North Dakota Public Service Commission (PSC) member Julie Fedorchak on Thursday outlined her proposal for having the PSC establish a state-run crude rail safety program that would complement ongoing federal rail safety oversight. It will need approval and funding from the state legislature to establish three new state safety jobs.

Currently, the Federal Rail Administration (FRA) holds the responsibility for rail safety in North Dakota, Fedorchak told news media at press conferences in Bismarck and Fargo, ND, but there is precedent for the state being involved in some of the safety regulation, given the dramatic increase in rail traffic in the state over the past decade or more.

Fedorchak is proposing the hiring of two new state inspectors and a rail safety manager to oversee North Dakota's program at a cost of about $1 million per two-year budget period. She contends that a state-run program will have the advantage of being able to focus resources on specific safety-related concerns.

Rail traffic volumes in the state increased by 233% between 2000 and 2012, Fedorchak said, and during that period the majority of the activity changed from nonhazardous shipping of coal and grain products to a predominance of hazardous cargo -- oil and ethanol. In the last five years, she said, North Dakota has had 56 track-related accidents, costing $19 million, and 22 equipment-caused accidents resulting in $11.5 million in damages.

FRA currently deploys two track inspectors covering more than 3,000 miles of track in the state. Adding a state program would increase track inspections by 50%, Fedorchak said.

"A state program run by the PSC will naturally be more nimble than a large federal bureaucracy," Fedorchak said. "We can pay what's needed in this market to attract good, qualified safety inspectors who will be entirely devoted to finding safety problems or defects on North Dakota tracks and rail operations that could cause accidents."

The state regulator said that rail inspection ultimately is only a small piece of an overall solution that includes the building of new pipelines; setting new federal standards for rail cars with stronger materials and better equipment; setting optimal speeds for crude-by-rail trains; making sure the content of the crude being shipped stays standard; and training and equipping local emergency response personnel.

"All that being said, the single best way to improve rail safety is to approve and construct more pipelines," she said, adding that North Dakota has approved nine separate pipeline projects currently pending, collectively valued at more than $1.35 billion.

North Dakota's top oil/gas regulator, Lynn Helms, director of the Department of Mineral Resources (DMR), recently said the Industrial Commission would look at the state’s crude-by-rail state responsibilities prior to establishing draft rules for oil rail shipments, which are primarily overseen by the federal government (see Daily GPI, Aug. 19).

DMR has scheduled a one-day hearing Sept. 23 to address issues related to Bakken Shale crude oil rail transportation. DMR cited 10 areas in which the commission seeks input, including operating conditions, equipment/processes, costs, transportation safety and marketability (see Daily GPI, Aug. 21).

The U.S. Department of Transportation's Pipeline Hazardous Materials and Safety Administration (PHMSA) regulates tracks, train routes and speeds involved in crude-by-rail shipments, rail tank car specifications and funding for training of emergency responders.

PHMSA shares training responsibilities with states, so Helms indicated North Dakota's funding programs for training emergency personnel will be one of the topics tackled in the upcoming public hearing.