PSC ‘very likely’ to propose state-run oil pipeline inspection program

BISMARCK – Public Service Commission Chairman Brian Kalk says it is “very likely” the regulatory agency will ask state lawmakers to create an inspection program for oil pipelines in North Dakota, an idea propelled by a massive oil spill last fall near Tioga.

Kalk’s comment came at the end of an informal discussion Thursday between the three-member commission and officials from the federal agency that currently oversees transmission pipelines carrying oil and other hazardous liquids such as gasoline and propane.

The commission, which already approves the siting of such pipelines, would need to adopt federal pipeline standards and provide trained inspectors to launch a state program.

“We’re not trying to increase regulation. We’re trying to make sure we have a local touch point on regulation,” Kalk said.

Fourteen states have hazardous liquid pipeline safety programs in partnership with the U.S. Pipeline and Hazardous Materials Safety Administration, which funds up to 80 percent of the program’s cost.

The Public Service Commission has authority under state law to create such a program, but the state Legislature would have to approve its funding and staff.  

Kalk said he sees it as an extension of the commission’s existing program that regulates natural gas transmission and distribution lines.

“If we’re going to be a world-class energy producer, it just seems reasonable,” he said.

Linda Daugherty, deputy associate administrator for PHMSA, said the agency regulates 3,215 miles of interstate pipelines running through North Dakota – including 1,855 miles of crude oil pipeline – and 119 miles of crude oil pipelines contained within the state’s borders.

However, that 119-mile figure is from the agency’s 2012 annual report and doesn’t include six new pipelines under construction, she said. Kalk said an accurate count of oil pipeline miles will be crucial if the commission decides to bring a proposal to the Legislature and Gov. Jack Dalrymple.

Several states with their own programs, including Minnesota and Iowa, have less than 100 miles of intrastate hazardous liquid pipeline. PHMSA State Programs Director Zach Barrett said state-run programs are most efficient for PHMSA when they cover 500 miles of pipeline or more, but he said the agency will support programs of any size.

Commissioner Julie Fedorchak said she believes North Dakota’s existing pipeline mileage justifies a more active state program and the state would benefit from having its own inspectors.

“That was something that I thought was really lacking in the spill that we experienced up near Tioga,” she said, referring to the Tesoro Logistics pipeline that leaked an estimated 20,600 barrels of Bakken crude in a farm field in September. “It was hard to find out, to get a person on the ground to talk about it. And I think that folks expect to see somebody who’s responsible.”

Daugherty said PHMSA has 25 inspectors covering its 10-state Midwest region, but no one stationed in North Dakota. Inspectors spent 66 days in the state in 2012-13, she said.

State inspectors can usually respond quicker than the feds when a pipeline fails, Daugherty said, but she also cautioned that a state-run hazardous liquid pipeline program could distract from the natural gas program.

Fedorchak said the state could avoid that issue by making sure the program is well-staffed, saying, “I think we have the resources to do this right.” The natural gas program has two inspectors and a cost of about $900,000 every two years, and Kalk said a hazardous liquid pipeline program would probably require similar resources.

Barrett said PHMSA prefers to have the same state agency run both the oil and gas pipeline safety programs, and Commissioner Randy Christmann said the PSC would be the logical choice in North Dakota.

However, if PHMSA moves ahead with its plans to expand regulation of oil gathering pipelines in rural areas – rules Daugherty said are at least three to five years away – it could set up a jurisdictional struggle because the North Dakota Industrial Commission is set to adopt regulations this spring for underground gathering lines.

Kalk said if the 2015 Legislature were to approve a state-run program, the soonest the state could apply for PHMSA certification would be that August, meaning the program could be up and running by 2016.