One car that was breached released 23,000 gallons of the hazardous chemical into the atmosphere, according to the Environmental Protection Agency, forcing the evacuation of 700 residents.
The agreement lists at least a dozen different forms of cancer, neurological damage such as Parkinson's disease, and "emotional distress" as examples of illnesses for which people would not be able to sue. They also would not be able to make claims for medical monitoring or property damage.
The settlements range from $500 for people who live outside the evacuation zone that was established by officials leading the response, to $2,500 for those who live inside the zone, according to residents.
Conrail would not discuss the payments, saying only that it treats "each claim differently."
Lawyers representing residents who have already sued Conrail lambasted the railroad company for what they said is an attempt to take advantage of people in an economically distressed town.
Mark R. Cuker, an attorney representing more than 50 Paulsboro residents in a suit filed last month against Conrail, described the settlement offer as "draconian."
By signing the agreement, "you are done, no matter what happens to you the rest of your life," he said. "What they're doing is pretty outrageous."
In a statement, Conrail spokesman Michael Hotra said the settlement process "is an important step in Conrail's commitment to the Paulsboro community now that the incident response is over and rail service has resumed."
Contact Andrew Seidman at 856-779-3846, firstname.lastname@example.org or @AndrewSeidman on Twitter.