Norfolk Southern unveils compensation plans for homeowners near derailment site

By Andrea Cambron, Jason Carroll and Chris Isidore, CNN

Norfolk Southern is spelling out how it will compensate East Palestine, Ohio, homeowners whose homes lost value due to the railroad’s February derailment.

In a letter to a bipartisan group of senators on the Commerce, Science and Transportation committee, Norfolk Southern said it would initially compensate homeowners “within an approximately 5-mile radius of the derailment, and who sell their homes for less than their property’s pre-February 3 appraised value.”

Norfolk Southern says that it expects “it will be able to begin making payments to eligible homeowners within one year.”

The plan to compensate homeowners came after CEO Alan Shaw was grilled by members of the committee at a March 9 hearing. Sen. Ed Markey, a Massachusetts Democrat, asked Shaw four different times to commit to compensating homeowners, only to hear Shaw repeatedly reply, “Senator, I’m committed to do what’s right.”

His responses angered Markey and some other senators.

“Will you commit to insuring that these families, these innocent families do not lose their life savings in their homes and small businesses?” Markey asked Shaw at that hearing. “The right thing to do is to say, ‘Yes we will.'”

When Shaw came back to a follow-up hearing on March 23, he unveiled plans for a compensation plan.

“We also know residents are worried about their home values,” he said at that later hearing. “We understand these concerns. We are committed to working with all relevant stakeholders to provide tailored protection for home sellers if their property loses value due to the impact of the derailment.”

The latest letter to the committee provided more details of those compensation plan. While it talks about a five-mile radius, it said it will develop the details of the geographic area for homeowners eligible to receive compensation “in concert with the key stakeholders involved with the legal process, in order to ensure we are following appropriate procedures and are respecting the class action participants’ rights.”

The company faced not just grilling from the senators, ut it is also the subject of some lawsuits from homeowners seeking compensation for lost property values.

The compensation promise was good news to Melissa Henry, who lived about a mile from the derailment site, and recently sold her remodeled home at a loss.

“I am surprised, and I hope they keep their word,” she told CNN Thursday. “They should. A lot of people want out and can’t, so I think this will help people who want to sell.”

She said she would have preferred for the company to notify residents of the plans, rather than the Senate committee.

“You would think they would reach out to us,” she said. “We can’t get a straight answer half the time from those people, so that doesn’t surprise me.”

The company’s website said Thursday that so far it has pledged $34.4 million to East Palestine and the surrounding area. In its letter to the senators the company says the financial commitment “is just a downpayment,” with an aim to provide for the community “not just for the near term, but for the long haul.”

Shaw defended the company’s commitment to the community at the company’s annual shareholder meeting Thursday, saying it remains committed to making things right for East Palestine. He said he has visited the town nearly weekly since the derailment and has heard from residents about what they want and need.

The company has ample resources with which to compensate shareholders. With a population of about 5,000 people, there are roughly 2,600 residential properties in East Palestine according to Attom, a property data provider. The average value of a property there in January of this year, prior to the derailment, was $146,000, according to Attom.

Taken together, the value of all residential real estate in the town adds up to about $380 million, including single family homes and multi-family properties.

Norfolk Southern estimates the derailment cost the company $387 million, including site cleanup and various compensation programs. It said that some of that cost may be recoverable from insurers. And even with the charge it took from the accident, it earned net income of $466 million in just the first three months of the year.

The letter comes as the committee recently voted to approve the Railway Safety Act of 2023, co-sponsored by Ohio’s two senators, Democrat Sherrold Brown and Republican JD Vance. While Shaw has said there are parts of the bill that Norfolk Southern can support, it and other railroads are opposed to some of the new regulations, such as a requirement that all locomotives have at least a two-person crew, that are included in the current version of the bill.

— CNN’s Anna Bahney contributed to this report

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