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House, Senate pass PSC budget with rail program

From the Bismarck Tribune article by Nick Smith

North Dakota lawmakers in each legislative chamber approved a Public Service Commission budget Monday, which included a compromise on a rail safety pilot program.

The Senate unanimously passed Senate Bill 2008 by a 47-0 vote Monday morning and the House by an 85-4 vote in the evening.

The rail safety program had been a major source of debate within the PSC budget. The original bill had provided for two inspectors and a rail safety manager, which were removed by the House earlier this month.

Under the compromise, the program would provide $523,345 from the rail safety fund for the pilot program. A total of $253,345 would be for the salary of one inspector and $200,000 for a temporary employee. The remaining $70,000 was for operating costs.

Language in SB2008 states that the pilot program is intended to last through the 2017-19 biennium.

Senate debate

“We got a pretty good deal at the end of the day. It isn’t all that we wanted, but it’s a good start,” Sen. Ronald Sorvaag, R-Fargo, said.

Sen. Tyler Axness, D-Fargo, said the state should have stuck with the original number of positions to supplement federal inspectors from the Federal Railroad Administration.

“To me, there should be no compromise on public safety. I think we can do better,” Axness said.

Sen. Ray Holmberg, R-Grand Forks, said the end of the session is the time for concessions and compromise.

“They are boots on the ground, and I think that’s extremely important,” Holmberg said.

House debate

Bill carrier Rep. Roscoe Streyle, R-Minot, said industry and the state has stepped up to address rail safety.

SB2008 allows railroads to provide training for fire departments that have jurisdiction along railroad routes. The training would be made available by June 2016 with refresher courses made available every three years after that.

House Democrats echoed their Senate counterparts in saying the original rail program should have been in the final bill.

“I think this is a start. I don’t think it’s enough,” Rep. Ron Guggisberg, D-Fargo, said.

Guggisberg said federal inspectors have found numerous rail defects across the state in recent years, which he said was evidence of the need for additional oversight.

Rep. Kris Wallman, D-Fargo, said, if lawmakers hadn’t cut the oil extraction tax last week, there might be more money for a more robust program.

Streyle took exception with what he called attacks on the oil industry.

“Quite frankly, I’m sick and tired of the attacks on an industry where there’s 65,000 direct jobs,” Streyle said.

He said the state has benefited to the tune of billions in revenues that can be used to fund critical statewide needs.

The 2015-17 PSC budget, as passed, increases total staff by two to 46 and a budget of $22.2 million.

Tribune Endorses Fedorchak

From the Bismarck Tribune Editorial

Voters will decide two of the three seats on the Public Service Commission on Nov. 4.

Commission Chairman Brian Kalk is seeking his second six-year term, and Julie Fedorchak hopes to win the right to fill the remaining two years of office after being appointed to the PSC by Gov. Jack Dalrymple in 2012. She replaced Kevin Cramer, who had been elected to the U.S. House.

They are being challenged by Democrats Todd Reisenauer and Tyler Axness, respectively.

The Tribune believes Republicans Kalk and Fedorchak deserve to be elected. Both have served well and their challengers haven’t provided compelling arguments to replace them.

Kalk, a former Marine and North Dakota State University professor, has been aggressive politically. When he ran for the PSC in 2008, he was a virtual unknown, but was able to win the Republican nomination and the general election.

He won the nomination for the U.S. House in 2012, but lost in the primary to Cramer. However, he hasn’t allowed his career objectives to interfere with his PSC duties.

Kalk has worked to diversify energy sources in the state, improve the Call Before You Dig program and improve the reliability of the energy grid.

Since being appointed to the PSC, Fedorchak has been anything but a seat-warmer. She has demonstrated that she’s a quick learner and been active in many areas.

She’s asked for the state to take the lead in the oversight of intrastate liquid hazardous materials pipelines. She also wants a supplemental rail safety program that would complement the federal program.

Fedorchak worked for former Gov. Ed Schafer and Sen. John Hoeven, R-N.D., and operated her own business.

So she has a solid understanding of how government works and the challenges facing small-business owners.

Reisenauer is an independent consultant from Fargo. He has worked in the software industry for more than 11 years and has a master’s degree from the University of Mary. It’s his first race.

He wants a different approach from the PSC to deal with the state’s growing pains and the infrastructure needs of communities.

Axness, a freshman senator from Fargo, serves on the Transportation Committee and the Human Services Committee.

He is the communication and policy coordinator for the Freedom Resources Center, a disability rights organization in Fargo.

He also wants a more proactive and critical approach by the PSC.

