Ohio Jury Clears GATX in $600M East Palestine Train Derailment Settlement

An Ohio jury ruled that GATX, the company owning the railcar implicated in the East Palestine train derailment of 2023, is not liable for the $600 million settlement Norfolk Southern agreed to with affected residents. Although the National Transportation Safety Board (NTSB) cited a bearing failure on GATX's railcar as the derailment's cause, the jury determined Norfolk Southern had sole operational and inspection responsibility for the train and its cargo. This verdict shifts the financial responsibility squarely onto Norfolk Southern, which has already incurred over $1 billion related to cleanup and settlements from this incident.

The derailment led to significant chemical spills and a subsequent controlled vent-and-burn of vinyl chloride tanks, creating a large smoke plume and necessitating evacuations. Norfolk Southern previously sought to hold GATX and OxyVinyls, the chemical manufacturer, accountable for environmental cleanup costs but faced mixed outcomes in these legal actions. While OxyVinyls recently agreed to an undisclosed settlement, GATX continues to deny liability, highlighting compliance with maintenance regulations and blaming the railroad for inadequate inspection and repair programs.

The NTSB's investigation underscored that although the train's overheating bearing was detected by sensors, the temperature threshold to trigger alarms came too late to prevent the derailment. GATX contended that prior damage from floodwaters occurred years earlier and that Norfolk Southern should have identified defects during routine checks. The litigation, while impacting corporate financial allocations, does not change the compensation residents or the village of East Palestine receive under Norfolk Southern's settlements.

This case highlights complexities in liability allocation within the railroad industry for catastrophic incidents involving hazardous materials. It emphasizes the importance of robust inspection protocols and clarifies operational roles between railcar lessors and train operators in compliance and risk management. For insurers and risk professionals, the verdict and ongoing settlements illustrate potential exposures and underscore the necessity for clear contractual responsibilities and oversight in rail transportation of hazardous goods.