ARCHIVED - Final Audit Report of the TransCanada Environmental Protection Program - Appendix I - Environment Program Audit Evaluation Table

Appendix I

TransCanada Pipelines Limited and NEB-regulated Subsidiaries (TransCanada)

Environmental Protection Program Audit Evaluation Table^[i]

• 1.0 Policy and Commitment
  • 1.1 Leadership Accountability
  • 1.2 Policy and Commitment Statements
• 2.0 Planning
  • 2.1 Hazard Identification, Risk Assessment and Control
  • 2.2 Legal Requirements
  • 2.3 Goals, Objectives and Targets
  • 2.4 Organizational Structure, Roles and Responsibilities
• 3.0 Implementation
  • 3.1 Operational Control-Normal Operations
  • 3.2 Operational Control-Upset or Abnormal Operating Conditions
  • 3.3 Management of Change
  • 3.4 Training, Competence and Evaluation
  • 3.5 Communication
  • 3.6 Documentation and Document Control
• 4.0 Checking and Corrective Action
  • 4.1 Inspection, Measurement and Monitoring
  • 4.2 Investigating and Reporting Incidents and Near-misses
  • 4.3 Internal Audits
  • 4.4 Records Management
• 5.0 Management Review
  • 5.1 Management Review

1.0 POLICY AND COMMITMENT

1.1 Leadership Accountability

Expectations: The company shall have an accountable officer appointed who has the appropriate authority over the company’s human and financial resources required to establish, implement and maintain its management system and protection programs, and to ensure that the company meets its obligations for safety, security and protection of the environment. The company shall have notified the Audit Team of the identity of the accountable officer within 30 days of the appointment and ensure that the accountable officer submits a signed statement to the Audit Team accepting the responsibilities of their position.

References: OPR section 6.2

Finding:

Following the release of the amended OPR on 10 April 2013, the National Energy Board (Board or NEB) gave its regulated companies 30 days to submit written notice of both the identity of their accountable officers and the acceptance by these persons of the responsibilities attached to this position. On 10 May 2013, TransCanada submitted its written notice to the NEB indicating that its Executive Vice President of Operations and Major Projects had been appointed as accountable officer for TransCanada and all of its subsidiaries. In its submission, TransCanada confirmed that its accountable officer has the authority over the human and financial resources required to meet the Board’s substantive expectations.

The Board notes that the legal requirement to appoint an accountable officer was introduced into the OPR in April of 2013 with the audit commencing in June 2013. As a result, this role at TransCanada had only been in effect for approximately two months and the accountable officer was not able to complete an annual planning cycle that would allow for the Board’s evaluation of the substantive responsibilities attached to this position. In this context, the Board is satisfied in its assessment that TransCanada has appointed an accountable officer and outlined the responsibilities of this position to the Board in accordance with the regulatory requirements and submission deadlines. As a result, the Board finds TransCanada to be Compliant with this sub-element.

Compliance Status: Compliant

1.2 Policy and Commitment Statements

Expectations: The company shall have documented policies and goals intended to ensure activities are conducted in a manner that ensures the safety and security of the public, workers, the pipeline, and protection of property and the environment. The company shall base its management system and protection programs on those policies and goals. The company shall include goals for the prevention of ruptures, liquids and gas releases, fatalities and injuries and for the response to incidents and emergency situations.

The company shall have a policy for the internal reporting of hazards, potential hazards, incidents and near-misses that includes the conditions under which a person who makes a report will be granted immunity from disciplinary action.

The company’s accountable officer shall prepare a policy statement that sets out the company’s commitment to these policies and goals and shall communicate that statement to the company’s employees.

References: OPR section 6.3

Finding:

As part of TransCanada’s Health, Safety and Environment (HS&E) Management System Framework, the Environmental Protection Program (EP Program) is aligned with its HS&E Commitment Statement which includes the statement "we conduct our business so it meets or exceeds all applicable laws and regulations and minimize risk to our employees, the public and the environment". TransCanada demonstrated that its HS&E Commitment Statement  is:

• current and signed by the accountable officer and other officers of the company;
• posted at the regional offices visited as part of this audit;
• communicated to all employees by senior leaders, managers and program owners;
• communicated at the annual safety stand down meetings conducted at all regions and areas;
• reviewed by new employees as part of the onboarding process and also includes the review of the Health Safety and Environment Management System; and
• reviewed during the annual Health, Safety and Environment Committee meeting.

The commitment statement and accompanying documentation outline TransCanada’s management principles and provides clear program goals. The EP Program is guided by these documents. Interviews with company representatives at all levels revealed a consistent awareness of the commitment statement as well as a clear understanding of its intent.

In addition to its HS&E Commitment Statement, TransCanada provided its Code of Business Ethics for review, which includes the requirement for TransCanada staff to report any actual or suspected violation of the law without fear of retaliation. In the Board’s view, however, these documents do not meet the Board’s expectations as hazards and potential hazards associated with the EP Program are not necessarily identifiable as violations of the law. TransCanada has also implemented an Incident Management Program to manage the reporting of violations, hazards and potential hazards that "encourages notification of all incidents". The Board has determined that it is not clear from this code or the Incident Management Program that TransCanada staff who report hazards, potential hazards, incidents or near-misses associated with the EP Program would be protected from disciplinary action. Thus, the Board finds TransCanada to be Non-Compliant with this sub-element.

Compliance Status: Non-Compliant

2.0 PLANNING

2.1 Hazard Identification, Risk Assessment and Control^[1]

Expectations: The company shall have an established, implemented and effective process for identifying and analyzing all hazards and potential hazards. The company shall establish and maintain an inventory of hazards and potential hazards. The company shall have an established, implemented and effective process for evaluating the risks associated with these hazards, including the risks related to normal and abnormal operating conditions. As part of its formal risk assessment, a company shall keep records to demonstrate the implementation of the hazard identification and risk assessment processes.

The company shall have an established, implemented and effective process for the internal reporting of hazards, potential hazards, incidents and near-misses, and for taking corrective and preventive actions, including the steps to manage imminent hazards. The company shall have and maintain a data management system for monitoring and analyzing the trends in hazards, incidents, and near-misses.

