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National Energy Board Onshore Pipeline Regulations (OPR) - Final Audit Report of the TransCanada Environmental Protection Program - OF-Surv-OpAud-T211-2013-2014 01 [PDF 2221 KB]

444 Seventh Avenue SW
Calgary, Alberta
T2P 0X8

National Energy Board Onshore Pipeline Regulations (OPR)
Final Audit Report of the TransCanada
Environmental Protection 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 systems include the tools, technologies and actions needed to ensure that pipelines are safe and remain that way over time. In the public interest, the Board holds companies accountable for safety and environmental outcomes.

This report documents the Board’s comprehensive audit of TransCanada’s Environmental Protection 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 Environmental Protection 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 has identified that TransCanada has developed and implemented an internal program to manage and control the environmental hazards associated with its facilities, processes and activities. The documents and records reviewed during this audit also demonstrate that TransCanada is ensuring that company personnel and contractors are appropriately informed and/or trained in Environmental Protection Program practices and procedures.

TransCanada’s management demonstrated that the company has resourced the Environmental Protection Program and has involved itself in implementation and oversight at senior management levels. TransCanada has also demonstrated that it has established an appropriate inspection and monitoring program to ensure the adequacy and effectiveness of its Environmental Program.

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 per cent 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.

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 OPR;
  • the insufficient development and implementation of effective processes related to ongoing, internal evaluation of the compliance to legal requirements, and the adequacy and effectiveness of its Environmental Protection Program; and
  • the inability to demonstrate full implementation of existing processes.

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 ongoing 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.

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.

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.

Finding: The evaluation or determination of the adequacy of programs or elements in meeting the requirements of the National Energy Board 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

PA Program: Public Awareness Program

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 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 findings are therefore similar in each audit and the individual audit reports reflect this.

5.0 Audit Objectives and Scope

The objective of the audit was to determine the adequacy and effectiveness of TransCanada’s Environmental Protection Program. The requirements against which TransCanada was audited are contained within:

  • The National Energy Board Act;
  • National Energy Board Onshore Pipeline Regulations; 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 TransCanada PipeLines Limited and its subsidiaries including specifically:

  • 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 TQM), 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 and its subsidiaries operate their facilities using a common organizational and technical management structure. 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 reviewed and evaluated a selection of facilities within the representative sample based on the individual activities conducted at those facilities, as well as the associated hazards and risks. For this audit, the Board chose to use NGTL and the Alberta System as its representative sample.

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 Environmental Protection 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 TransCanada’s Corrective Action Plan has been approved and implemented.

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

7.0 Audit Activities

The audit involved Board review of TransCanada company documents, interviewing company representatives at all levels of the organization, and conducting field verification of Compliance with NEB requirements at selected sites.

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.

For a list of TransCanada representatives interviewed, refer to Appendix III. For a list of documents and records reviewed, refer to Appendix IV.

Environmental Protection Program audit related field activities, including staff interviews and document review, were conducted 19 June 2013 to 7 October 2013:

Environmental Protection Program Audit Field Activities
  • Audit Opening Meeting (Calgary, Alberta) - 19 June 2013
  • Head Office Interviews (Calgary, Alberta) - 20 to 29 August 2013
  • Field Verification activities for the EP Program:
    • Inspection - Central Region, various areas in southern Manitoba - 8 to 11 July 2013
    • Inspection - Eastern Region, Les Cedres, Quebec to US Border - 15 to 18 July 2013
    • Inspection - Wildrose Region, Grande Prairie, Alberta - 15 to 19 July 2013
    • Inspection - Rocky Mountain Region, Torrington and Lethbridge, Alberta - 22 to 25 July 2013
    • Inspection - Eastern Region, Maple and Niagara Falls, Ontario - 22 to 25 July 2013
    • Inspection - Central Region, various areas in southern Saskatchewan - 12 to 15 August 2013
    • Interviews - Central Region, Winnipeg, Manitoba - 9 to 10 September 2013
    • Interviews - Wildrose Region, Spruce Grove, Alberta - 11 to 12 September 2013
    • Interviews - Rocky Mountain House Area, Rocky Mountain House, Alberta - 13 September 2013
    • Interviews - Lakeland Area, Athabasca, Alberta - 16 September 2013
    • Interviews -  Rocky Mountain Region, Airdrie - 17 to 18 September 2013
    • Inspection - Central Region, Medicine Hat, Alberta - 19 September 2013
    • Interviews - Palliser Area, Medicine Hat, Alberta - 20 September 2013
  • Head Office Interviews (Calgary, Alberta) - 30 September to 5 October 2013
  • Audit Pre-Close-Out Meeting  (NEB Office - Calgary, Alberta) - 24 October 2013
Audit Close-Out Meeting  (TransCanada Head Office - Calgary, Alberta) - 6 November 2013

