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Final Audit Report OF-Surv-OpAud-T211-2013-2014 01 of the TransCanada Safety Management Program [PDF 1331 KB]

444 Seventh Avenue SW
Calgary, Alberta
T2P 0X8

National Energy Board Onshore Pipeline Regulations (OPR)
Final Audit Report of the TransCanada
Safety Management Program

File Number: OF-Surv-OpAud-T211-2013-2014 01

TransCanada PipeLines Limited and National Energy Board-Regulated Subsidiaries (TransCanada)
450-1st Street SW
Calgary, Alberta  T2P 5H1

31 March 2014

Executive Summary

NEB-regulated companies must demonstrate a proactive commitment to continual improvement in safety, security, and environmental protection. Pipeline companies under the Board’s regulation are required to incorporate effective and implemented Management Systems into their day-to-day operations. These programs include the tools, technologies and actions needed to ensure that pipelines are safe and remain that way over time. Safety Management Programs enable companies to communicate with stakeholders to promote safety, environmental protection and regulatory compliance.

This report documents the Board’s comprehensive audit of TransCanada’s Safety Management Program as it applies to its NEB-regulated subsidiaries and pipeline facilities. The audit was conducted using the National Energy Board Onshore Pipeline Regulations (OPR) as amended on 21 April 2013. The amendment, among other things, now requires companies to have an effective and well-documented Safety Management program as a key component of their Management Systems. The OPR was promulgated with no implementation grace period for federally regulated companies.

The Board’s audit was conducted following its Audit Protocol, which identifies five Management System elements. These five elements are further broken down into 17 sub-elements. Each sub-element reflects a number of regulatory requirements. The NEB requires companies to be compliant with one hundred percent of the regulatory requirements of a sub-element being assessed. If a company’s program is found to be deficient with respect to any regulatory requirement, the entire sub-element will be found in Non-Compliance.

The Board’s audit finds that TransCanada has developed and implemented a program to manage and control the hazards associated with potential safety incidents and emergencies with its operations. The documents and records reviewed during this audit demonstrate that TransCanada is ensuring company personnel are appropriately informed of and trained in Safety Management practices and procedures.

The audit also identified a number of Non-Compliant findings, the majority of which fall into three general categories:  

  • the lack of documented, established and implemented processes that correspond with the Management System requirements as required by the recently updated OPR;
  • the development and implementation of effective processes related to ongoing, internal evaluation of the compliance to legal requirements, and the adequacy and effectiveness of its Safety Management Program; and
  • inability to demonstrate consistent implementation and integration of the OPR management system requirements to the Safety Management Program.

The Board has determined that no enforcement actions are immediately required to address the Non-Compliant findings identified in this audit. Within 30 days of the Final Audit Report being issued, TransCanada must develop and submit a Corrective Action Plan for Board approval detailing how it intends to resolve Non-Compliances identified by this audit. The Board will assess the implementation of the corrective actions to confirm they are completed in an expedient manner and on a system-wide basis. The Board will also continue to monitor the overall implementation and effectiveness of TransCanada’s Management Systems through targeted compliance verification activities as a part of its on-going regulatory mandate.

Table of Contents

Appendices

1.0 Audit Terminology and Definitions

Audit: A systematic, independent and documented process for obtaining evidence and evaluating it objectively to determine the extent to which audit criteria are fulfilled.

Corrective Action Plan: Addresses the non-compliances identified in the Audit Report and explains the methods and actions which will be used to "correct" them.

Compliant: A program element meets legal requirements. The company has demonstrated that it has developed and implemented programs, processes and procedures that meet legal requirements.

Finding: The evaluation or determination of the adequacy of programs or elements in meeting the requirements of the NEB Act and its associated regulations.

Non-Compliant: A program element does not meet legal requirements. The company has not demonstrated that it has developed and implemented programs, processes and procedures that meet the legal requirements. A corrective action must be developed and implemented.

Procedure: A documented series of steps followed in a regular and defined order allowing individual activities to be completed in an effective and safe manner. The procedure will also outline roles, responsibilities and authorities required for completing each step.

Process: A systematic series of actions or changes taking place in a definite order and directed towards a result.

Program: A documented set of processes and procedures to regularly accomplish a result. The program outlines how plans and procedures are linked, and how each one contributes towards the result.

2.0 Abbreviations

CAP: Corrective Action Plan

CLC: Canada Labour Code Part II

COHSR: Canada Occupational Health and Safety Regulations

EM: Emergency Management

EP: Environmental Protection

GOT: Goals, Objectives and Targets

HS&E: Health Safety & Environment

IIT: Incident and Issue Tracking

NEB: National Energy Board

NGTL: Nova Gas Transmission Ltd.