The company shall have an established, implemented and effective process for developing and implementing controls to prevent, manage and mitigate the identified hazards and risks. The company shall communicate those controls to anyone exposed to the risks.

References: OPR section 6.5(1)(c), (d), (e), (f), (r), (s)

Finding:

Through the company’s Issue and Incident Management System, TransCanada was able to demonstrate that it has an established, implemented and effective process for the reporting of hazards, incidents and near-misses. Environmental related incidents were reviewed by the auditors for their cause and appropriate corrective and preventive actions were implemented by TransCanada.

TransCanada was able to demonstrate that at the project level (i.e., new construction), environmental hazard identification and associated risk assessments are completed either through the development of an Environmental Site Assessment or an Environmental Protection Plan, Job Safety Analyses and, review of incidents, etc. The company also demonstrated that it has developed an inventory of its environmental hazards related to its activities associated with normal operations; however, through interviews with company representatives, these hazards were identified informally through corporate knowledge and not as the result of a documented process as required by the OPR. While the inventory of hazards appeared adequate, the lack of a documented process for establishing, maintaining and updating this inventory could lead to the company’s inability to proactively and repeatedly identify and manage new environmental hazards as they arise.

TransCanada also demonstrated through document review and interviews that a Health, Safety and Environment Risk Assessment process has been developed but has yet to be fully implemented. Due to the infancy of this process, the auditors were unable to assess the effectiveness of this process.

While TransCanada demonstrated that it has implemented elements of a hazard identification process, it lacks an established and documented process to ensure ongoing review and maintenance of its inventory. In addition, TransCanada was unable to demonstrate an implemented risk assessment process for the EP Program. As a result, TransCanada was not able to demonstrate that it had met the Board’s requirements with respect to these requirements and thus, the Board has determined that this sub-element is Non-Compliant.

Compliance Status: Non-Compliant

2.2 Legal Requirements

Expectations: The company shall have 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. The company shall have and maintain a list of those legal requirements. The company shall have a documented process to identify and resolve non-compliances as they relate to legal requirements, which includes updating the management and protection programs as required.

References: OPR section 6.5(1)(g), (h), (i)

Finding:

Interviews with TransCanada staff indicated that the monitoring of legal requirements is conducted through multiple methods, with examples including contracts with external providers and staff participation in industry associations. The company has also recently developed a process to assess changes to environmental related legislative requirements that could impact their operations. While the process appears to be adequate, the auditors were unable to assess its effectiveness as the process has not been implemented.

TransCanada also provided a copy of its Legislative Monitoring Process document in support of its process for identifying and monitoring legal requirements. Last revised in 2011, this document outlines the steps TransCanada takes to monitor legislation for any regulatory changes that could impact its pipe, energy and gas storage in Canada. The document also outlines that the Director or Vice President of a business unit impacted by a regulatory change is accountable to ensure conformance of company standards and specifications with the regulatory requirements. The process document formally indicates that it provides direction and describes the services and resources available for the review and management of identified regulatory requirements. It also includes a management of change process to affect changes where required. Substantively, however, the Board notes that the Legislative Monitoring Process is limited to listing legislation, and does not capture the legal requirements included in regulatory certificates. As such, the Board views its scope as not meeting the Board’s expectations.

TransCanada was able to demonstrate that the identification of legal requirements occurs for construction projects through the development of a site specific Environmental Site Assessment and/or Environment Protection Plan. TransCanada also incorporated the management of legal requirements directly into its operating procedures through the TransCanada Operations Procedures (TOPs) Program. TransCanada implemented this document control program to manage and control its over two hundred operational procedures and the related documentation. TransCanada indicated that within the TOPs Program database it has included the list of the legal requirements. According to TransCanada staff, the TOPs database lists all of the relevant legislation associated with the procedures as well as the as the legislative driver, the contact who is responsible for managing the TOP and any changes that are required. The TOPs Program database lists the regulations and has the functionality that allows staff to electronically access the listed regulations. According to staff, TOP owners in their respective business units are responsible for monitoring the legal requirements that will impact its procedures during annual reviews.

Through reviewing a sampling of these operating procedures, the company demonstrated that each operating procedure includes legislation references; however, the references did not specify the relevant provisions nor summarize the expectations of the requirements. In addition, certain legal requirements were absent from these operating procedures. As an example, inspections of several of the company’s compressor stations in Alberta observed domestic water wells operating without the necessary approvals as per the Government of Alberta Water Act. Of particular note was the exclusion of the NEB OPR EP Program requirements and as a result, lack of expectations that could be used in the development and evaluation of the company’s operating procedures, as well as audit, inspection and investigation processes. While the current process may function to track changes to legal requirements and integrate them to some degree, the Board has determined that it is not effective to address all changes that would affect the EP Program, given the legislation it lists for consideration includes predominantly legislative titles without reference to their particular provisions. As the Board’s regulations are process and outcome focused, a clear interpretation and description of the requirements in relation to TransCanada’s facilities and associated activities is required to ensure compliance.

While TransCanada demonstrated that it is tracking, listing and conducting internal notifications regarding some regulatory changes, it did not demonstrate that it has a complete list of 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 protection of the environment as the Board expects. As a result, the Board has determined that this sub-element is Non-Compliant.

Compliance Status: Non-Compliant

2.3 Goals, Objectives and Targets

Expectations: The company shall have an established, implemented and effective process for developing and setting goals, objectives and specific targets relevant to the risks and hazards associated with the company’s facilities and activities (i.e., construction, operation and maintenance). The company’s process for setting objectives and specific targets shall ensure that the objectives and targets are those required to achieve its goals, and shall ensure that the objectives and targets are reviewed annually.

The company shall include goals for the prevention of ruptures, liquid and gas releases, fatalities and injuries, and for the response to incidents and emergency situations. The company’s goals shall be communicated to employees.

