, testifying at a March 9 Senate Environment and Public Works Committee hearing, told senators the company was committed to East Palestine’s long-term recovery.

“It’s my personal commitment and Norfolk Southern’s commitment that we’re going to be there for as long as it takes to help East Palestine thrive and recover,” Shaw said.  

When lawmakers asked if Norfolk Southern would cover health care or long-term testing, Shaw said the company is “committed to doing what’s right” and that “everything is on the table.”

EPA officials at the hearing said air and water monitoring tests so far have not shown the presence of any toxins. 

The U.S. railroad industry averaged more than 2.9 derailments a day from 2019 to 2022, according to Federal Railroad Administration data, but the East Palestine train wreck has entered public awareness in a way others haven’t.

The derailment has prompted proposals for a crackdown on safety practices and new regulations and raised concerns among communities across the country about rail traffic. The derailment may also affect the way federal funds are spent under the new infrastructure law.

Municipal market participants are watching for longer economic fallout in the area and the potential impact on environmental, social, and governance investing strategies.

The lawsuit was filed in U.S. District Court of the Northern District of Ohio. The railroad is cited for 58 state and federal violations and accused of running afoul of the Comprehensive Environmental Response, Compensation, and Liability Act, Ohio’s Hazardous Waste Law, Ohio’s Water Pollution Control Law, Ohio’s Solid Waste Law, and Ohio’s Air Pollution Control Law, as well as Common Law Negligence, Common Law Public Nuisance, and Common Law Trespass.

The Common Law violations cover negligence counts relating to defects in the train and its operation. The nuisance counts encompass the chemical releases into the air, public waterways and public land, and the trespass counts address the contamination of natural resources.

The 106-page litigation requires Norfolk Southern to conduct future monitoring of soil and groundwater at the derailment location, the surrounding areas and beyond, and to submit a closure plan to the Ohio Environmental Protection Agency. The lawsuit seeks to ban the disposal of additional waste at the derailment site.

More than 20 lawsuits have been filed against the railroad by local residents and businesses.

— Caitlin Devitt contributed to this story

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