REPORT — Struck: NS Defenses on Ohio Derailment Cleanup Cost

Aerial photograph of Feb. 3, 2023, Norfolk Southern derailment site, courtesy of the NTSB.

U.S. District Judge John R. Adams will not allow multiple Norfolk Southern “defenses against the government’s environmental cleanup cost suit” that stems from the Feb. 3, 2023, derailment in East Palestine, Ohio, Law360 reported April 11, “but said it is too early to rule on the company’s argument that the Comprehensive Environmental Response Compensation and Liability Act [CERCLA] claims are preempted by federal rail statutes.”

According to Law360, the Ohio federal judge “partially granted the federal government’s bid to trim seven of Norfolk Southern’s affirmative defenses in the cleanup suit but added that ‘a more developed record is necessary before deciding the issue of preclusion’ even if he is not confident the company will prevail on that claim.”

Judge Adams’ April 10 order “struck claims that Norfolk Southern need not pay for cleanup efforts that were not ‘cost-effective’ and that the government failed to mitigate its damages from the derailment and subsequent toxic chemical release,” according to the news outlet.

The order follows Norfolk Southern’s April 9 announcement that it had reached a $600 million “agreement in principle,” subject to court approval, to resolve a consolidated class action lawsuit resulting from the derailment that is before another Ohio federal judge. If approved, the agreement would resolve all class action claims within a 20-mile radius from the derailment and, for residents who choose to participate, personal injury claims within a 10-mile radius from the derailment.

NS said the agreement, whose financial impact will be included in the railroad’s first-quarter 2024 results (preliminary numbers were also released April 9) “does not include or constitute any admission of liability, wrongdoing, or fault. It was reached through extensive negotiations with court-appointed class counsel and with the expert assistance of former federal district judge Layn Phillips, a nationally renowned neutral mediator.”

The April 10 order also follows Judge Adam’s March ruling, which found Norfolk Southern “could not pin some of the cleanup costs the government is pursuing on the multiple companies that leased some of the derailed rail cars,” according to Law360.

Law360 reported that Judge Adams’ April 10 order found “the federal government correctly argued that because it and the state of Ohio’s suit against Norfolk Southern is a removal action rather than a remedial action — meaning it deals with an immediate threat to the environment and the public rather than a long-term cleanup effort at, say, a superfund site — it does not have to consider cost-effectiveness.” Additionally, “CERCLA does not obligate the government to mitigate the damage caused by the derailment or its cleanup costs after the fact, the order said.”

According to the Law360 report, “‘Norfolk Southern has offered no legal authority that suggests that the government has a duty to mitigate,’ the order said. ‘Instead, Norfolk Southern relies upon the fact that the government’s response must be consistent with the national contingency plan. As the court is required to enforce that provision of CERCLA, there is no need for an independent affirmative defense regarding mitigation.’”

Two other Norfolk Southern defenses were axed that the judge said Norfolk Southern “‘abandoned’ by not arguing against the government’s bid to strike,” the news outlet reported:

• “Norfolk Southern’s argument that it was not responsible for costs related to ‘de micromis’ releases, defined under CERCLA as those less than 110 gallons of liquid materials or less than 200 pounds of solid materials or otherwise specified by regulation.”
• Norfolk Southern’s “claim that it was entitled to limited damages and its liability was apportioned to various unnamed parties.”

According to Law360, the three other “affirmative defenses targeted by the government’s strike bid all claimed CERCLA is preempted by statutes governing the rail industry, specifically the Federal Railway Safety Act, the Interstate Commerce Commission Termination Act and the Hazardous Materials Transportation Act.” It is “‘unlikely’ Norfolk Southern will prevail on those defenses, but that further briefings from the parties are needed to make a ruling,” according to Judge Adams, the news outlet reported.  

Norfolk Southern and the federal government “declined to comment,” according to Law360, which added that “[c]ounsel and representatives for the state of Ohio did not immediately respond to requests for comment.”