The company shall develop performance measures for assessing the company’s success in achieving its goals, objectives, and targets. The company shall annually review its performance in achieving its goals, objectives and targets and the performance of its management system. The company shall document the annual review of its performance, including the actions taken during the year to correct any deficiencies identified in its quality assurance program, in an annual report, signed by the accountable officer.

References: OPR sections 6.3, 6.5(1)(a), (b), 6.6

Finding:

Company staff indicated through interviews that, on an annual basis, senior management sets corporate Key Performance Areas, Key Performance Indicators and performance standards that are applied and measured at every level within the organization through each individual’s performance agreement and corporate environmental scorecard (also referred to as the Annual Business Plan - Environment). TransCanada has also established annual environmental strategies, objectives and tactics for the operations aspect of the pipeline system of which the environmental specialists can then also establish specific tactics based on the needs within their region.

During interviews at the management level, TransCanada staff articulated multiple terms interchangeably in their description of their performance measurement. For example, in reviewing the information TransCanada provided, the Board noted that it links its HS&E Programs to the Key Focus Area titled "Safety & Environmental Compliance" which can be found in the Peak Performance insert card. However, TransCanada also refers to the Corporate Performance Scorecard which uses the term "Key Performance Area". It was not clearly explained how the Key Focus Areas differ from Key Performance Areas or how either of these terms equate to goals, targets or objectives, as required by the Board. Consequently, during the audit, and to advance the Board’s assessment of this sub-element, Board 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 is not in a position to find TransCanada compliant with the Board’s expectations in this sub-element. In developing any Corrective Action Plan for this finding, TransCanada will have to demonstrate clearly how it is meeting these expectations.

TransCanada could also not demonstrate that it has established corporate Goals Objectives and Targets GOTs that refer to the ongoing protection of environment as per section 6.3(1) and 6(c) of the OPR. In reviewing the 2013 environmental scorecard provided by the company, the auditors noted that the only objective specific to the performance of the EP Program is to ensure compliance with the appropriate regulations. While the Board recognizes that compliance is the primary objective of any environmental protection program, the Board also expects its regulated companies to identify and seek out opportunities for continual improvement within their management system and protection programs. It should be noted that the TransCanada has embarked in developing a Corporate Environmental Strategy which will provide a framework for establishing future goals, objectives and targets specific to environmental protection.

While TransCanada demonstrated that it has developed a corporate objective to remain compliant with environmental regulations, it did not demonstrate that specific environmental protection GOTs were documented nor discussed at management meetings. Furthermore, linkages between TransCanada’s varied internal terminology and regulatory requirements were not confirmed. 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 has determined that this sub-element is Non-Compliant.

Compliance Status: Non-Compliant

2.4 Organizational Structure, Roles and Responsibilities

Expectations: The company shall have a documented organizational structure that enables it to meet the requirements of its management system and its obligations to carry out activities in a manner that ensures the safety and security of the public, company employees and the pipeline, and protection of property and the environment. The documented structure shall enable the company to determine and communicate the roles, responsibilities and authority of the officers and employees at all levels. The company shall document contractors’ responsibilities in its construction and maintenance safety manuals.

The documented organizational structure shall also enable the company to demonstrate that the human resources allocated to establishing, implementing and maintaining the management system are sufficient to meet the requirements of the management system and to meet the company’s obligations to design, construct, operate or abandon its facilities to ensure the safety and security of the public and the company’s employees, and the protection of property and the environment. The company shall complete an annual documented evaluation in order to demonstrate adequate human resourcing to meet these obligations.

References: OPR sections 6.4, 20, 31

Finding:

Through interviews as well as document and record review, TransCanada was able to demonstrate that all staff with environmental responsibilities has clear role and responsibility statements applicable to their positions within the environmental or organizational structure. The company was also able to demonstrate that it had an organizational structure that would allow its EP Program to effectively function. For the operational aspects of their pipeline system, regional environmental specialist positions have been created and filled and these staff members are also supported by subject matter experts in the corporate office. For construction or other non-routine projects, the company demonstrated through interviews that sufficient resources were available to ensure environmental protection objectives were met. Further to this, a formal assessment of the resources required to successfully implement the EP Program occurs on an annual basis through the budgeting process and includes both direct (i.e., subject matter expert) and indirect (i.e., operational staff carrying out environmental tasks through Avantis Work Order System) resource requirements.

While Board inspections conducted prior to both the audit and interviews resulted in a few environmental non-compliances, the Board is of the view that these non-compliances are not the result of a lack of environmental resources. Rather, they are the result of other management system deficiencies (i.e., understanding appropriate legal requirements and communications of previous non-compliances).

The Board did not identify any non-compliance with TransCanada’s documented organizational structure relating to the protection of the environment. As a result, the Board views the sub-element as being Compliant.

Compliance Status: Compliant

3.0 IMPLEMENTATION

3.1 Operational Control-Normal Operations

Expectations: The company shall have an established, implemented and effective process for developing and implementing corrective, mitigative, preventive and protective controls associated with the hazards and risks identified in elements 2.0 and 3.0, and for communicating these controls to anyone who is exposed to the risks.

The company shall have an established, implemented and effective process for coordinating, controlling and managing the operational activities of employees and other people working with or on behalf of the company.

References: OPR section 6.5(1)(e), (f), (q)

Finding:

Review of the TOPs Framework and associated environmentally focused procedures/controls (Surface Water Sampling, Vegetation Management, etc.) indicated that the process appears to be adequate and is being implemented as designed. Company representatives throughout the organization were aware of their responsibilities as they pertain to the controls, whether it is technical specialists who are tasked with maintaining and evaluating the effectiveness of each procedure or operations staff who are tasked with the implementation of the procedure.

The Board determined that, in accordance with its expectations, TransCanada communicates controls to staff that may be exposed to risks through project kick-off and tailgate meetings. For contractors, controls are communicated initially through the internal procurement and review process for pre-qualification and then evaluated on site while completing various activities. Performance is then assessed for compliance with TransCanada requirements, issues are entered and ranked in Incident and Issue Tracking (IIT) and evaluation of contractor performance is tracked. Where performance does not meet TransCanada requirements, corrective actions are required by the contractor. As an example, records from an environmental remediation project at the Didsbury Compressor Station that was being completed by a TransCanada qualified contractor were reviewed with no issues noted.