OPR: National Energy Board Onshore Pipeline Regulations

SM: Safety Management

TOPs: TransCanada Operating Procedures

TransCanada: TransCanada PipeLines Limited and its NEB-regulated subsidiaries

TQM: TransCanada Québec & Maritimes Pipeline Inc.

3.0 Introduction: NEB Purpose and Framework

The NEB’s purpose is to promote safety and security, environmental protection, and efficient energy infrastructure and markets in the Canadian public interest within the mandate set by Parliament in the regulation of pipelines, energy development and trade.

To evaluate a regulated company’s compliance with its regulations, the NEB undertakes management system audits of its regulated companies. The NEB requires that each company demonstrate the adequacy and implementation of the methods the company has selected and employed in order to proactively identify and manage hazards and risks to achieve compliance.

Following the audits, companies are required to submit and implement a Corrective Action Plan to address all findings of Non-Compliance. The results of the audits are considered as a part of the NEB’s risk-informed life cycle approach to compliance assurance.

4.0 Background

TransCanada operates approximately 42,000 km of federally regulated pipeline from British Columbia to Quebec. In order for the audit of TransCanada and its subsidiaries to reflect the way it runs its operations, the NEB audited each program separately. Therefore, this audit is one of a series of six program audits having been undertaken by the Board with respect to NEB-regulated facilities operated within TransCanada’s organization. The audits are titled:

  • TransCanada Integrity Management Program Audit; (Final Audit Report released February 2014)
  • TransCanada Safety Management Program Audit;
  • TransCanada Environmental Protection Program Audit;
  • TransCanada Emergency Management Program Audit;
  • TransCanada Third Party Crossings Program Audit; and
  • TransCanada Public Awareness Program Audit.

These audits identified that TransCanada operates its facilities using a common organizational and technical management structure for all of the facilities noted. Some of the findings are therefore similar in each audit and the individual audit reports reflect this. During the audit, the Board reviewed and evaluated a sample set of facilities based on the individual activities, as well as the associated hazards and risks, as reflected in the individual audit reports.

5.0 Audit Objectives and Scope

These audits identified that TransCanada operates its facilities using a common organizational and technical management structure for all of the facilities noted. Some of the findings are therefore similar in each audit and the individual audit reports reflect this. During the audit, the Board reviewed and evaluated a sample set of facilities based on the individual activities, as well as the associated hazards and risks, as reflected in the individual audit reports.

  • National Energy Board Act (NEB Act);
  • National Energy Board Onshore Pipeline Regulations;
  • Canada Labour Code Part II (CLC);
  • Safety and Health Committees and Representatives Regulations made under Part II of the CLC;
  • Canadian Occupational Health and Safety Regulations made under Part II of the CLC; and
  • TransCanada’s policies, programs, practices and procedures.

In utilising the OPR, the Board notes its amendment on 21 April 2013, which clarified the Board’s expectations with respect to establishing and implementing formal Management Systems and Environmental Protection Programs. These amendments were preceded by consultation between the Board and its regulated companies, and accordingly the OPR was not promulgated with an implementation grace period. As a result, the audit of TransCanada’s Environmental Protection Program made use of the OPR, as amended.

The scope of the audit included the following companies that hold certificates to operate in Canada:

  • TransCanada PipeLines Limited;
  • TransCanada Keystone Pipeline GP Ltd.;
  • Trans Québec & Maritimes Pipeline Inc. (TQM);
  • Foothills Pipe Lines Ltd.; and
  • NOVA Gas Transmission Ltd. (NGTL).

These subsidiaries hold the certificates for TransCanada’s NEB-regulated facilities, which include the Canadian Mainline (operating under TransCanada PipeLines Limited), Keystone Pipeline (operating under TransCanada Keystone Pipeline GP Ltd.), TQM Pipeline System (operating under Trans Québec & Maritimes Pipeline Inc.), Foothills System (operating under Foothills Pipe Lines Ltd.), and the Alberta System (operating under NGTL). For more TransCanada facility information, refer to Appendix II of this report.

6.0 Audit Process and Methodology

TransCanada operates approximately 42,000 km of pipelines and associated facilities across the country. TransCanada and its subsidiaries operate these facilities using a common Management System. Accordingly, and in order to complete an assessment of its Management System in a reasonable timeframe, the Board elected to audit and assess a representative sample of TransCanada and its subsidiaries utilizing a risk-informed approach that included a review of previous compliance history.

