Norfolk Southern agreed to pay $600 million to settle lawsuits brought by individuals and businesses in connection with a toxic train derailment in Ohio early last year.
The tentative settlement announced Tuesday still has details yet to be completed, including determining a formula for distributing funds that accounts for their proximity to the derailment site.
The settlement is pending approval in the U.S. District Court in Ohio, and Norfolk Southern said it doesn’t reflect an admission of liability, wrongdoing or fault.
Thirty-eight cars of a freight train derailed in East Palestine on Feb. 3, 2023, resulting in damaged cargo, fires and chemical releases. The village of around 4,700 people was thrust into the national spotlight amid fears of contamination and adverse health effects in the community. Some businesses closed and residents with homes close to the derailment site and nearby creeks said they were still exposed to chemicals after they returned following the initial evacuation.
The accident also led to scrutiny of Norfolk Southern’s safety practices, with costs associated with the derailment surpassing $1 billion. Before the settlement, the railroad had been making payments to area residents and businesses through a community assistance program.
On Tuesday, Norfolk Southern also released preliminary first-quarter financial results. The railroad said it earned a profit of 23 cents a share on railway revenue of $3 billion. Excluding costs including those associated with the East Palestine settlement and efforts to trim its management ranks, earnings were $2.26 a share.
Norfolk Southern will release its full first-quarter report April 24.
Other claims are pending against Norfolk Southern as well. The railroad faces lawsuits brought by the state of Ohio and the U.S. Environmental Protection Agency.
The Atlanta-based freight railroad is facing other pressures, including a proxy fight with an activist investor seeking to oust its chief executive, Alan Shaw, and replace several board members. Hedge fund Ancora Holdings is seeking to take control of the board as part of changes at the company, whose stock underperformed its peers in 2023. Ancora has also criticized how the company handled the East Palestine train derailment.
Shaw has said the company has worked to improve its operations and safety culture since the derailment.
Norfolk Southern recently said it would replace its chief operating officer with John Orr, another railroad executive who has decades of experience implementing precision scheduled railroading. Orr was previously at Canadian Pacific Kansas City, where he was executive vice president and chief transformation officer and improved the railroad’s Mexico operations.
Shareholders will vote at the company’s annual meeting May 9.