The Board did not identify any non-compliances with TransCanada’s processes for developing and implementing corrective, mitigative, preventive and protective controls associated with the hazards and risks of its operations. As a result, the Board views these processes as being Compliant in meeting its expectations for this sub-element.

The Board notes that the  corrective actions implemented by TransCanada to address findings in sub-elements 2.1 and 2.2 will trigger the updating of the operational controls discussed in this section to introduce appropriate controls for any newly identified hazards, risks and legal requirements.

Compliance Status: Compliant

3.2 Operational Control-Upset or Abnormal Operating Conditions

Expectations: The company shall establish and maintain plans and procedures to identify the potential for upset or abnormal operating conditions, accidental releases, incidents and emergency situations. The company shall also define proposed responses to these events and prevent and mitigate the likely consequence and/or impacts of these events. The procedures must be periodically tested and reviewed, and revised where appropriate (for example, after upset or abnormal events). The company shall have an established, implemented and effective process for developing contingency plans for abnormal events that may occur during construction, operation, maintenance, abandonment or emergency situations.

References: OPR section 6.5(1)(c), (d), (e), (f), (t)

Finding:

Review of TransCanada’s documents and records, as well as interviews with EP Program staff indicated that the company was able to demonstrate that it has appropriate controls to minimize, respond to or mitigate the environmental effects associated with upset or abnormal operating conditions of its operating processes. The formal procedures, including emergency management, that have been developed included the high-risk hazards that should be addressed. Similarly, TransCanada was able to demonstrate that certain EP Program staff are trained as first responders and as well as other roles within the Incident Command Structure (ICS). Further, it was noted that environmental-related processes and procedures included practices to be implemented if abnormal or upset conditions were detected or were occurring.

TransCanada was able to demonstrate that its EP Program staff plays a role in supporting the Emergency Management Program by fulfilling and being trained on various technical roles within the ICS framework. As a result, the Board has determined this sub-element to be Compliant.

Compliance Status: Compliant

3.3 Management of Change

Expectations: The company shall have an established, implemented and effective process for identifying and managing any change that could affect safety, security or protection of the environment, including any new hazard or risk, any change in a design, specification, standard or procedure and any change in the company’s organizational structure or the legal requirements applicable to the company.

References: OPR section 6.5(1)(i)

Finding:

At the time of the audit, TransCanada had developed and implemented two separate MOC processes to manage and document changes that affect its EP Program. The first process was developed and implemented as part of its Integrity Management Program, and is captured in a MOC form (Integrity MOC). This Integrity MOC is asset based and therefore is triggered by changes to equipment or software. Changes are described and tracked using a standardized form that documents both the description of the rationale for the change being managed, as well as internal and external stakeholder notifications that need to be considered under its process.

The second process used to manage changes in TransCanada’s EP Program relies on the TOPs database and the TOPs Program Framework Document. The TOPs database contains various environmental related operating procedures and some documents that pertain to the EP Program.

As per the TOPs Program Framework Document, when the TransCanada TOP owner modifies a specific procedure and reloads it into the database, the TOPs database automatically notifies a list of pre-identified internal stakeholders of the new version of the document in order to systematically solicit comments on the changes. Further, once changes have been finalized, the TOPs Program automatically disseminates a monthly report for all employees outlining the TOPs that have been modified during the previous period.

The Board notes that these processes only capture changes that have materialized and do not include steps to proactively identify change that could affect safety, security or the protection of the environment. The Board has determined that by using the Integrity MOC and TOP framework processes, TransCanada has operationalized some aspects necessary for an MOC process by documenting and communicating some types of change through document versioning, however, these processes are not adequate either separately or in combination to satisfy the OPR requirements.

In considering the MOC process as it integrates the HS&E management system, during the audit, TransCanada staff indicated that, while the company considers its presently implemented MOC processes to be compliant with the Board’s requirements, it has a project underway to implement a singular MOC process which will better meet the Board’s requirements. The new MOC process is scheduled to be fully implemented by the end 2014. TransCanada staff provided an overview presentation of the new MOC process. Initial review indicates that it could potentially address the OPR requirements.

During interviews TransCanada indicated that the company has developed the new MOC process as the result of a corrective action arising from an internal audit completed in 2009. While the Board acknowledges the improvements that the new process represents, the Board notes that that the 2014 implementation date represents approximately 5 years from identification through to correction. The Board has addressed this issue in its evaluation of sub-elements 4.3 Internal Audits and 5.1 Management Review.

While TransCanada has implemented some aspects of a MOC, at the time of the audit, TransCanada did not demonstrate that it has an established and implemented a process for identifying and managing change that could affect safety, security or protection of the environment, including new hazards or risks, changes in design, specifications, standards or procedures, and change in the company’s organizational structure or the legal requirements. As a result, the Board has determined that this sub-element is Non-Compliant.

The Board notes that the corrective actions implemented by TransCanada to address findings in sub-elements 2.1 and 2.2 will trigger the updating of the MOC discussed in this sub-element.

Compliance Status: Non-Compliant

3.4 Training, Competence and Evaluation

Expectations: The company shall have an established, implemented and effective process for developing competency requirements and training programs that provide employees and other persons working with or on behalf of the company with the training that will enable them to perform their duties in a manner that is safe, ensures the security of the pipeline and protects the environment.

The company shall have an established, implemented and effective process for verifying that employees and other persons working with or on behalf of the company are trained and competent, and for supervising them to ensure that they perform their duties in a manner that is safe, ensures the security of the pipeline and protects the environment. The company shall have an established, implemented and effective process for making employees and other persons working with or on behalf of the company aware of their responsibilities in relation to the processes and procedures required by the management system or the company’s protection programs.

The company shall have an established, implemented and effective process for generating and managing training documents and records.