The Democrats have been diligent in promoting their positions, but they haven’t provided voters with enough reasons to replace Kalk and Fedorchak.

Kalk and Fedorchak have shown the ability to deal with the issues fairly and responsibly.

They both deserve to remain on the PSC.

Pipeline company gets “conditional OK” to convert a pipeline

Listen to Dave Thompson of Prairie Public here.

The Public Service Commission has approved a plan to convert an existing crude oil gathering pipeline to a transmission line.

However, the approval comes with conditions.

Hiline Crude built the 197 mile long pipeline as a gathering line, But it now wants to convert it to a transmission line – and it will have to add tanks and pumping stations to do so. State law says transmission pipelines can’t be built within 500 feet of an existing home, unless the company gets the owner of the property to sign a waiver. There are 20 homes within 500 feet of the pipeline, and all but five have signed waivers. The PSC order says Hiline must get waivers from those five additional homeowners.

“This is really a case of balance,” said Commissioner Julie Fedorchak. “We need to maximize our existing pipeline structure, and that’s what this project attempts to do.”

Fedorchak says at the same time, more pipelines need to be built.

“The key to building more pipelines is good landowner relations.” said Fedorchak.

The pipeline will be able to carry about 65,000 barrels of crude oil per day. The project has a $55 million price tag.

Forum Endorses Fedorchak

From the Fargo Forum Editorial “Fedorchak and Kalk for PSC”

For the first time in years (ever?), two of three North Dakota public service commissioners are on the November ballot. Incumbent Brian Kalk and appointed Commissioner Julie Fedorchak have been doing excellent work and should stay on the job.

Todd Reisenauer of Fargo is challenging Kalk for a six-year term. State Sen. Tyler Axness,

D-Fargo, is challenging Fedorchak for an unexpired two-year term. Neither Democratic challenger has advanced convincing arguments that the two commissioners should be replaced.

Kalk’s credentials – education and experience – were impressive when he first ran for the Public Service Commission. Since then, he has become a sophisticated regulator who understands the complexities and growing pressures of regulating on the state level.

Fedorchak, who is relatively new to the job, has made it her business to study, study, study before she comes to conclusions that affect the regulatory climate in the state. In that process, she has not been reluctant to criticize industries that are subject to regulation, or to delay PSC action until she is satisfied she has the information she needs to make an informed judgment.

Both Kalk and Fedorchak have worked well together – and with other regulators, state and federal – as regulatory demands have escalated in the new energy environment in North Dakota. Both are thoughtful elected officials who understand their responsibilities to the public and to the industries and systems that fall under the PSC’s umbrella.

Some of the challengers’ raps on the commissioners seem to miss the mark in that they stumble into areas that are not within the legal purview of the PSC.

There is no credible reason to replace Kalk and Fedorchak. They work hard in an agency that deals with some of the most complex and consequential matters facing the state. They are doing a good work. Both should stay on the job.

STB Asks Railroads about Plans for Service Issues

From the Electric Co-op Today Article by Steven Johnson, ECT Staff Writer

Every year, federal regulators ask the nation’s freight railroads how they plan to deal with peak seasonal traffic.

This year’s request comes with more urgency.

At a time when many electric cooperatives have been plagued by delayed or missing coal shipments, the Surface Transportation Board wants railroads to explain how they plan to avoid a catastrophe this fall and winter.

STB Chairman Daniel R. Elliott III asked the seven Class I railroads to respond by Sept. 15 on how they will work with customers to prevent or cushion critical commodity shortfalls during periods of rail congestion.

“Rail service issues continue to have an adverse impact on many rail customers,” Elliott wrote in an Aug. 19 letter to the railroads.

The last year has been “challenging” because of issues involving weather, volume, capacity and equipment, Elliott said. The polar vortex strained rail shipments last winter when many utilities needed additional coal to meet winter heating needs.

“Stakeholders have raised recent concerns with the board about supply chain fluidity for coal, automobiles, ethanol, and propane among other commodities,” Elliott wrote.

Among a list of items to be filed with the STB are:

• Expectations for seasonal traffic peaks;

• Predicted changes from historic volume level or train speeds for commodities such as coal; and

• A description of any regions, with a special emphasis on Chicago, that could become chokepoints in meeting customer service expectations.

Elliott’s letter came less than two weeks after the North Dakota Public Service Commission urged the STB to act to reduce a backlog of grain cars that might not make it to market before harvest time.

That’s evidence, the commission said, of a major problem in freight rail traffic.

“The railroads’ response has been entirely inadequate to address the needs of our producers,” said Commissioner Julie Fedorchak. “This demands swift action by the STB.”

