Norfolk Southern reports $387 million expense from Ohio derailment

Atlanta-based Norfolk Southern said Wednesday that it has incurred an initial $387 million in costs because of its toxic derailment in East Palestine, Ohio in February.

The amount includes costs for cleanup of the site, community support and restoration payments, legal and advisory expenses and a preliminary estimate of claims and settlements, according to Mark George, the company’s chief financial officer, in remarks during a conference call with investors.

Some of that amount may be “potentially recoverable under the company’s insurance policies,” which would be reported in the future, according to the railroad.

“From the beginning, we have been guided by one principle: We are going to do whatever it takes to make it right for East Palestine and the surrounding areas,” said Norfolk Southern CEO Alan Shaw in a written statement. “We are making progress every day,” he added.

The Feb. 3 derailment of a Norfolk Southern train carrying hazardous materials that burned just on the edge of East Palestine, near the border of Ohio and Pennsylvania, has caused months of concern about the effects of the chemicals on residents in the area.

Officials decided to burn vinyl chloride from rail cars to prevent an uncontrolled explosion, which resulted in a huge plume of dark smoke over the town.

The company has faced lawsuits over the wreck by residents, shareholders, the U.S. Justice Department and Ohio’s attorney general.

The railroad and government agencies have also spent months cleaning up contamination from the hazardous materials that spilled from the train, and testing the air and water.

Norfolk Southern says since the East Palestine derailment, it has contributed more than $30 million to the community, including more than $13 million in financial assistance to families, $7.5 million to state agencies and local fire departments in Pennsylvania that responded to the derailment, $3 million to the East Palestine fire department for fire equipment used in the derailment response and other contributions.

The $387 million charge from the derailment drove down the company’s profits to $466 million in net income in the first three months of the year, down from $703 million a year earlier.

The company’s insurance policies cover legal liability for bodily injury and property damage to third parties of $75 million to $800 million per occurrence, with up to $1.1 billion for “specific perils.”