References: OPR section 6.5(1) (j), (k), (l), (p)

Finding:

Through documentation and record review, and during interviews with staff, the company demonstrated that it has dedicated training staff that have developed a formalized training process within its Learning Management System. The process involves formal identification, assignment and monitoring of training requirements. All training records reviewed were current and individual training profiles reviewed appeared adequate for the position. The company has developed an Environmental Training and Awareness Program that provides the framework for all required environmental related training, including modules related to the various operational procedures that staff could be involved with. With respect to the assurance of contractor training and competence, TransCanada has also established a pre-qualification process that includes both safety performance and environmental technical considerations. These formal processes and practices were appropriate in managing a training program to meet the Board’s requirements.

While training modules for EP Program areas and procedures have been established to include testing, the company was not able to demonstrate that operations staff is assessed to verify their competency in completing environmental related tasks. As an example, members of the regional operations management team along with a representative from the regional Joint Health Safety Environment Committee are tasked with completing annual inspections at their compressor stations and other aboveground facilities. Interviews indicated that environmental specialists can participate in these inspections, but in those cases where environmental expertise is absent, TransCanada could not confirm through document review that the designated internal inspectors are competent in assessing environmental conditions at these facilities. Also, the training module for other environmental related tasks such as the sampling and discharging of accumulated surface and/or groundwater in underground valve culverts at facilities does not include a competency component.

TransCanada could not 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 has determined that this sub-element is Non-Compliant.

The Board notes the corrective actions implemented by TransCanada to address findings in sub-elements 2.1 and 2.2 may trigger the updating of the training program to address any newly identified legal requirements or hazards.

Compliance Status: Non-Compliant

3.5 Communication

Expectations: The company shall have an established, implemented and effective process for the internal and external communication of information relating to safety, security and environmental protection. The process should include procedures for communication with the public, company employees, contractors, regulatory agencies and emergency responders.

References: OPR section 6.5(1)(m)

Finding:

Environmental staff was able to demonstrate appropriate, ongoing communication practices, procedures and activities between TransCanada and its external stakeholders. The stakeholders involved included corporate and private individuals surrounding the facilities. The company was also able to demonstrate through document review that a significant amount of meetings occur at all of levels within the organization.

Where the company was not able to demonstrate compliance with the Board’s requirements was in the communication of environmental non-compliances (in particular Board non-compliances) vertically and horizontally across the organization. As an example, Board inspectors have issued several non-compliances since the fall of 2011. In reviewing corporate and regional management records in this time frame, references to these non-compliances were neither on the agenda nor included in the meeting minutes. The Board is of the view that this transfer of information, whether positive or negative, would assist in confirming the EP Program is effective and could identify areas for improvement.

TransCanada also indicated through interviews that non-compliances are tracked and communicated through its Incident and Issue Management program. However, repeat Board non-compliances (integrity testing of underground storage tanks) have occurred since 2011 and in multiple regions across the organization. The Board is of the view that these repeat non-compliances are the result of a deficient communication process.

TransCanada could not demonstrate that it has effectively established and implemented a process relating to external and internal communication requirements. As a result, the Board has determined that this sub-element is Non-Compliant.

Compliance Status: Non-Compliant

3.6 Documentation and Document Control

Expectations: The company shall have an established, implemented and effective process for identifying the documents required for the company to meet its obligations to conduct activities in a manner that ensures the safety and security of the public, company employees and the pipeline, and protection of property and the environment. The documents shall include all of the processes and procedures required as part of the company’s management system.

The company shall have an established, implemented and effective process for preparing, reviewing, revising and controlling documents, including a process for obtaining approval of the documents by the appropriate authority. The documentation should be reviewed and revised at regular and planned intervals.

Documents shall be revised where changes are required as a result of legal requirements. Documents should be revised immediately where changes may result in significant negative consequences.

References: OPR sections 6.5(1)(i), (n), (o), 6.5(3)

Finding:

In order to manage and control its over two hundred procedures and the related operational documentation, TransCanada has developed and implemented the TOPs Program. The TOPs Program owner is the Vice President of Engineering and Asset Reliability and TransCanada has outlined the TOPs Program in a framework document (TOPs Program Framework Document). According to this document, "the objective of the TransCanada TOPs Program is to create a framework for the development and maintenance of the documentation necessary for TransCanada employees and contractors to efficiently and correctly conduct the operational and maintenance activities associated with TransCanada’s facilities". Also the TOPs Program Framework Document clarifies that, "the TOP Program applies to all TransCanada TOPs when being created, revised, reviewed or retired."

In addition to identifying documents, the Board also expects companies to have a process for preparing, reviewing, revising and controlling those documents, and a process for obtaining approval of the documents by the appropriate authority. TransCanada has developed and implemented a database to house all of the TOPs documents. Available to staff at all locations through the corporate Intranet, the TOPs database has the functionality to generate a monthly report to track and alert internal stakeholders to any updates to TOPs and produces a monthly report listing the TOPs that have been updated.

The audit identified that the TOPs Program Framework Document provides for planning, document development, alignment with management systems, review, measurement, analysis, control, audits and improvement of the TOPs.

TransCanada demonstrated that it has a documented process for the development, revision and management of operational procedures. Records reviewed demonstrated that this process has been implemented. However, other pertinent environmental protection documents (design standards, manuals, plans, etc.) outside of the TOPs Framework do not have documented review and revision cycles. Also, in some cases observed by the auditor, review and revision cycles were established but not followed. Examples include:

• Mainline and BC System Environmental Design Standard - last updated in 2003 but internal guidance states that the standard is to be reviewed and modified annually;
• Post Construction Reclamation and Monitoring Integrity Plan - last updated in 2009 but internal guidance states that the plan is to be reviewed annually;
• Site Assessment and Remediation Program - was updated during the audit to incorporate Board Remediation Process Guide that has been in place since 2011. Previous review of this document was completed in 2003;
• Environmental Noise Design Philosophy Directive, List of Selected References and Noise Design Procedure - all dated 2001 with no internal guidance for review and revision; and
• Waste and Hazardous Material Management Manual - was last revised in 2009 with no internal guidance for review and revision.