8.0 Program Summary

TransCanada’s Environmental Protection Program applies to all TransCanada corporate entities and the operation of all TransCanada natural gas and oil pipelines and associated facilities in Canada.

The Environmental Protection Program oversees environmental considerations from both construction related projects as well the operational phase of their pipeline systems. Overall management of the Environmental Protection Program resides in the TransCanada head office in Calgary in addition to the majority of the subject matter expertise. To assist in the oversight of its Environmental Protection Program from an operation aspect, TransCanada has established regional environmental specialists across its pipeline system.

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 Environmental Protection Program based on information provided for the audit. Details of how each of the audited elements impacts the Environmental Protection 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

As the position of accountable officer was introduced into the OPR in April of 2013, there has not been time for a full planning cycle to allow for the evaluation of the substantive responsibilities attached to this position. Therefore, in determining compliance to this element, the Board is satisfied that TransCanada has appointed an accountable officer and outlined the responsibilities of this position to the Board in accordance with the regulations and submission deadlines. As a result, the Board views this process as being Compliant in meeting its expectations for this sub-element.

Sub-element 1.2 - Policy and Commitment Statements

The Board determined that TransCanada’s Health, Safety and Environment Commitment Statement provides clear policies and goals towards environmental protection. However, it is not clear from TransCanada’s Code of Business Ethics that TransCanada staff who report hazards, potential hazards, incidents and near-misses would be granted immunity from disciplinary action as required by the Board’s expectations. 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 developed an inventory of its environmental hazards related to its activities associated with normal operations. However, these hazards were identified informally through corporate knowledge and not as the result of a documented process. 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 communicating some of its legal requirements. However, TransCanada did not demonstrate that it has a complete inventory of specific legal requirements. Therefore, TransCanada did not demonstrate that it has an established, implemented and effective process for identifying and monitoring compliance with all legal requirements that are applicable to the company in matters of safety, security and protection of the environment as required in the Board’s expectations. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 2.3 - Goals, Objectives and Targets

TransCanada demonstrated that it has developed a corporate objective to remain Compliant with environmental regulations. However, it did not demonstrate that specific environmental protection goals, objectives and targets were developed or discussed at management meetings. Furthermore, linkages between TransCanada’s varied internal terminology and regulatory requirements were not confirmed. During the audit, Board auditors requested clarification from TransCanada via a table of concordance, but this table was not provided to Board auditors. Therefore, TransCanada did not demonstrate that it has an established, implemented and effective process for developing, and setting goals, objectives and specific targets relevant to the risks and hazards associated with its facilities and activities. 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 views TransCanada’s processes for resource evaluation and its established hierarchy of responsibility within the Environmental Protection Program as being Compliant with this sub-element.  

Element 3.0 - Implementation

Sub-element 3.1 - Operational Control-Normal Operations

The Board views TransCanada’s processes for developing and implementing corrective, mitigative, preventive and protective controls associated with its Environmental Protection Program as being Compliant with this sub-element. 

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

TransCanada was able to demonstrate that its Environmental Protection Program staff plays a role in supporting the Emergency Management Program by fulfilling and being trained on various technical roles within the Incident Command Structure framework. As a result, the Board views this process as being Compliant in meeting its expectations for this sub-element.

