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Figure 1. Photograph of East Palestine Train Derailment 6

Figure 2 Graph Showing Number of Derailments per Year 7

Figure 3 Graph of Derailment’s Effect on Norfolk Southern Stock 7

Figure 4 Graph Showing Number of Class I Railroad Employees 8

The derailment of a Norfolk Southern train in East Palestine has had a devastating effect on the residents. There are many environmental concerns stemming from the release and burning of toxic chemicals the train was carrying. The residents of East Palestine are looking to Norfolk Southern to provide the resources that will allow them to feel as comfortable and safe in their homes as they did before the derailment.

It is Norfolk Southern’s duty to make things right in East Palestine.

Norfolk Southern’s stakeholders have also been affected by the accident. Share prices have dropped significantly. Shareholders have filed a lawsuit against Norfolk Southern for prioritizing profit over safety (Stempel, 2023).

There are many other lawsuits directed at Norfolk Southern, too. The residents of East Palestine and other nearby locations are suing, the Attorney General of Ohio has opened a case, and the US Justice Department has filed a civil lawsuit on behalf of the Environmental Protection Agency.

The catastrophe in East Palestine has brought scrutiny to the company’s safety record and practices. The millions of people who see Norfolk Southern trains passing through their communities should feel confident that another such accident will not occur.

Reguard Strategies has compiled several recommendations for your company moving forward, which can be found in the following report. Suggested actions include:

· Additional compensation to the residents of East Palestine

· Support for independent testing of air, soil, and water

· Reviewing the risks vs. Benefits of Precision Scheduled Railroading

· Welcoming employee feedback regarding safety issues

The derailment involving toxic substances is a challenge that Norfolk Southern must meet for the well-being of those living in East Palestine, as well as its own business. Every aspect of this complicated situation demands that Norfolk Southern be committed to safety more than anything else.

Norfolk Southern Corporation was formed in 1982 with the consolidation of Norfolk and Western and Southern railways. Headquartered in Atlanta, Georgia, it is a Class I railroad company operating tens of thousands of miles of rail through 22 states and part of Canada. The company’s activity consists of transporting industrial materials that include metals, chemicals, construction materials, forest and consumer products, and agriculture. For much of Norfolk Southern’s 42 years, it set the industry standard for safety. It won the E.H. Harriman safety award for 23 consecutive years, until the award was retired in 2012 (Eavis, 2023).

On the evening of February 3, three dozen cars of a Norfolk Southern train derailed in East Palestine, Ohio and caught on fire. Eleven of the cars were carrying hazardous materials, including vinyl chloride, and were in danger of exploding from the heat. State authorities determined that releasing the vinyl chloride into a trench and burning it off would be less catastrophic than if the cars exploded, potentially throwing shrapnel as far as a mile (Sullivan, 2023). Residents of East Palestine were evacuated as the chemicals burned for two days, generating massive amounts of black smoke and fears about what toxins had been released and their effects.

Figure 1 (Food and Water Watch, 2023)

The derailment raises serious concerns about its impact on the local environment and the health of those living and working nearby. Prolonged exposure to vinyl chloride has been linked to liver damage and cancer (Sullivan, 2023). Since being assured that it is safe to return home, residents have reported nausea, headaches, rashes, bloody noses, and trouble breathing (Ebrahimji, 2023). Air monitoring provided by Norfolk Southern has deemed the air to be safe, but environmental experts have questioned if the screening is comprehensive (Lerner, 2023). Vinyl chloride breaks down into different compounds when burned, including known carcinogens. Residents are worried they could experience adverse health conditions for many years in the future.

Figure 2 (The Learning Network, 2023)

Viewing Figure 2, the encouraging decrease in train derailments is eclipsed by the number of derailments involving hazardous materials. This data suggests that disasters of this nature are becoming more likely. Additionally, the release of toxic chemical liquids into the ground threatens the surrounding water and soil. The US Justice department has filed a lawsuit against Norfolk Southern on behalf of the Environmental Protection Agency for violations of the Clean Water Act (Ebrahimji, 2023).

In the weeks following the accident in East Palestine, shares of Norfolk Southern stock plummeted. As shown in Figure 3, the share price was on par with the other major US railroads on February 3rd and has since fallen severely below. Just two weeks after the derailment, Norfolk Southern’s market value had decreased by $5 billion (Fox, 2023). Shareholders have taken the drastic step of filing a lawsuit against Norfolk Southern, describing the company’s statements regarding the safety of its operations as materially false or misleading (Stempel, 2023). The lawsuit claims the shareholders were defrauded as Norfolk Southern prioritized profit over safety and names Precision Scheduled Railroading as a particularly risky practice.

Figure 3 (Bloomberg, 2023)

Our review of Norfolk Southern’s response found that representatives could have handled things better. The company’s last-minute absence from East Palestine’s first town hall meeting following the accident was a missed opportunity to establish a good-faith commitment to the community. The hiring of Center for Toxicology and Environmental Health (CTEH), with its reputation of loyalty to big business, sowed distrust among the residents (Lerner, 2023). Funneling those with symptoms and other concerns to a helpline run, without advertisement, by CTEH made it worse. Scanning for specific chemicals in the air alone leaves the safety of the soil and water unknown.

Initial offers of $1 million to compensate the residents for being evacuated, suffering various symptoms, and living in fear for the safety of their environment is insufficient.

Investigations into the cause of the derailment are ongoing. Several former Norfolk Southern employees have suggested that whether a wheel bearing or axel or another part failed on this particular train, it is Precision Scheduled Railroading (PSR) that is to blame. The implementation of PSR in 2016 led to a 25% decrease in workers at Class I railroads (Marsh, 2021). PSR does not provide sick leave for its workers, leaving them less rested and alert. PSR also allows under one minute for inspecting a train car, when before its implementation 5-6 minutes were spent on each car (Fung, 2023). Many inspection points have been shuttered completely. This means fewer workers making very brief inspections fewer times per trip.

Figure 4 (Freight Waves, 2021)

After reviewing the derailment in East Palestine and its aftermath, Reguard Strategies has compiled the following recommendations for Norfolk Southern’s next steps, as well as ideas for protecting the company in the future. The bottom line is, Norfolk Southern must make it clear and inarguable that safety is its top priority.

For the continuing efforts in East Palestine:

· Provide more compensation to the residents. The impressive profits that Norfolk Southern earns are on public record and make the amount of money thus far offered to the victims seem paltry. A more appropriate amount might also garner respect for the company during its many impending lawsuits.

· In addition to money for the damage suffered, Norfolk Southern should cover the cost of any air, water or soil testing that residents seek from any company they choose.

· A trust should be established to prepare for the future cost of care for health conditions linked to the derailment.

Actions to lessen the likelihood of another similar disaster:

· Establish a work environment that welcomes employee feedback. The Federal Railroad Administration has received numerous reports that Norfolk Southern employees fear reprisals when reporting safety issues (Berger, 2023). These employees are the key to early detection of mechanical problems.

· Reconsider the risk vs. benefits of Precision Scheduled Railroading. While PSR has improved Norfolk Southern's efficiency and profitability, the short and less frequent inspections may lead to more catastrophes in the future.

· Continued support for common sense measures in the Rail Safety Bill now being legislated.