While these documents primarily function as over-arching guidance documents with respect to the various environmental hazards that the company will or could affect, it was noted during interviews that these documents are used across the organization and thus should be periodically reviewed and revised to ensure its adequacy and effectiveness.

TransCanada did not demonstrate that it has effectively established and implemented a process relating to the management of documents required to meet its OPR obligations. As a result, the Board has determined that this sub-element is Non-Compliant.

Compliance Status: Non-Compliant

4.0 CHECKING AND CORRECTIVE ACTION

4.1 Inspection, Measurement and Monitoring

Expectations:The company shall have an established, implemented and effective process for inspecting and monitoring the company’s activities and facilities to evaluate the adequacy and effectiveness of the protection programs and for taking corrective and preventive actions if deficiencies are identified. The evaluation shall include compliance with legal requirements.

The company shall have an established, implemented and effective process for evaluating the adequacy and effectiveness of the company’s management system, and for monitoring, measuring and documenting the company’s performance in meeting its obligations to perform its activities in a manner that ensures the safety and security of the public, company employees and the pipeline, and protection of property and the environment.

The company shall have an established, maintained and effective data management system for monitoring and analyzing the trends in hazards, incidents and near-misses. The company shall have documentation and records resulting from the inspection and monitoring activities for its programs.

The company management system shall ensure coordination between its protection programs, and the company should integrate the results of its inspection and monitoring activities with other data in its hazard identification and analysis, risk assessments, performance measures and annual management reviews, to ensure continual improvement in meeting the company’s obligations for safety, security and protection of the environment.

References: OPR sections 6.1(d), 6.5(1)(g), (s), (u), (v), (w),56

Finding:

During the audit, company staff indicated that inspection and monitoring consists of a four-tiered governance model, with each tier focused on a different level of activity. As a result, there are a number of established methods that TransCanada implements in order to inspect and monitor its right-of-way and associated facilities. These include:

• Annual Planned Inspection Compressor Station;
• Planned Inspection Meter Stations;
• Monthly Waste Storage Inspection and Inventory;
• Monthly Facility Inspection;
• Underground Storage Tank Integrity Testing;
• Dry Well Water Testing;
• Building Spill Containment System Integrity Inspection; and
• Aerial Patrol Checklists.

TransCanada was able to demonstrate that it uses several methods to monitor and measure the performance of its EP Program. It also demonstrated that the records of the inspections are captured and maintained in its Electronic Document Management System. In addition to the annual performance measures established by TransCanada for the EP Program, the actions resulting from the Tier 1, 2, 3 and 4 inspections and audits are captured in scorecards and IIT to track their management and resolution. The scorecards are reported to program management, senior management and through the annual management review process, to executive leadership.

In reviewing the aforementioned process, procedures and their associated documents (i.e., forms), the Board is of the view that the technical content is appropriate to ensure that the inspection and monitoring program can assess the adequacy and effectiveness of the EP Program. However, TransCanada could not demonstrate that these procedures have been consistently implemented. As an example, the Board auditors requested records from the Planned Inspection Compressor Station for several compressor stations within the Wildrose Region for the years of 2011-13. Upon reviewing the records, the section containing environmental considerations was blank for all facilities and for all years. In addition, similar records were requested for a compressor station in the Central Region. Review of the records indicated that all three annual inspections were completed in the winter months and thus environmental considerations could not be assessed. Finally, similar records were requested for compressor stations in the Rocky Region but these records were not made available for the auditors to review.

The Board’s auditors also requested records from the aerial patrol overflights. While TransCanada did provide records demonstrating that aerial vegetation surveys are being completed in the Rocky Region, TransCanada could not consistently demonstrate across its pipeline system that it is proactively evaluating and assessing the condition of its pipeline right-of-way.

TransCanada could not demonstrate that it has effectively established and implement a process for inspecting and monitoring its activities and facilities and for evaluating the adequacy and effectiveness of its EP program. As a result, the Board has determined that this sub-element is Non-Compliant. The Board notes that the corrective actions for sub-elements 2.1 and 2.2 may affect the processes described in this element.

Compliance Status: Non-Compliant

4.2 Investigating and Reporting Incidents and Near-misses

Expectations: The company shall have an established, implemented and effective process for reporting on hazards, potential hazards, incidents and near-misses, and for taking corrective and preventive actions. This should include conducting investigations where required or where hazards, potential hazards, incidents and near-misses have or could have resulted in the safety and security of the public, company employees and the pipeline, and protection of property and the environment, being significantly compromised.

The company shall have an established, maintained and effective data management system for monitoring and analyzing the trends in hazards, incidents and near-misses.

The company should integrate the results of its reporting on hazards, potential hazards, incidents and near-misses with other data in hazard identification and analysis, risk assessments, performance measures and annual management reviews, to ensure continual improvement in meeting the company’s obligations for safety, security and protection of the environment.

References: OPR sections 6.5(1)(r), (s), (u), (w), (x), 52

Finding:

The audit identified that TransCanada has implemented its Incident and Issue Management Program in order to track, document, analyze, communicate and report hazards, near-misses, and injuries. The Incident and Issue Management Program is supported by tools and procedures designed to promote the reporting, tracking, resolution, communication, and sharing of learnings for events that cause loss or had the potential to cause loss or injury. Events such as injury and illness, spill or release, environmental related issues and Tier 1, Tier 2 and Tier 3 audit findings are tracked and managed by the Incident and Issue Management Program as well.

The Incident and Issues Management Program TOP documents the procedures for how incidents and issues are managed by TransCanada. The main components of the program include incident notification and reporting, investigation, follow-up and sharing. In support of this TOP, TransCanada has implemented an internal web-based Incident Management System (IMS) that defines how incidents are managed and to ensure that TransCanada meets its commitments and satisfies regulatory requirements. The IMS provides for incident response, notification, investigation, documentation, follow-up and sharing information and includes links to incident investigation processes, checklists policies, guides, tools and regulations.

