Norfolk Southern faces harsh US Senate criticism after Ohio derailment

FILE PHOTO: A burnt container is seen at the site where toxic chemicals were spilled following a train derailment, in East Palestine, Ohio, U.S., February 15, 2023. REUTERS/Alan Freed


By David Shepardson

WASHINGTON (Reuters) -A U.S. Senate committee harshly criticized rail operator Norfolk Southern (NYSE:NSC) and pressed it to back safety reforms on Thursday after a devastating Feb. 3 derailment in East Palestine, Ohio, of a freight train carrying hazardous materials.

Since the Ohio derailment that caused cars carrying toxic vinyl chloride and other hazardous chemicals to spill and catch fire, Norfolk Southern has been under pressure after a number of derailments of its trains.

During a three-hour hearing, senators from both parties said Congress must pass rail safety reforms and pressed Norfolk Southern CEO Alan Shaw to endorse improvements.

“It’s our responsibility in Congress to answer: What went wrong? What do we need to do to fix it? What can we do to make sure it does not happen again?” Senate Environment and Public Works committee chair Tom Carper said in opening the hearing.

Late on Thursday, the Senate Commerce Committee confirmed Shaw will appear on March 22 at a rail safety hearing, as will National Transportation Safety Board Chair Jennifer Homendy.

Senators asked Shaw to do more to compensate local residents, boost staffing and spend more on safety improvements, as well as questioned the company’s spending on stock buybacks and sharp cuts in staffing over the last decade.

At the hearing Shaw apologized, pledging to improve safety and address impacts including thoroughly cleaning the site. He said it had already committed $21 million to the community as a “down payment… I am committed to doing what’s right for the community.”

He said the railroad was committed to the “legislative intent to make rail safer” but did not endorse the bill.

Shaw defended Norfolk Southern’s safety record but has pledged to make immediate safety improvements. At the hearing, one senator noted that another Norfolk Southern operated train on Thursday had derailed in Alabama.

Shaw said on Thursday that in December he directed the railroad to “move away from a near-term focus solely on profits and that we’re going to take a long-term view.”

The Federal Railroad Administration (FRA) and NTSB both announced new safety probes after the death of a conductor in Cleveland, Ohio, when a train was struck by a dump truck.

The NTSB said it was opening a special investigation and urged “the company to take immediate action today to review and assess its safety practices.” The railroad’s shares fell 1.4% Thursday and are down 15% since the derailment.

Senators also asked where the hazardous materials will be sent, to which Shaw pledged to disclose a list. He also faced questions on the decision to conduct a controlled venting and burning of vinyl chloride in five tank cars.

Shaw said the decision to vent the material was made by the unified command under the direction of a local fire chief. “The only consideration, senator, was the safety and health of the community,” Shaw said.

Ohio Democratic Senator Sherrod Brown said Norfolk Southern used much of its “massive profits” to hike executive pay and pay shareholders rather than on safety measures. “This company has failed to its job over and over and over,” Brown said, saying the railroad eliminated 38% of its jobs over a decade.

Shaw said the railroad is on a “hiring spree” and has added 1,500 jobs over the last year but it is still far below where it was.

A bipartisan group of senators led by Brown and Ohio Republican J.D. Vance introduced legislation last week to prevent train disasters. It would require enhanced safety procedures for trains carrying hazardous materials, as well as require wayside defect detectors, a minimum of two-person crews and increased fines for wrongdoing.

Vance rejected suggestions from some fellow Republicans that new rail safety measures would violate free market principles, arguing railroads enjoy “special subsidies” and “special legal carve outs” few industries receive.

Vance noted Congress stepped in last year to impose labor contracts over the objections of workers that he called a “bailout.”

“Do we do the bidding of a massive industry that is in bed with big government or do we do the bidding of the people that elected us,” Vance asked at the hearing.

Democratic Senate Majority Leader Chuck Schumer asked, “Why did Norfolk Southern spend years lobbying for looser regulations to prevent accidents like this?”

Following the East Palestine derailment, some of the town’s 4,700 residents have reported ailments such as rashes and breathing difficulties and fear long-term health effects. No deaths or injuries were reported after the accident.

Democratic Senator Ed Markey said the railroad needed to do more to boost safety, citing a string of recent incidents. “You are not having a good month,” he told Shaw. “We are not hearing the right things today.”


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