The Board chose to use NGTL as its representative sample. The Board also included areas of the TransCanada system presenting unique potential hazards in order to assess the application of hazard-specific system elements. As such, the audit included a review of documents and records as well as site visits and interviews in TransCanada’s Central Region.

TransCanada has divided its Canadian facilities and assets into five operational regions. These regions are the Wildrose Region, Rocky Mountain Region, Central Region, Northern Ontario Region and Eastern Region. As TransCanada applies the same Safety Management Program across all of its systems, any findings and corrective actions required will be applied across all of TransCanada’s systems and subsidiaries. The NEB will verify the implementation of any corrective actions with subsequent compliance verification activities at each subsidiary once the Corrective Action Plan has been approved and implemented.

TransCanada’s utilization of one set of policies and procedures for its Safety Management Program guided the implementation of the Board’s audit process. Interviews and document review on the Safety Management program were conducted at the Head Office in Calgary, Alberta, and site visits were conducted at select NGTL facilities. During these site visits, activities were evaluated for each Management System element through interviews with a number of personnel from various levels, as well as document and record review.

7.0 Audit Activities

On 19 June 2013, an opening meeting was conducted with representatives from TransCanada in Calgary, Alberta to discuss the Board’s audit objectives, scope and process. A schedule for conducting the staff interviews and site verifications was also developed at this meeting. Throughout the audit, daily summaries with action items were provided to TransCanada.

On 24 October 2013, the Board held an audit Pre-Close-Out meeting with TransCanada to discuss additional information that could be of value to the Board prior to compiling its draft audit report. An audit Close-Out meeting was held on 6 November 2013.
Safety Management Program Audit Activities
  • Audit Opening Meeting (Calgary, AB) – 19 June, 2013
  • Head Office Interviews (Calgary, AB) – 19-29 August 2013
  • Field verification activities for the Safety Management Program Audit:
    • Interviews - Winnipeg, MB - 09 – 11 September 2013
    • Interviews - Medicine Hat, AB  - 11-13 September 2013
    • Interviews - Lac La Biche, AB – 23-25 September 2013
    • Interviews - Athabasca, AB – 25–27 September 2013
  • Audit Pre-Close-Out Meeting of Information Gaps (Calgary, AB) 24 October 2013
Audit Close-Out Meeting (Calgary, AB) - 6 November, 2013

8.0 Program Summary

TransCanada has a formal Health, Safety and Environment Management System document dated last revision 18 July 2011 that is classified as a Policy and Procedure within their document structure. The document provides an outline of the Health, Safety and Environmental Management System. The document includes description of:

  • HS&E Governance;
  • HS&E Management System Description;
  • HS&E Management System Elements;
  • Element 1 HS&E Commitment;
  • Element 2 Risk & Regulatory Assessment;
  • Element 3 Objectives & Targets;
  • Element 4 Structure & Responsibility;
  • Element 5 Operational Control;
  • Element 6 Contractor Management;
  • Element 7 Emergency Preparedness;
  • Element 8 Training & Awareness;
  • Element 9 Document & Records Management;
  • Element 10 Communication & Reporting; and
  • Element 11 HS&E Performance, Audit and Review.

The scope of the TransCanada Health Safety & Environment Management System, as outlined in the Health Safety & Environment Manual, includes all full-time and part-time employees, contract workers, independent consultants and its wholly-owned subsidiaries and operated entities in Canada, United States and Mexico.

9.0 Summary of Findings

The Board’s audit was conducted following its Audit Protocol, which identifies five Management System elements. These five elements are further broken down into 17 sub-elements. Each sub-element reflects a number of regulatory requirements. The NEB requires companies to be compliant with one hundred percent of the regulatory requirements of each of the management system sub-elements being assessed. If a company’s program is found to be deficient with respect to any regulatory requirement, the entire sub-element will be found in non-compliance. A corrective action plan will be required in order to demonstrate to the Board that appropriate actions will be taken to achieve full compliance.

The following summary represents a high-level overview of the Board’s audit findings for TransCanada’s Safety Management Program based on information provided for the audit. Details of how each of the audited elements impacts the Safety Management Program and a full description of the Board’s assessment for each of its management system sub-elements can be found in Appendix I of this report.

Element 1.0 - Policy and Commitment

Sub-element 1.1 - Leadership and Accountability

The position of accountable officer was introduced into the OPR in April of 2013. The Board is satisfied that TransCanada has appointed an accountable officer and outlined the responsibilities of this position in accordance with the regulations and submission deadlines. Subsequent NEB compliance activities will verify the adequacy and effectiveness of the process implementation. The Board finds this sub-element to be Compliant.

