Norfolk Southern will pay $7.35 million to settle civil charges resulting from a June 2006 derailment in rural McKean County that polluted 30 miles of pristine streams with toxic lye and killed thousands of fish.

State and local officials announced the settlement yesterday, saying most of the money -- approximately $6.76 million -- will be used in McKean, Cameron, Elk, Clearfield and Potter counties to repair damage to the streams and local recreation economy caused by the high-speed derailment.

"This settlement will help heal the ecosystem and provide the needed resources for nearby communities," said Kathleen McGinty, state Department of Environmental Protection secretary.

The settlement total will be split between the DEP and the state Fish and Boat Commission. Most of the money will go directly to the Headwaters Resource Conservation and Development Council Inc. to support projects in the Sinnemahoning Portage Creek and Driftwood Branch of Sinnemahoning Creek watersheds.

The DEP will also receive about $500,000 and the Fish and Boat Commission $93,000 to cover costs of investigating and responding to the derailment.

The Norfolk Southern train on its way from Buffalo to Scranton was traveling 76 mph on a steep and treacherous stretch of track off of Keating Summit when 32 of its 46 freight cars jumped the track. The speed limit on that extreme downhill grade is 15 mph.

Three tank cars ruptured, spilling 42,000 gallons of sodium hydroxide, also known as caustic soda or lye, which killed fish and aquatic life in Big Fill Hollow and segments of Sinnemahoning-Portage Creek and the Driftwood Branch of Sinnemahoning Creek, all popular, high-quality fishing streams.

The landmark settlement amount, one of the largest in the history of the state for environmental damages, settles Norfolk Southern's civil liability. The settlement agreement is subject to a 60-day public comment period and a 30-day appeal period before it can be finalized in court. The railroad must pay the entire settlement within 10 days of the final court filing.

Norfolk Southern has completed cleanup of the derailment site at a cost of approximately $4 million. But under terms of the settlement, it must continue to monitor restoration at the site through September 2013.

Criminal charges are still pending against the train's engineer, 46-year-old Michael Seifert of West Seneca, N.Y., who tested positive after the accident for morphine and an anti-anxiety drug.

He was charged by McKean County District Attorney John Pavlock with two felony counts of risking a catastrophe and reckless endangerment, a second-degree misdemeanor. State prosecutors have charged him with two environmental felonies and two misdemeanors.