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Exclusive: North Dakota governor: railcar safety standards for crude needed now

North Dakota Governor Jack Dalrymple (R) speaks with the media at the FEMA Disaster Recovery Center in Minot, North Dakota, June 27, 2011. R
North Dakota Governor Jack Dalrymple (R) speaks with the media at the FEMA Disaster Recovery Center in Minot, North Dakota, June 27, 2011. R

By Ernest Scheyder

NEW YORK (Reuters) - Provisional safety standards for railcars carrying crude oil are needed as soon as possible, not next year as the U.S. Department of Transportation expects, North Dakota Governor Jack Dalrymple said in an interview on Tuesday.

While Dalrymple has little power over federal regulators, his bully pulpit as head of the second-largest oil-producing state carries much weight as a national debate rages over the safety of shipping crude oil by rail.

Federal regulators have been studying railcar design and the composition of North Dakota's Bakken crude oil after a string of explosive derailments, including one last month when a 106-car BNSF Railway Co train carrying crude east crashed into a derailed westbound BNSF grain train near Dalrymple's hometown of Casselton, North Dakota.

Last July, a runaway oil train derailed and exploded in the center of the Quebec town of Lac-Megantic, killing 47 people.

Yet DOT said last week permanent standards are not likely until 2015, leaving companies that make railcars, as well as oil producers, shippers and processors, in limbo and technically beholden to outdated regulations.

"We do need some kind of provisional standard for the next year," Dalrymple said. Waiting until then "just leaves a couple of industries guessing."

There has been broad agreement that newer, safer railcars, with more shielding and advanced valves, are needed to ship crude oil.

The Railway Supply Institute, a trade group for tank car owners, urged DOT's Pipeline and Hazardous Materials Safety Administration (PHMSA) last month to adopt safety standards already put in place in October 2011 by the Association of American Railroads, the rail industry's trade group.

Under those standards, tank railcars known as DOT-111s built after October 2011 should have thicker hulls and reinforced valves to better protect against punctures or leaks in derailments.

Yet retrofitting existing cars takes time and could cost more than $1 billion, the rail industry has said. New cars are being built now using standards their manufacturers think are safest. The possibility exists that DOT's final rules in 2015 could make such cars outdated and illegal, throwing the industry further into a tailspin.

"They say they can't come up with specifics until 2015, and to me that just sounds like a bureaucratic answer," said Dalrymple, a Republican elected in 2010.

Some 71 percent of all oil produced in North Dakota was transported by rail in November, or around 800,000 barrels per day (bpd), according to the state's Pipeline Authority. That compares with 500,000 bpd transported in November 2012, when 58 percent of the oil had been transported by rail.

Dalrymple said he and other North Dakota politicians would pressure regulators for standards as soon as possible. He also said railroads could soon need to rethink how railcars carrying crude oil operate within urban areas, though he said it is too soon to identify the possible new procedures.

"This is going to lead to some modifications on the part of BNSF," said Dalrymple, referring to the state's largest railroad and one involved in the Casselton explosion.

(Editing by Terry Wade and Matthew Lewis)

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