The board will hear from rail customers at a Sept. 4 hearing in Bismarck, N.D.

Rail Delays Prompt PSC Letter

After months of delays in shipping grain, the Public Service Commission has sent a letter to the Surface Transportation Board that regulates the railroads.

The PSC permits and represents grain shippers across the state, and some shippers have expressed concern over the growing backlog of grain cars in the state. The commission has met with the railroads since April and says there hasn’t been too much improvement.

“It has been very slow progress, and we are just really concerned that there isn’t enough time for them to catch up. They really need to devote more resources to this issue. So, we sent the letter to the Surface Transportation Board urging them to act in behalf of all the shippers in North Dakota,” says North Dakota Public Service Commissioner Julie Fedorchak.

The commission plans to meet with representatives from BNSF and Canadian Pacific to discuss the current state of their orders, and how the two rail companies plan to eliminate the backlog before this year’s harvest comes online.

Source: Kfyrtv.com

ND PSC Urges Action to Fix Ongoing Rail Delays

The North Dakota Public Service Commission (PSC) said railroads need to make faster progress on reducing the backlog of grain cars available if they are going to transport last year’s crop to market before harvest arrives.

The Commission sent a letter this week to the U.S. Surface Transportation Board (STB) outlining the very serious situation for producers who rely on rail to transport their crops to market. The letter states: “We urge you to take immediate action, similar to your work this spring on fertilizer shipments, and require the railroads to devote more resources to transporting the 2013 and 2014 crop to market this fall so the quality of these commodities is preserved and our producers and elevators don’t suffer significant financial harm.”

“The railroad’s response has been entirely inadequate to address the needs of our producers. This year’s crops are ripening, farmers are preparing for harvest, and far too many storage facilities are full or near capacity,” Commissioner Julie Fedorchak, who now holds the rail portfolio, said. “The conditions are ripe for a significant problem with the 2014 crop. This demands swift action by the STB.”

In mid-July, a survey conducted by the PSC of North Dakota grain elevators showed little progress toward reducing overdue grain cars and moving product to market. More than 90 percent of the Canadian Pacific (CP) customers and 50 percent of the Burlington Northern Santa Fe (BNSF) customers who responded were waiting for more than 60 percent of their cars. The survey also asked how customers were feeling looking forward to the 2014 harvest season and the vast majority of the shippers who use both Burlington Northern and Canadian Pacific either have low or no confidence in the service they are going to get.

At a PSC meeting held April 28, railroad officials outlined plans for catching up with demand by late July but reports being filed weekly with the STB continue to show significant backlogs in grain shipments. The July 25 report shows that BNSF had 2,259 overdue cars. Canadian Pacific’s tracking mechanism makes it almost impossible to identify the real number of overdue cars, but the report does show that customers were waiting an average of 11 weeks for cars.

“Inadequate rail service has caused severe financial losses for our producers and elevators on the 2013 crop. Furthermore, inadequate service is already devastating the 2014 cycle because elevators are unable to contract as they normally would if they could count on timely shipping,” Commissioner Randy Christmann said. “This is not only a problem for North Dakota because when the grain is dumped on the ground while waiting for transportation, the food supply loses quality and goes up in price. Thus, this is a problem for the whole country.”

The PSC will hold a meeting with railroads again on Aug. 7 to receive a status report on eliminating the backlog and a plan for meeting the needs of producers. The meeting will be held at 1 p.m. CDT in the Commission Hearing Room on the 12th floor of the State Capitol Building. The Commission is also exploring legal advice to see what actions can be brought forth in this situation.

North Dakota Century code gives the Commission the authority to represent state interests in direct negotiations with rail carriers and in proceedings before Congress, federal agencies and courts. The Commission’s regulatory authority over railroads diminished as a result of the enactment of the federal Staggers Rail Act in 1980 and the Interstate Commerce Commission (ICC) Termination Act in 1995. The 1995 enactment eliminated many ICC functions and transferred all remaining duties to the Surface Transportation Board. However, the Commission has the authority to open a formal investigation into matters within its jurisdiction.

LETTER TO STB:

Dear Chairman Elliott, Vice Chairman Miller and Board Member Begeman:

The North Dakota Public Service Commission is very concerned about the ongoing delays North Dakota producers and grain dealers are experiencing for rail service. We met with grain dealers, producers and the railroads in April to discuss the backlog of grain that remained at that time from the 2013 harvest. The railroads explained the reasons for the delays and outlined plans for catching up in time for the 2014 harvest.