Sub-element 1.2 - Policy and Commitment Statements

The TransCanada’s Health, Safety and Environment Management System identifies safety management activities, responsibilities, processes and the enabling tools and the Code of Business Ethics outlines reporting requirements. However, these documents do not include or incorporate a specific policy for the internal reporting of hazards, potential hazards, incidents and near-misses including the conditions under which a person who makes a report will be granted immunity from disciplinary action as required by the Board. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Element 2.0 - Planning

Sub-element 2.1 - Hazard Identification, Risk Assessment and Control

TransCanada demonstrated that it has established and implemented a Safety Management Program incorporating procedures and several types of tools for the identification of hazards and controls to mitigate those hazards. However, it was not able to demonstrate that it has introduced the required level of specificity for the establishment of a hazard inventory, the evaluation of risk or a systematic implementation of corresponding controls as required by the Board. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 2.2 - Legal Requirements

TransCanada demonstrated that it is tracking, listing and conducting some internal notifications regarding its legal responsibilities as that relates to regulatory changes. However, it did not demonstrate that it has a complete list of legal requirements. It also did not demonstrate an effective process to ensure regulatory changes trigger necessary program changes or communication to all staff involved in the Safety Management Program. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 2.3 - Goals, Objectives and Targets

During the audit, and to advance the Board’s assessment of this sub-element, the Board’s auditors requested clarification from TransCanada via a table of concordance to confirm the appropriate correlation between TransCanada’s varied internal terminology and the regulatory requirements. This table was not, however, provided to Board auditors during the audit. As a result, the Board finds that TransCanada did not demonstrate compliance with respect to the requirements associated with this sub-element. In developing the Corrective Action Plan for this finding, TransCanada will have to demonstrate clearly how it is meeting these expectations. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 2.4 - Organizational Structure, Roles and Responsibilities

The Board finds TransCanada’s processes and established hierarchy of responsibility within the Safety Management program to be Compliant.

Element 3.0 - Implementation

Sub-element 3.1 - Operational Control-Normal Operations

The Board determined that TransCanada’s processes for developing and implementing corrective, mitigative, preventive and protective controls associated with the hazards and risks of its operations to be Compliant.

Sub-element 3.2 - Operational Control-Upset or Abnormal Operating Conditions

The Board found that TransCanada’s processes for plans and procedures to identify the potential for upset or abnormal operating conditions, accidental releases, incidents and emergency situations including established, implemented and effective process for developing contingency plans for abnormal events that may occur during construction, operation, maintenance, abandonment or emergency situations to meet expectations. TransCanada demonstrated that its Safety Management Team plays a role in supporting the Emergency Management Program.  The Board finds TransCanada Compliant with the requirements regarding this sub-element.

Sub-element 3.3 - Management of Change

TransCanada has developed some aspects of a management of change process. It has also begun implementing some elements of the plan as they related to pipeline integrity and operating procedures. The new Management of Change is scheduled to be fully implemented by the end 2014. However, at the time of the audit, TransCanada did not demonstrate that it has an established and implemented a proactive process for identifying and managing changes that could affect safety, security or protection of the environment. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 3.4 - Training, Competence and Evaluation

The Board found TransCanada’s processes for establishing, implementing effective processes for developing competency requirements and training programs to be Compliant with this sub-element.

Sub-element 3.5 - Communication

TransCanada demonstrated that it has established a communication plan that identifies the appropriate stakeholders and developed messages relating to maintaining the safety and security of the pipeline and protection of the environment. Based on the information provided during the audit, the Board finds this sub-element to be Compliant.

Sub-element 3.6 - Documentation and Document Control

TransCanada has an established Electronic Document Management System to control documents across TransCanada operations. The Board is of the view that there is no process for preparing, reviewing, revising and controlling of safety-related non-procedural documentation such as standards and plans including contractor documentation. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Element 4.0 - Checking and Corrective Action

Sub-element 4.1 - Inspection, Measurement and Monitoring

The Board’s review of the inspection documentation and records identified some deficiencies with respect to the requirements.  Specifically, the inspections performed do not adequately address the evaluation of effectiveness of all safety processes and procedures. For example, inspections do not evaluate the adequacy and effectiveness of the orientation and training procedures, permitting procedures, pre-job planning, working alone, manual material handling etc. 

TransCanada demonstrated that it has established an inspection process applicable to its Safety Management Program, the process did not meet the requirements associated with this sub-element.  As a result, the Board views these processes as being Non-Compliant in meeting its expectations associated with this sub-element.

