Norfolk Southern’s stock fell before the opening bell Wednesday after the railroad unveiled plans to create a fund for residents near the site of an Ohio train wreck that would cover any decline in home values since a derailment earlier this year.
In early February about 50 cars derailed in East Palestine, some carrying hazardous chemicals that spilled into nearby waterways. The U.S. filed a lawsuit against Norfolk Southern over environmental damage in March.
Half of the 5,000 residents of East Palestine were evacuated as emergency personnel burned off some of the chemicals to avert an uncontrolled explosion.
Norfolk Southern Corp. CEO Alan Shaw apologized for the impact the derailment has had on the community and the company has pledged to pay for the cleanup.
Shaw said in a letter late Tuesday to the Senate Committee on Commerce, Science and Transportation that while the company has total accrued charges of almost $400 million for the derailment, that amount doesn’t include expected costs for funds tied to falling property values, long term health care or water treatment.
Shaw said the company was “undertaking these efforts and expenses without any judicial or investigatory finding of fault.”
Shaw anticipates that homeowners eligible for compensation will initially include those with homes within an approximately five mile radius of the derailment, and who sell their homes for less than what their property was appraised at before Feb. 3, when the derailment took place.
Later Wednesday, the Senate committee will debate broad, new rail safety legislation in response to the wreck in Ohio and other derailments that followed.
Among measures under consideration are requiring at least two crew members aboard each train, something the industry has been fighting against; an increase in the maximum penalty for violating rail safety rules, from $100,000 to $10 million; and requiring the use of defect detection technology that could prevent derailments like the one in East Palestine.
Shares of Norfolk Southern Corp., based in Atlanta, slid nearly 4% in premarket trading.