Sub-element 3.3 - Management of Change

TransCanada has implemented some aspects of a Management of Change process. However, TransCanada did not demonstrate that it has established and implemented a process for proactively identifying and managing any change that could affect safety, security or protection of the environment. This includes any new hazard or risk, any change in design, specification or standard or procedure and any change in the company’s organizational structure or applicable legal requirements.  As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 3.4 - Training, Competence and Evaluation

TransCanada was able to demonstrate that it invested a significant amount of resources in developing and implementing a formal training process. However, it was not able to demonstrate that it has effectively established and implemented processes for developing and verifying competency requirements in order to ensure the protection of the environment. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 3.5 - Communication

TransCanada demonstrated appropriate, ongoing communication practices, procedures and activities between TransCanada and its external stakeholders. However, it did not demonstrate the communication of environmental Non-Compliances (in particular Board Non-Compliances) vertically and horizontally across the organization in order to prevent reoccurrences of the same issue. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 3.6 - Documentation and Document Control

TransCanada demonstrated that it has established and implemented a process for the development, revision and management of operational procedures. However, it was not able to demonstrate that other pertinent Environmental Protection Program documents (design standards, manuals, etc.) being used across the organization were periodically reviewed and revised to ensure its adequacy and effectiveness. 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

TransCanada demonstrated established processes for inspecting and monitoring its activities and facilities in order to evaluate the adequacy and effectiveness of its Environmental Protection Program. However, it could not demonstrate that these processes are being consistently implemented as records provided to the Board were either not provided or incomplete. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

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

TransCanada demonstrated that it has a process in place to identify, track, analyze and resolve issues and incidents throughout its Incident and Issue Management Program that reflects the Board’s expectations for this sub-element. As a result, the Board views these processes 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 scale that exceeds the Board’s expectations with respect to frequency. However, the audits focused on conformance to internal requirements rather than compliance with statutory requirements. There was also a lack of guidance to enable senior management to prioritize and manage corrective and preventive actions for deficiencies identified in audits. As a result, the Board finds TransCanada to be Non-Compliant with this sub-element.

Sub-element 4.4 - Records Management

TransCanada demonstrated that it has established effective processes for generating, retaining, and maintaining records that document the implementation of its Environmental Protection Program, and for providing access to those who require them. As a result, the Board views these processes as meeting its expectations, and finds TransCanada to Complaint with this sub-element.

Element 5.0 - Management Review

Sub-element 5.1 - Management Review

TransCanada demonstrated that it is undertaking a significant number of management review activities consistent with the descriptions included in its internal Health Safety & Environment Framework document. However, TransCanada did not demonstrate that it has a documented and comprehensive process for conducting a consistent management review of the Environmental Protection Program and for ensuring continual improvement as described in the Board’s expectations. As a result, 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. Environmental Protection Programs enable pipeline companies to ensure environmental hazards are identified, mitigated and managed throughout the life cycle of the pipeline system.

The Board’s audit has identified that TransCanada has developed and implemented an internal program to manage and control the environmental hazards associated with its facilities, processes and activities. The documents and records reviewed during this audit also demonstrate that TransCanada is ensuring that company personnel and contractors are appropriately informed and/or trained in environmental protection practices and procedures.

TransCanada’s management demonstrated that the company has resourced the Environmental Protection Program and has involved itself in implementation and oversight at senior management levels. TransCanada has also demonstrated that it has established an appropriate inspection and monitoring program to ensure the adequacy and effectiveness of its Environmental Protection Program.

Notwithstanding this, the audit has also identified areas of Non-Compliance with NEB requirements. The Board concludes that a 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 OPR;
  • the insufficient development and implementation of effective processes related to ongoing, internal evaluation of the compliance to legal requirements, and the adequacy and effectiveness of its Environmental Protection Program; and
  • the inability to demonstrate full implementation of existing processes.

The Board has determined that while no enforcement actions are immediately required to address these non-compliant findings, 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 and the timeline in which corrective actions will be completed. TransCanada will be required to submit its 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 Environmental Protection Program and management system as a whole through targeted compliance verification activities as a part of its ongoing regulatory mandate.

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