Norfolk Southern to start compensating homeowners for Ohio derailment

Site of the derailment of a train carrying hazardous waste, in East Palestine, Ohio

By David Shepardson

(Reuters) - Norfolk Southern said on Monday it launched an interim program to compensate homeowners around East Palestine, Ohio who have had to sell their properties at a reduced value following a Feb. 3 train derailment that spilled toxic chemicals.

The program applies to parts of Ohio and Pennsylvania near the derailment site and applies to those with homes on the market, future listings or sold since Feb. 3. The railroad first announced plans in May to create the program. The train caught fire and released over a million gallons of hazardous materials and pollutants.

Senator Ted Cruz, the top Republican on the Senate committee that oversees railroads, said Norfolk Southern had made good on the promise it made in May, calling the fund "one of the most consequential actions taken to date for helping Ohioans and Pennsylvanians affected by the accident."

The fund covers a radius of approximately 5 miles (8 km) around the derailment. Cruz said the total coverage is 91 square miles, including portions of Columbiana and Mahoning Counties in Ohio and Beaver and Lawrence Counties in Pennsylvania.

The final fund is expected to be part of the resolution of litigation resulting from the derailment, but Cruz said the interim fund "accelerates compensation for homeowners who decide to move with the benefit of this protection."

The U.S. Justice Department and state of Ohio have both sued Norfolk Southern.

The company has so far booked charges of $803 million for the derailment. It said it does not have a cost estimate for the home value program.

Norfolk Southern has also said it supports a "solution that addresses long-term health risks through the creation of a long-term medical compensation fund." Another program would help protect East Palestine drinking water.

Last month, the Transportation Department's Federal Railroad Administration (FRA) said Norfolk Southern needs "significant improvements" in its safety culture and disclosed it is considering enforcement actions against the railroad on a number of issues, including track maintenance, inspection, repair practices and hours of service regulations.

In May, a U.S. Senate panel approved bipartisan rail safety legislation that tightens rules on trains carrying explosive substances like the Norfolk Southern-operated train, but further action has stalled.

(Reporting by David Shepardson; Editing by Chris Reese and Sonali Paul)