We have continued to monitor this situation closely wanting to give the railroads time to implement this plan while recognizing that this is a particularly serious situation for North Dakota producers who rely on rail to transport 80 percent of their crop to market. In mid-July, we surveyed North Dakota elevators and the information we received showed little progress toward reducing overdue grain cars and moving product to market. More than 90 percent of the Canadian Pacific customers who responded and 50 percent of Burlington Northern’s were waiting for more than 60 percent of their cars.

Information the railroads are filing with your board reveals similar problems. The July 25 report to the STB showed BNSF had 2,259 overdue cars. Canadian Pacific’s tracking mechanism makes it virtually impossible to identify the real number of overdue cars, but they do report customers were waiting an average of 11 weeks for cars. Additionally, we are confused and troubled by reports that more than half of the grain hoppers from both railroads are off line. This presumably means a large number of cars exist to move this grain but are not being used to do so.

We have requested an update from railroads on August 7, 2014 regarding their grain service, a status report on eliminating the backlog and a plan for meeting the needs of our producers to ship their 2014 crop. Barring a major change of course in the next week, we fully expect their response will be entirely inadequate to address the needs of our producers. The reality is, there isn’t enough time and the clock is ticking. This year’s crops are ripening, farmers are preparing for harvest, and far too many storage facilities are full or near capacity.

The conditions are ripe for a significant problem with the 2014 crop. This demands swift action by the STB. The ramifications are serious for our state’s entire agriculture industry and could well have ramifications on our nation’s food supply as well. Inadequate rail service has caused severe financial losses for our producers and elevators on the 2013 crop. Furthermore, inadequate service is already devastating the 2014 cycle because elevators are unable to contract as they normally would if they could count on timely shipping. This problem is not only a problem for North Dakota, because when the grain is dumped on the ground while awaiting transportation, the food supply loses quality and goes up in price. Thus, this is a problem for the whole country.

We urge you to take immediate action, similar to your work this spring on fertilizer shipments, and require the railroads to devote more resources to transporting the 2013 and 2014 crop to market this fall so the quality of these commodities is preserved and our producers and elevators don’t suffer significant financial harm. Thank you for your prompt attention to this important matter.

Source: ValleyNewsLive.com

PSC visits area, talks about rail issues

From the Devil’s Lake Journal Article by Harry Lipsiea, Journal Reporter

It’s been a busy year-and-a-half for Julie Fedorchak. In January of 2013, the born-and-raised North Dakotan was appointed as one of the state’s three Public Service Commissioners by Gov. Jack Dalrymple. It’s been quite the ride serving as a leader of energy and natural resources in the fastest growing state in the nation, she told the Journal during an interview Monday.

“It’s been a fascinating, positive learning experience,” Fedorchak said of time serving on the three-member commission. “It’s an extremely dynamic agency and I am very proud to represent North Dakota as a Public Service Commissioner.”
She traveled to the region early this week to discuss the possibility of expanding natural gas opportunities in the Rugby area before traveling to Devils Lake for a special meet-and-greet Monday evening.

“It’s always great to meet with the people of this area and discuss any issues that they may be concerned with,” she said. “This is such a great region.”

One of the components of the position that has been a surprise for her has been the great amount of different jobs that the commission deals with on a daily basis. From agricultural, energy and telecommunication issues, the North Dakota Public Service Commission serves as an authority over multiple departments.

“It’s amazing how many different components there are to the position,” Fedorchak pointed out to the Journal. Much of the commission’s time in the last month, however, has had due to topics related to freight service and the railways.

Fedorchak and the state’s other commissioners have attended several meetings with officials from Burlington Northern Santa Fe (BNSF) and Canadian Pacific regarding a remarkably large backlog of available grain cars in North Dakota.

“While the Public Service Commission doesn’t regulate railroads, we owe it to our shippers and producers to fight for them,” she said. “The delay and lack of availability of railcars has been entirely inadequate and unacceptable.”
BNSF and Canadian Pacific representatives have told state officials that the rail situation will improve significantly in 2014 compared to the 2013 harvest. If that doesn’t happen, there is possibly legal action that can be taken, Fedorchak stated. “We are prepared to take the necessary steps to assure that shippers and producers are able to be provided the timeliest service possible,” she said.

Another issue that the commissioner touched on during her meet-and-greet Monday is currently a major issue in Devils Lake. She noted that the Public Service Commission has a great concern for safety on the railway.

“As far as transported goods go and from a public safety standpoint, we have a large stake in the railway even though the Federal Railway Administration oversees the train system,” Fedorchak, who oversees the rail portfolio for the North Dakota Public Service Commission, added.