An integral component of the IMS is the IIT Process. The IIT Process is an incident management process that provides for incident response, notification, investigation, documentation, follow-up and sharing of learnings. The IIT is an internal web-based electronic database tool that is available to TransCanada employees. The IIT tracks internal and external compliance reporting of incidents and near misses and corrective actions. It is used to implement actions to address hazards and risks and features two types of notifications that are sent to pre-determined notification profiles (e-mail lists). The profiles are for event notifications (incidents, issues) and action notifications sent to accountable parties. The IIT generates reports on incidents, events and causes and can search events by categories including: classification counts (incidents by classification), spills, gas releases, hazard analysis and controls, and abnormal operations. A training module for IIT is presented to employees as part of the Learning Management System. The Board also noted TransCanada’s established and implemented procedures for external reporting of incidents in accordance with regulatory requirements.

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 EP Program, was effective to meet the Board’s expectations. A sampling of completed and outstanding environmental related IIT 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.

Compliance Status: Compliant

4.3 Internal Audits

Expectations: The company shall have an established, implemented and effective quality assurance program for its management system and for each protection program, including a process for conducting regular inspections and audits and for taking corrective and preventive actions if deficiencies are identified. The audit process should identify and manage the training and competency requirements for staff carrying out the audits.

The company should integrate the results of its audits with other data in hazard identification and analysis, risk assessment, performance measures and annual management review, to ensure continual improvement in meeting the company’s obligations for safety, security and protection of the environment.

References: OPR section 6.5(1)(w), (x)

Finding:

Review of the documentation and records provided by TransCanada demonstrated that it has established and implemented an audit program to assess its management programs and provide quality assurance of same. This multi-level approach consists of:

• Tier 1 - Conformance reviews;
• Tier 2 - Inspections: Planned inspections;
• Tier 3 - Internal system audits and targeted audits focused on maintenance and equipment suitability; and
• Tier 4 - External audits and assessments.

Records provided by TransCanada during the audit demonstrated that the audit program is presently being implemented at a frequency exceeding the OPR requirements to audit on a maximum three-year interval. Review of TransCanada’s audit program documentation and records of audits indicated that TransCanada’s audits are not meeting the requirements for audits outlined in OPR section 53. Specifically, TransCanada could not demonstrate that the audits are being conducted to ensure that their pipelines are designed, constructed, operated and abandoned in compliance with the legal requirements outlined in that section. Review of the internal audit standard and audit specific internal audit protocols and records indicated that TransCanada focuses almost exclusively on evaluating the implementation of its existing programs, procedures and practices, as designed, as opposed to statutory compliance. TransCanada did provide records indicating that some of the content was covered during the external audit processes (Tier 4); however, TransCanada was unable to provide appropriate records of the external audit protocols or working files. As a result, it could not clearly demonstrate the content and extent of the review. Further, review of records outlining the direction provided by TransCanada to its external auditors outlined a focus on conformance to internal requirements or conformance to external ISO standards. While the Board encourages the practice of comparing performance relative to international standards in order to improve audit programs, conformance to internal procedures and external ISO standards alone is not sufficient for a quality assurance program because it does not include all relevant legal requirements. Without an evaluation of compliance to its legal requirements, TransCanada has not established an audit program that can determine the adequacy and effectiveness of its management system.

TransCanada has also established and implemented a process for developing and implementing corrective and preventive actions if deficiencies are noted during Tier 3 audits. This process utilizes its IIT database for assignment, tracking and closeout for all internal audit findings that have associated corrective or preventative actions identified.

Findings from the Tier 4, third party audits are discussed, prioritized and managed at the senior management level. However, the Board noted deficiencies in relation to quality assurance and corrective and preventive actions. The Board was unable to view, as part of a process, how TransCanada and its management consistently evaluated and prioritized the findings, recommendations and the development of preventive and corrective actions resulting from the internal and external audits. While management must have some latitude to manage the results of findings, there must be proceduralized guidelines to consider and prioritize the findings to ensure timely statutory compliance and the safety of public, workers and the environment. The Board was unable to find clear direction to guide managers during the development of corrective and preventive action plans provided within the processes reviewed. This may have contributed to unacceptable implementation periods for some of the identified deficiencies contained within the audit documents provided by TransCanada. For example, TransCanada’s 2009 audit identified the need to develop and implement an MOC process across the company. During the Board’s 2013 audit (this audit) it was noted that the MOC process would not be fully implemented until after the beginning of 2014. This is a lag period of at least 5 years from identification through to correction. The Board clearly described its MOC requirements in its 2009 Audit Protocol. The Board is of the view that all findings related to compliance must be acted on in a timely manner. As another example, the Board notes that the 2009 third party audit provided recommendations to management that they conduct third party audits of the internal programs to measure compliance. This recommendation is consistent with the Board’s findings in this audit; however, as per records provided during the audit, TransCanada management decided not to act on the recommendation. Regardless of the third party audit recommendation to implement another third party review of compliance, an issue relating to compliance or assurance of compliance was identified during the audit. Review of TransCanada’s internal audit processes indicated that there are no clear requirements to act on known or potential non-compliance findings during the management review of the audit results. This particular example could have led to compliant findings being made in other sub-elements in the Board’s audit if TransCanada had acted on the recommendation.

While TransCanada was able to demonstrate that its quality assurance program is implemented on a scale that exceeds the Board’s expectations with respect to frequency, its 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. This sub-element has therefore been found by the Board to be Non-Compliant.

Compliance Status: Non-Compliant

4.4 Records Management

Expectations: The company shall have an established, implemented and effective process for generating, retaining, and maintaining records that document the implementation of the management system and its protection programs, and for providing access to those who require them in the course of their duties.

References: OPR section 6.5(1)(p)

Finding:

TransCanada has established a Business Information Management Program to manage the records that are generated either in support of, or by, its operational activities. The Records Classification System and Records Retention Schedule document has been developed to address regulatory and business information retention requirements.

During the document review and site visits, Board auditors observed the electronic data management system that TransCanada has implemented to manage its EP Program related records. This system adheres to the TransCanada Records Classification System and Retention Schedule, which categorizes and assigns codes to records, and sets out the schedule for retention of records based on category and type.

