Ohio Derailment Fallout: Senate Panel Greenlights Rail-Safety Bill, Railroad Pledges Support to Affected Homeowners

A Senate committee, despite facing significant Republican opposition, approved a rail-safety bill on Wednesday. The legislation was introduced in response to the freight train derailment in East Palestine, Ohio. However, the fate of the bill remains uncertain as it progresses further.

The proposed bill includes provisions to increase inspections of trains carrying hazardous materials, mandate the use of technology for track defect detection, and substantially raise penalties for railroad companies involved in crashes.

One day before the Senate Commerce Committee’s decision, Norfolk Southern reaffirmed its commitment to establishing a fund for residents living near the site of the Ohio train accident. This fund aims to compensate homeowners for any decline in property values since the derailment in February. Norfolk Southern Corp. CEO Alan Shaw expressed in a letter to committee members that the railroad expects to provide compensation to homeowners within approximately a 5-mile radius of the crash if they sell their homes for less than the pre-derailment appraised value. Shaw stated that the company anticipates commencing payments within a year.

The East Palestine derailment occurred on February 3, resulting in the derailment of 38 railcars, including 11 carrying hazardous chemicals. Some of these chemicals spilled into nearby waterways. In response, half of the town’s 5,000 residents were evacuated, and emergency responders had to conduct controlled burnings to prevent an uncontrolled explosion.

Images of billowing black smoke and stories of families forced to evacuate their homes prompted lawmakers to call for measures to enhance rail safety. The resulting bill, approved by the Senate panel in a 16-11 vote, faced opposition from all but two Republicans.

One of the bill’s Republican supporters, J.D. Vance of Ohio, emphasized the necessity of the measure in curbing the rise in rail accidents. Vance warned that failing to pass the Railway Safety Act would lead to future incidents similar to the one in East Palestine. He acknowledged that the bill might increase the cost of rail transportation slightly but emphasized that it would be in the service of safety.

In contrast, Senator Ted Cruz of Texas argued against the bill, expressing concerns that it would grant excessive power to the Biden administration, potentially allowing restrictions on rail shipments of coal, oil, and other fossil fuels. Cruz suggested that changes must be made to limit the administration’s authority over railroads to secure passage in the Senate and House.

Bipartisan negotiations have led to modifications in the bill since its initial introduction by Senator Sherrod Brown of Ohio. Although these negotiations have improved the legislation, challenges remain, including the requirement for at least two crew members on each train, according to Ian Jefferies, President of the Association of American Railroads.

Norfolk Southern CEO Shaw, in a letter to committee members issued late Tuesday, disclosed that the company had accrued approximately $400 million in charges related to the derailment. However, this amount does not include compensation for diminished property values, long-term healthcare expenses, or water treatment. Shaw’s letter provided more comprehensive details on homeowner compensation than the company had previously disclosed. Shaw emphasized that Norfolk Southern recognizes the derailment was not the fault of the people of East Palestine and is committed to fulfilling its obligations.

The derailment has led to lawsuits from the federal government, the state of Ohio, and residents living near the crash against Norfolk Southern.

Shares of Norfolk Southern Corp., headquartered in Atlanta, saw a marginal increase in trading on Wednesday.