ND PSC budget seeks staff for proposed oil pipeline, rail inspection programs

From the Prairie Business Article by Mike Nowatzki

BISMARCK – The North Dakota Public Service Commission is requesting more than half a dozen new employees in its 2015-17 budget to monitor the state’s growing number of oil pipelines and railroad traffic that has increased with oil-by-rail shipments.

The three-member panel voted unanimously Thursday to submit its budget request to the Office of Management and Budget for review. It’ll be revised and incorporated into the governor’s executive budget presented to state lawmakers in December.

Three of the new positions would be dedicated inspectors as part of a state-run hazardous liquids inspection program for intrastate oil pipelines, a proposal that gained steam after an oil pipeline leaked an estimated 20,600 barrels of Bakken crude in a farm field near Tioga in September.

The 2015 Legislature would have to vote to create the program, and the federal Pipeline and Hazardous Materials Safety Administration would have to agree to relinquish inspection duties to the state.

Brian Kalk, chairman of the three-member PSC, said the state-run program could be up and running by late 2016 if the Legislature and PHMSA approve it.

Commissioner Julie Fedorchak said given the growing presence of oil pipelines in North Dakota, “it’s a good idea to have state personnel in charge of that oversight.”

The budget request also includes three employees who would inspect railroad track and motor operations, working in tandem with federal inspectors as part of a proposed state-run rail safety inspection program. Fedorchak said the program could be in place by mid- to late 2015 if approved.

Commissioner Randy Christmann said it’s been hard to predict how many employees will be needed for the programs.

“We’re really trying to aim at something based on projections of where we might be in pipeline activity and rail traffic two, three years down the road,” he said. “So it’s quite a tough target to really define with pinpoint accuracy.”

A half-time position requested for the hazardous liquids program and another half-time position for the natural gas inspection program would be combined into one employee who would oversee both programs. The PSC also is asking for an additional natural gas pipeline inspector and a weights and measures employee to help inspect the growing number of scales being installed in the state.

The PSC’s total budget request is for just more than $24 million, compared with the current two-year budget of about $20.5 million, which includes the reclamation program.

The budget request includes a general fund budget of $9.7 million, which would represent a 37 percent increase over the current two-year general budget of about $7.1 million. Kalk said growth in the state’s infrastructure was the main driver behind the request for more employees.

“The growth of the infrastructure is just really hard to predict,” he said. “Until the growth, the build-out settles out in North Dakota, you’ll probably see this in every commission budget going forward.”

Commissioners also are seeking a $250,000 equity package to keep salaries competitive for employees in high-demand positions. Pipeline safety inspectors in particular have been leaving the PSC because they’re offered more pay – sometimes double – by private industry, Kalk said, noting it takes three years to fully train a PSC pipeline inspector.

Fedorchak pushes rail safety plan

From the Bismarck Tribune Article by Nick Smith

BISMARCK, N.D. _ Support is strong for a proposal to take on some oversight of rail safety in the state, a state regulator says.

Public Service Commissioner Julie Fedorchak outlined a proposed state-run rail safety program included in the PSC’s 2015-17 budget request.

The program, with a price tag of $1 million per biennium, would consist of two inspectors and a rail safety manager. They would supplement the Federal Rail Administration, which oversees rail safety in North Dakota.

Fedorchak said the need for a supplemental program, already in 30 other states, isn’t a knock on the federal effort but a need to address new realities on the ground.

In 2000, approximately 4.7 million tons of materials was shipped via rail in North Dakota. By 2007, the amount had grown to 29.5 million tons and in 2012, it spiked to 49.8 million tons — an increase of more than 230 percent, she said.

“The FRA is a big federal bureaucracy that has taken a long time to adjust … to challenges,” Fedorchak said. “We can be more nimble and we can be more responsive.”

Fedorchak said Gov. Jack Dalrymple and several legislators have signaled support of the proposal. She said she’s confident the program will be approved in some form during next year’s session and would be up and running by late 2015 or early 2016.

Fedorchak disagreed with the idea that the state may have been slow in considering such a program. She said the increase in rail shipments between 2000 and 2007 was almost entirely from agricultural shipments and was manageable.

With increased shipping of oil by rail, however, Fedorchak said the tightening rail capacity is “making the margin of error much tighter.”

“I think the time is right (for new inspectors),” Fedorchak said.

The new inspectors would be trained by the FRA but would fall under state jurisdiction.

Fedorchak said in time more pipelines will be built, taking pressure off of rail for transporting crude oil. That also will ease backups in agricultural shipments, an issue for several months.

“The rail system is a huge driver in our economy,” Fedorchak said.

Even with more oil moving by pipeline as infrastructure is built, she said, she expects increases in farm products to keep overall tons of products being shipped annually to stay where they are.