Norfolk Southern CEO Alan Shaw grilled over Ohio derailment

Norfolk Southern CEO Alan Shaw discusses East Palestine derailment in full CNBC interview



Norfolk Southern Corporation President and CEO, Alan Shaw, testifies before a US Senate Committee on Environment and Public Works hearing on the environmental and public health threats from the Norfolk Southern February 3 train derailment, on March 9, 2023, in Washington, DC.

Brendan Smialowski | AFP | Getty Images

Norfolk Southern CEO Alan Shaw told a U.S. Senate panel Thursday that he plans to “make it right” after one of the company’s trains derailed in East Palestine, Ohio, last month.

Shaw appeared at a hearing of the U.S. Senate Committee on Environment and Public Works to address what committee Democrats called “environmental and public health threats” resulting from the derailment.

Shaw told the Senate panel he is “deeply sorry for the impact this derailment has had on the people of East Palestine and surrounding communities.”

He vowed the company will clean the site fully and that it’s making progress. “We will be in the community for as long as it takes,” he said, adding there are “no strings attached” to the company’s assistance.

As Shaw testified, news surfaced of another Norfolk Southern derailment, this time in Alabama. Around 30 train cars came off the tracks Thursday, though there were no reported injuries and no risk of hazardous material associated with the derailment.

“You’re coming here with three derailments within three months, and the average in the¬†industry is one per month for the entire industry,” Sen. Jeff Merkley, D-Ore., told Shaw during the hearing “So congratulations on maybe some good luck over a few years, but at this moment, your team is the team that has the most derailments in the last three months.”

Shaw, for his part, said Norfolk Southern is committed to providing financial assistance to affected residents and first responders in the region. The company has pledged more than $21 million in reimbursements and investments.

The CEO appeared alongside Environmental Protection Agency regional administrator Debra Shore, Ohio EPA director Anne Vogel, Ohio River Valley Water Sanitation Commission executive director Richard Harrison, and Beaver County, Pennsylvania, Department of Emergency Services director Eric Brewer.

Environmental concerns

At about 9 p.m. local time on Feb. 3, an eastbound Norfolk Southern freight train with 11 tank cars carrying hazardous materials derailed near Ohio’s border with Pennsylvania and subsequently ignited. The chemicals included vinyl chloride, a highly flammable carcinogen, according to the National Transportation Safety Board.

The EPA screened about 600 homes in East Palestine and didn’t detect vinyl chloride or hydrogen chlorine, Shore said. She said the EPA is currently conducting 24/7 air monitoring at 21 stations throughout the community. Vogel added that the Ohio EPA has installed monitoring wells at the site of the derailment to test for potential groundwater contamination, as well as sentinel wells for long-term sampling of groundwater.

Shore said she expects waste from the site to move as soon as Thursday. The EPA waited a month before starting to order dioxin testing.

“We detected very low levels, which very quickly went even down to non-detect. Without those primary indicators, it was a very low probability that dioxins would have been created,” Shore said. “They are secondary byproducts of the burning of vinyl chloride, but we were listening to the community and they expressed significant concerns about toxins.”

There was not a script for this. There wasn’t a binder for me labeled ‘Train Wreck.’

Eric Brewer

Beaver County official

Texas and Michigan officials said they did not know soil and water from the site of the wreck would be transported to their jurisdictions.

“Michigan officials, the governor, myself, Sen. Peters, Michigan EPA, were not notified before that happened,” said Sen. Debbie Stabenow, D-Mich. “That’s not acceptable to us.”

The committee’s ranking member, Republican Sen. Shelley Moore Capito from West Virginia, said the issue came down to trust and accountability.

“If something like this happens again, God forbid they should also be able to trust the federal government will be quick, deliberate, transparent and clear in their response, and the guilty party parties will be held responsible,” Capito said.

The committee’s chairman, Sen. Tom Carper, D-Del., said there was miscommunication surrounding first responders who were under the impression that only one car would be vented and burned rather than five, which left some first responders scrambling. Brewer, the Beaver County official, said the decision was “jaw-dropping.”

“There was not a script for this. There wasn’t a binder for me labeled ‘Train Wreck,'” Brewer said.

The committee also heard from Ohio Sens. Sherrod Brown, a Democrat, and J.D. Vance, a Republican, as well as Sen. Bob Casey, D-Penn., who together introduced the Railway Safety Act of 2023. The bill aims to enhance safety procedures for trains transporting hazardous materials, establish requirements for wayside defect detectors, increase fines for wrongdoing and create a minimum requirement for two-person crews.

Shaw endorsed parts of the bill by committing to “the legislative intent to make rail safer.” Shaw said during the hearing that Norfolk Southern installed its first new wayside detector on Wednesday, though he said there is no indication these detectors were faulty before the East Palestine derailment. Shaw did not address a provision of the bill requiring a minimum of two-person crews on every locomotive.

Shaw refused to say whether Norfolk Southern would commit to ensuring families full compensation for diminished property values when questioned by Sen. Ed Markey, D-Mass.

No fatalities were reported after the East Palestine derailment, though residents and officials have raised concerns. Rail union representatives told Biden administration officials at a meeting last week that rail workers have fallen ill in East Palestine during the site cleanup.

Pressed by Sen. Bernie Sanders, a democratic socialist from Vermont, Shaw said “everything is on the table” regarding covering health care needs for East Palestine residents. He also did not directly say whether the company would provide sick days for all employees.

Ohio senators speak up

Vance expressed frustration at fellow Republicans who have opposed legislation to hold the company accountable, including those who “think that any public safety enhancements for the rail industry is somehow a violation of the free market.”

The NTSB released a preliminary report on Feb. 23 that pointed to an overheated wheel bearing as a factor in the derailment and fire. At the time, the train was instructed to stop, the bearing’s temperature measured 253 degrees hotter than ambient temperatures, above a threshold of 200 degrees hotter at which point temperatures are considered critical, according Norfolk Southern criteria.

On Saturday, another Norfolk Southern train derailed in Ohio, after which residents near Springfield were ordered to shelter in place. The train was not carrying hazardous materials, and no injuries were reported, though there were power outages in the area.

Hours after that derailment, internal emails obtained by CNBC indicated that Norfolk Southern was making broad safety adjustments to prevent future incidents. A company spokesman told CNBC the train carrier is now mandating trains over 10,000 feet long use distributed power, such that trains are powered from several locations across their length.

The Norfolk Southern incidents have spurred wide-sweeping reviews by government agencies. On Tuesday, the NTSB said it had opened a special investigation into the company’s organization and safety culture following the derailments. Separately, the Federal Railroad Administration announced it would conduct a 60-day supplement safety assessment of the company.

“We see what the company did with their massive profits. Norfolk Southern spent $3.4 billion on stock buybacks last year and are planning to do even more this year,” Brown said Thursday. “That’s money that could have gone to hiring inspectors to put in more hot box detectors along its rail lines and having more workers available to repair cars and repair tracks.”

The company has cut around 40% of its workforce since 2015, but Shaw said the company is now “aggressively hiring employees.”

On Wednesday, Norfolk Southern announced it will create a new regional training center in Ohio for first responders, as well as expand its Operation Awareness and Response program, which educates first responders on safely responding to rail incidents. Training classes will begin on March 22 at Norfolk Southern’s Bellevue, Ohio, yard.

Norfolk Southern CEO Alan Shaw discusses East Palestine derailment in full CNBC interview



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