The records management program includes the management of policies, procedures, guidelines, and documents related to departmental activities and functions. Documents and record types include email correspondence, Tier 1 and 2 inspections, Tier 3 and 4 audits, drawings, etc.

While some records requested by the auditors were not made available for review (please refer to 4.1 Inspection, Measurement and Monitoring), the Board is of the view that this is not as a result of a systemic deficiency in the company’s ability to maintain and ensure the accessibility of records, as a significant amount of records were provided throughout the audit process.

The Board did not identify any non-compliances with TransCanada’s process relating to establishing and implementing effective processes for generating, retaining, and maintaining records that document the implementation of the management system and its protection programs and for providing access to those who require them. As a result, the Board views these processes as being Compliant in meeting its expectations for this sub-element.

Compliance Status: Compliant

5.0 Management Review

5.1 Management Review

Expectations: The company shall have an established, implemented and effective process for conducting an annual management review of the management system and each protection program and for ensuring continual improvement in meeting the company’s obligations to perform its activities in a manner that ensures the safety and security of the public, company employees and the pipeline, and protection of property and the environment. The management review should include a review of any decisions, actions and commitments which relate to the improvement of the management system and protection programs, and the company’s overall performance.

The company shall complete an annual report for the previous calendar year, signed by the accountable officer, that describes the performance of the company’s management system in meeting its obligations for safety, security and protection of the environment and the company’s achievement of its goals, objectives and targets during that year, as measured by the performance measures developed under the management system and any actions taken during that year to correct deficiencies identified by the quality assurance program. The company shall submit to the Board a statement, signed by the accountable officer, no later than April 30 of each year, indicating that it has completed its annual report.

References: OPR sections 6.5(1)(w),(x), 6.6

Finding:

Interviews with TransCanada staff and review of the supporting documentation and records provided by TransCanada indicated that the company undertakes a significant amount of work in the oversight of its EP program. Interviews also indicated that aspects related to the EP Program undergo regular review by TransCanada’s regional and senior management teams. Members of TransCanada’s senior management also participate in meetings on a regular basis at different field locations to evaluate the operations of the pipeline and associated facilities. The Board is also of the view that senior management has allocated the appropriate amount of resources to ensure the protection of the environment.

The HS&E Management System Framework document, dated 18 July 2011, outlines a high level overview of processes for collecting HS&E management system (HS&E MS) metrics, evaluating the HS&E MS, developing recommendations, communicating findings to senior management, and for the implementation of program and management system modifications. Interviews indicated there are several processes that TransCanada utilizes for reviewing environmental related performance including, a management scorecard, and a process for the review of audit findings. Review of the management scorecards indicated that they include and monitor a large number of program metrics. Review of documents and records indicates that the various reviews are being performed on a regular basis at several organizational levels within TransCanada and that the information flows vertically and across the organization.

The HS&E Management System Framework document also describes the HS&E governance structure for TransCanada. The structure includes a Corporate HS&E Committee (HS&E Committee) comprised of members of TransCanada’s senior management. Part of the HS&E Committee’s mandate is to provide leadership and review the performance of the health, safety, wellness and environmental policies, programs and processes. The HS&E Committee also reviews implementation and effectiveness of policies, procedures and programs and makes recommendations to the HS&E Committee’s Board of Directors. The HS&E Committee meets monthly, validates HS&E performance and goals, and conducts a review of incidents and incident trends. Annually, the HS&E Committee identifies key performance areas, sets the internal program goals and objectives, including the key performance indicators to monitor progress.

TransCanada provided records of the HS&E Committee meetings conducted on a monthly basis over the last two years. While the records demonstrated that a significant amount of health and safety topics are being discussed, it did not include a review of the EP Program nor was there sufficient environmental content discussed. While the Board acknowledges the amount of informal review of the EP Program conducted by TransCanada senior management, the company was not able to provide records demonstrating that this review is being completed on an annual basis as required by the OPR.

In reviewing this sub-element, the Board also considers companies’ senior management involvement in prioritizing activities on behalf of the company in order to continually improve the EP Program. Specifically, these include evaluating and managing the results of: internal inspection and monitoring programs, investigations of incidents, audits, and the results of compliance verification activities conducted by regulatory agencies.

As noted above, TransCanada’s senior management and Board of Directors are significantly involved in the direction and review of the company’s HS&E related management system programs, including the EP Program. This audit, however, has made findings that could be partly attributed to management review and action requirements. These include findings relating to the development of the scope of company audits, the evaluation of audit findings and recommendations, and the development and implementation Corrective Action Plans to address some of the deficiencies identified by the audits. Upon reviewing the results of TransCanada’s internal and external audits from 2009 and 2012, the company could not demonstrate that the findings were incorporated into the continual improvement of the EP Program nor provide evidence to why these findings were not actioned. As one example, a consistent finding relating to the development and implementation of an environmental risk assessment process was identified in the 2009 internal, 2009 external and 2012 external audits respectively and to this date, has yet to be fully implemented. The Board is of the view that senior management is ultimately responsible for ensuring that corrective actions related to internal and external audits are fully implemented in a timely matter, especially when they pertain to the company being in compliance with the appropriate regulations.

While TransCanada is undertaking a significant number of management review activities consistent with the descriptions included in the HS&E Framework document, it was not able to demonstrate a documented and comprehensive process for conducting a consistent management review of the EP Program and for ensuring continual improvement as described in the Board’s expectations. As a result, the Board has determined that this sub-element is Non-Compliant.

Compliance Status: Non-Compliant

[i] The "References" in this table contain specific examples of the legal requirements applicable to each element but are not exhaustive and do not represent a complete list of all applicable legal requirements audited to, which are found within the NEB Act and its associated regulations, as well as other applicable legislation, technical and other standards including the Canada Labour Code and CSA Z662, and any conditions contained within applicable certificates or orders enforced by the Board.

[1] Hazard:  Source or situation with a potential for harm in terms of injury, ill health, damage to property, damage to workplace and environment, or a combination of these. Risk:  Combination of the likelihood and consequence(s) of a specified hazardous event occurring.

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