Textile Company Settles Graniteville Spill Lawsuit

Norfolk Southern Corp. and the closed Avondale Mills reached a confidential settlement of Avondale's lawsuit from the Jan. 6, 2005, derailment in Graniteville, S.C., that produced a chlorine cloud. Avondale, a textile company that had been founded in 1845, said corrosive chemicals ruined its Graniteville plant, and the entire company shut down in mid-2006. Nine people including six of the plant's workers died in the incident, which was caused by a misaligned switch that sent a Norfolk Southern freight train off a main line and onto a spur, where it struck a parked train.

This was one of the incidents that prompted the Federal Railroad Administration to propose a human factors regulation earlier this year.

Norfolk Southern (Norfolk, Va.), which reported $9.4 billion in railway operating revenue and $1.5 billion in net income for 2007, announced the settlement Monday and said it came after four weeks of trial. "A portion of the settlement will not be reimbursed by insurance and will be recorded in the first quarter as an expense," the rail company said. "This expense combined with other favorable claims-related adjustments will increase year-over-year operating expenses by $13 million and reduce first quarter earnings by $0.02 per diluted share."

Avondale sought $420 million in its lawsuit, according to an April 8 Associated Press report that said the settlement was reached by Avondale, Norfolk Southern, and the textile mill's insurance company. Norfolk Southern's 2007 annual report says Norfolk Southern's 2005 expenses included $41 million related to the derailment.

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