Sub-element 4.2 - Investigating and Reporting Incidents and Near-misses

TransCanada was able to demonstrate that its process for reporting on hazards, potential hazards, incidents and near-misses, and for taking corrective and preventive actions with respect to the Safety Management Program, was adequate to meet the Board’s expectations. A sampling of completed and outstanding safety related Incident and Issue Tracking records was reviewed from different regions of the pipeline system and all issues/incidents had appropriate corrective actions and were implemented in an acceptable timeframe.

As TransCanada was able to demonstrate that it has a process in place to identify, track, analyze and resolve issues and incidents throughout its Incident and Issue Management Program, the Board views this process as being Compliant in meeting its expectations for this sub-element.

Sub-element 4.3 - Internal Audit

TransCanada demonstrated that its quality assurance program is implemented on a frequency that exceeds regulatory requirements. However, implementation of the program only measures performance relative to internal TransCanada requirements and does not include compliance relative to legal requirements. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 4.4 - Records Management

TransCanada has implemented a record retention process as outlined in the Operating Procedures Program Framework and this process addresses the controls of records related to TransCanada Operating Procedures and includes appropriate types of records to be retained, the retention and disposition timeframes and the disposal methods. However, safety related records at several locations indicated varying record storage and retention practices and interviews confirmed there were no formal procedures for retaining safety related records such as permits, minutes and contractor documentation. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Element 5.0 - Management Review

Sub-element 5.1 - Management Review

The Board was able to confirm that TransCanada is undertaking a significant number of management review activities consistent with the descriptions included in TransCanada’s Health Safety and Environment Framework document. However, the Board considers senior management’s involvement and performance in particular areas to be critical. These include evaluating and managing the results of audits, and the results of compliance verification activities conducted by regulatory agencies. The Board has made findings of non-compliance in other sub-elements dealing with the development of the scope of company audits, and the development and implementation of corrective action plans, which it views to properly fall within the care and control of senior management. In addition, TransCanada was unable to demonstrate a documented and comprehensive management review process of the Safety Management Program describing activities for adequately and effectively undertaking management reviews on a consistent basis and for ensuring continual improvement. Based on these reasons, the Board finds TransCanada to be Non-Compliant with this sub-element.

10.0 Conclusions

NEB-regulated companies must demonstrate a proactive commitment to continual improvement in safety, security, and environmental protection. Pipeline companies under the Board’s regulation are required to incorporate effective and implemented management systems into their day-to-day operations. These programs include the tools, technologies and actions needed to ensure that pipelines are safe and remain that way over time. In particular, Safety Management Programs are required by the Board to ensure that companies have a program in place to provide ongoing safety processes and procedures in order to prevent accidents, injuries for its employees and contractors.

Over the course of this audit TransCanada was required to demonstrate the adequacy and effectiveness of its Management Systems and Safety Management Program to the Board. The Board reviewed documentation and records provided by TransCanada, conducted interviews with TransCanada staff and performed site tours at selected facilities. Based on this review, the Board finds TransCanada has developed and implemented a Safety Management Program that addresses significant, identified hazards and risks associated with potential incidents or emergencies on its pipelines.

Notwithstanding the work being conducted and the processes in place, the audit has also identified areas of Non-Compliance with NEB requirements. The Board concludes that the majority of the Non-Compliant findings fall into three general categories:

  • the lack of documented, established and implemented processes that correspond with the Management System requirements as required by the recently updated OPR;
  • the development and implementation of effective processes related to ongoing, internal evaluation of the compliance to legal requirements, and the adequacy and effectiveness of its Safety Management Program; and
  • inability to demonstrate consistent implementation and integration of the OPR management system requirements to the Safety Management Program.

The Board has determined that no enforcement actions are immediately required to address the Non-Compliant findings identified in this audit. As per the Board’s standard audit practice, TransCanada must develop and submit a Corrective Action Plan describing its proposed methods to resolve the non-compliances identified by this audit and the timeline in which the corrective actions will be completed. TransCanada will be required to submit the Corrective Action Plan for approval within 30 days of the final Audit Report being issued by the Board. The Board will make its final Audit Report and TransCanada’s approved Corrective Action Plan public on the Board’s website.

The Board will assess the implementation of all of TransCanada’s corrective actions to confirm they are completed in a timely manner and on a system wide basis until they are fully implemented. The Board will also continue to monitor the overall implementation and effectiveness of TransCanada’s Safety Management Program and management system as a whole through targeted compliance verification activities as a part of its ongoing regulatory mandate.

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