ARCHIVED - Maritimes and Northeast Pipeline Management Ltd. - Audit Report OF-Surv-OpAud- 01 - Appendix VII: M&NP Management Review Audit Evaluation Table

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APPENDIX VII
M&NP MANAGEMENT REVIEW AUDIT EVALUATION TABLE

5.0 MANAGEMENT REVIEW

5.1 Management Review

Expectations: Senior management should formally review the management and protection programs for continuing suitability, adequacy and effectiveness. The review should be based on appropriate documentation and records including the results of the surveillance, monitoring and audit programs. This review should be formal and documented and should occur on a regular basis. The management review should include a review of any decisions, actions and commitments which relate to the improvement of the programs and the company’s overall performance.

References
Environment: Safety: Integrity: Crossings
and
Awareness:
Emergency
Management:
OPR-99
section 55

CSA Z662-07
Clause10.2.2 (h) (iii)
OPR-99
section 55

CSA Z662-07
Clause10.2.2 (h) (iii)

OPR-99
sections 4, 40 and 55

CSA Z662-07
Clauses 10.2.2 (h) (iii) and 10.14.1

OPR-99 section 
53

CSA Z662-07
Clause 10.2.2 (h) (iii)

PCR Part II,
sections 4 and 5
OPR-99
section 55

CSA Z662-07
Clause 10.2.2
(h) (iii)

Assessment:
The Board considers senior management, as described in the expectations of the NEB audit protocols, to be the senior management of the certificate holder. As such, the Board assessed the level of oversight demonstrated by the Management Committee of M&NP as the holder of the operating certificate for Element 5.1, Management Review. It is the expectation of the Board that, in cases where a certificate holder has entered into an Operations and Maintenance agreement with an Operator, the responsibility to implement processes that ensure all regulatory obligations are being met on its behalf remains with the certificate holder. In this case, the Management Committee of M&NP has been designated to manage and control the business and operation of M&NP and thus bears ultimate responsibility for overseeing compliance with the NEB Act, the OPR-99, the PCR and other relevant Acts and Regulationsof the operational programs and the adequacy with which these programs address the hazards and risks while remaining in compliance with all applicable legal requirements.

The M&NP Management Committee was demonstrating elements of the required oversight expected by the Board, in that the Management Committee reviewed and monitored operational activities including performance goals at quarterly and annual meetings. M&NP also indicated that the President has informal daily communications regarding operational activities. However, it could not be demonstrated that the Management Committee is actively and formally ensuring that the management and protection programs (e.g., IMP, EHS MS and EPR Program) developed and implemented by the Operator are suitable and effective in meeting its regulatory obligations.

Through the course of the audit, the Board confirmed that the Operator was performing formal reviews of its Integrity Management Program, Environmental, Health and Safety Management System, and Emergency Preparedness and Response Program. However, the Board did not review documentation to indicate that the certificate holder was ensuring that the Operator was conducting any formal reviews of its Crossing or Public Awareness Programs.

The assessment of Element 5.1 - Management Review for each of the programs is as follows:

Integrity Management Program (IMP)

The Integrity Manual Section 15: IMP Review and Evaluation specifies that the IMP be reviewed and evaluated periodically (at least once per year). The Pipeline Integrity Oversight Committee (PIOC) is responsible for reviewing the IMP with input from Subject Matter Experts (SME) from Houston Technical Services as well as Region Technical Staff or Area Management. The PIOC also monitors Performance Metrics for satisfactory performance every six months. Annual Corrosion Review Meetings are also held with the purpose of reviewing the status of the corrosion control systems and determine what remedial actions may be necessary based on the previous year’s surveillance, monitoring and survey results. Review of the February 2010 meeting minutes indicated the attendance of appropriate personnel and appropriate detail of the meeting agenda to cover topics relevant to the IMP.

Although the IMP is being reviewed by several senior level committees to ensure its suitability; it could not be demonstrated that the results of this review are being communicated to the M&NP Management Committee.

Environment Health and Safety Management System (EHS MS)

The Operator manages the Environment Program and the Safety Program with an Environment Health and Safety Management System (EHS MS). M&NP’s EHS related programs document the activities such as inspection and audits as well as the related findings for management level review. M&NP demonstrated that these documents were discussed as regular agenda items at senior Operator meetings.

In addition, M&NP confirmed that the EHS programs are evaluated on an ongoing basis through lessons learned and progress is tracked. Processes were in place to ensure adequate senior level review and assessment of the effectiveness of the EHS MS with opportunities for continual improvement.

However, the Board could not confirm that results of these reviews were being communicated to the M&NP Management Committee for review.

Emergency Preparedness and Response Program (EPR Program)

The Board verified that the Operator is conducting an annual management review of the EPR Program. Documentation and records reviewed as part of this annual review include the EPR Program, the Field Emergency Response Plan, emergency response exercises and feedback from participants, the continuing education and liaison programs and the training program. A review of annual review meeting minutes confirmed that senior Operator staff review all elements of the EPR program to assess the overall effectiveness program.

However, the Board could not verify that results of the Operator’s annual management review of the EPR Program were being communicated to the M&NP Management Committee for review.

Crossing Program

For activities related to third party activity, the Board did not see any formal reporting addressing third party activity covered by the National Energy Board Pipeline Crossing Regulations (PCR). Further, it was noted that little if any tracking or trending done to monitor levels of third party activity. As such, the Board could not confirm that the Crossing Program has ever been assessed for suitability, adequacy or effectiveness.

Public Awareness Program

M&NP’s Operator did not demonstrate that it was formally reviewing its awareness program as developed and implemented to ensure the program it is meeting all applicable regulatory requirements.

The audit could not verify that there is a formal assessment of the effectiveness of the PA Program to ensure the ongoing suitability of the PA program and its resources that has been completed and communicated to the M&NP Management Committee.

As noted above, it is the Management Committee’s responsibility, to confirm and demonstrate its compliance through the development and implementation of adequate and effective programs. The responsibility of the development and implementation of these programs has been designated by M&NP to Spectra as the Operator through an Operations and Maintenance Agreement. It is the expectation of the Board that M&NP formally and actively oversee the activities of the Operator to ensure its regulatory obligations are being met on its behalf. It could not be demonstrated by M&NP that it was formally reviewing its programs as developed by the Operator to ensure they were meeting all applicable regulatory requirements and that they continue to be suitable.

Compliance Status: Non-compliant

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