Norfolk Southern (NSC) CEO Alan Shaw faced heated criticism from the Senate on Thursday over the February 3 train derailment in East Palestine, Ohio, which left toxic chemicals in the area.
“I want to begin today by expressing how deeply sorry I am for the impact this derailment has had on the residents of East Palestine and the surrounding communities,” Shaw said in his opening statement to the Environment and the Public Works of the Senate. “I am determined to make this right.”
Shaw promised that Norfolk Southern would remain in East Palestine to assist in the cleanup process “for as long as it takes.” Norfolk Southern and several state and federal agencies are still in the “emergency response” phase of the cleanup, which will continue until “obvious, known contamination remains,” according to the Ohio Environmental Protection Agency.
The chemicals that were spilled and burned after the derailment—especially vinyl chloride and phosgene—remained a major concern, as many of them are known carcinogens and irritants, especially for long-term exposure.
The CEO of Norfolk Southern said that when it comes to paying the health care bills of those affected by the derailment, “everything is on the table,” although he did not reveal any specifics about company commitment.
So far, Norfolk Southern said it has committed at least $13 million to help affected communities, including $1 million for initial relief, a $445,000 scholarship fund, and reimbursement for firefighting equipment used by emergency responders during the event.
According to Anthony Hatch, senior transport analyst at ABH Consulting, the financial impact to the company will not be significant, but it has been a PR nightmare for the company.
“It’s a reputational hit,” Hatch recently told Yahoo Finance Live. “And it’s just unfortunate that it comes after a period in which there were service issues and supply chain issues that were part of, very happy labor negotiations that ended.”
Hours before the hearing, another Norfolk Southern train derailed in Alabama. There were no people injured or toxic chemicals involved. In 2022, the railways recorded 1,168 train derailments, according to the Federal Railway Administrationdown 10% from 2013.
The CEO of Norfolk Southern talked about safety
As the National Transportation Safety Board (NTSB) continues its investigation into the particularly catastrophic incident in eastern Ohio, its preliminary report he pointed to an overheating wheel bearing as the cause of the derailment.
“The preliminary report found that the Norfolk Southern crew operated the train below the speed limit and in an appropriate manner,” Shaw said in his prepared statement. “However, it is clear that the security mechanisms in place were not sufficient.”
Some senators, including Bernie Sanders (I-VT) and Sherrod Brown (D-OH), have questioned the risks inherent in Norfolk Southern’s use of precision scheduled rail (PSR), an operating model intended to reduce costs through fixed hours, leaner. staff, and longer trains.
Norfolk Southern’s CEO pushed back against this criticism, noting that the company has moved away “from a short-term focus solely on profits,” but is not committed to abandoning PSR or offering to workers guaranteed paid sick days.
Under pressure from regulators and lawmakers – Ohio Sens. Brown and JD Vance (R) propose a new bipartisan railway safety bill earlier this month – Norfolk Southern released a six-point security plan which mainly focuses on enhancing the sensors.
Some experts argue that, while better detection would be an improvement, PSR and staff are the biggest problems to be faced.
“In the short term, it makes the bottom line look good, but in the long term it throws the dice on safety,” Jeremy Ferguson, president of the SMART Transportation Division, said. Yahoo Finance Live. “The impact on safety is that they’ve cut manpower across all trades when it comes to car inspections, when it comes to the amount of equipment available to operate the trains… We’ve had a variety of problems because you’re trying to do a lot more with a lot less.”
Others, like Hatch, argue that some of the recent scrutiny around rail safety may be overblown, particularly when considering alternatives to transporting hazardous materials, such as using highways and trucks
“Their safety record is actually quite remarkable — 99.99% pass,” he said of Norfolk Southern. “I think that instead of being thankful that it could be worse, we are sort of attacking them as not safe. And this seems unfair.”
Similarly, Joseph Schofer, professor emeritus of civil and environmental engineering at Northwestern University, said that while the East Palestine derailment serves as “a wake-up call” for the industry, it is still too early to draw conclusions. wide from the disaster.
“My concern going forward is: What are the causes?” Schofer told Yahoo Finance in an interview. “What is fundamental here, and what should motivate the changes?”
“As I watch the news coverage,” he continued, “it seems like every politician, from the local level to the federal level, is trying to jump in front of the camera and say, ‘Save your life.'” But we really don’t. a good sense of the scope of the problem and if what we see, especially the various events in Ohio, are in any way connected.”
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