ARCHIVED - Final Audit Report of the TransCanada Safety Management Program - Appendix I - Safety Program Audit Evaluation Table

Appendix I

TransCanada Pipelines Limited and NEB-regulated Subsidiaries (TransCanada)

Safety Management 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 audit commenced in June 2013,which was approximately two months after the legal requirement to appoint an accountable officer was introduced into the OPR (April 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’s to be Compliant with the requirements associated 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:

The Board expects companies to establish documented policies and goals in order to meet their regulatory requirements relating to the safety and security of people and the protection of property, including internal reporting of hazards, potential hazards, incidents and near-misses and providing includes the conditions under which a person who makes a report will be granted immunity from disciplinary action.

TransCanada’s Health Safety and Environment Management System (HS&E Management System) sets out the TransCanada Health, Safety & Environment Commitment Statement (Commitment Statement), which includes a principle that emphasises the conducting of business to meet or exceed all applicable laws and regulations and minimize risk to employees, the public and the environment. TransCanada demonstrated that the Commitment Statement is:

• 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 HS&E Management System; and
• reviewed during the annual Health, Safety and Environment Committee meeting.

The Commitment Statement outlines the leadership commitment and guidance for the eleven (11) elements that make up TransCanada’s H&SE Management System.

TransCanada Health, Safety and Environment Commitment was posted in offices and facilities inspected as part of the audit. The Commitment was also observed in orientation and training materials sampled.

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

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

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

With the promulgation of the amended OPR, the Board has clarified its expectations for management systems including what is required content for the policies that govern protection programs including Safety Management Programs (SM Program). As per the OPR, companies must have policies 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.

As part of its demonstration of compliance with respect to the above, TransCanada provided its formal Code of Business Ethics (COBE) that includes requirements for Leaders to (refer to Page of 8 of the COBE) to:

• create a safe environment in which individuals are encouraged to speak up if they are aware of or suspect a legal or ethical violation;
• accepting reports of violations that individuals may bring to you, and understanding your obligation to report these issues as appropriate to your Compliance Coordinator, the Corporate Compliance Department, Internal Audit, the Harassment Investigation Coordinator or Privacy Officer, or the Ethics Help Line; and
• ensuring that your direct reports understand and act in accordance with all legal and ethical requirements that impact them in their jobs, that they know how to report actual or suspected non-compliance with the law or COBE or to ask questions regarding ethical or legal matters, and that they complete all required ethics and compliance-related training.

The COBE, page 9, outlines procedures for reporting legal and ethical violations, resources available and information about the Ethics Help Line. Additionally, the COBE, page 36, includes content related to Protecting Health and Safety and the Environment including:

• "Whether you work in a field location or in an office setting, you must always ensure that you comply with all health, safety and environment-related legal requirements, as well as TransCanada’s corporate policies; and
• This includes appropriate use of personal protective equipment, not smoking at TransCanada work sites (except in designated smoking areas), completing all health and safety related training, complying with ergonomic practices, preventing environmental leaks and spills, and complying with all reporting obligations to governmental agencies, to name just a few requirements."

The review of the COBE indicated that it did not meet the requirements as it limits the immunity provisions to reporting any actual or suspected violation of the law without fear of retaliation. TransCanada has also implemented an Incident Management Program to manage the reporting of violations, hazards and potential hazards that "encourages notification of all incidents". In the Board’s view, these documents do not adequately address the OPR requirements because it is not explicit in these documents that there is a policy indicating that TransCanada staff who reported deficiencies, hazards or risks associated with the Safety Program would be protected from disciplinary action.

TransCanada demonstrated that it has established and implemented an HS&E Commitment Statement, an Incident Management Program and Code of Business Ethics that include protection of the public, workers and the environment and, to certain extent, provides for immunity from disciplinary action. Following review and consideration, however, for the reasons noted above, the Board has determined that these documents do not demonstrate the existence of policies that meet the criteria outlined in expectations. As a result, the Board has determined that this sub-element is Non-Compliant.

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:

TransCanada’s risk assessment and hazard identification process is rooted in Element 2 of its HS&E Management System: Risk and Regulatory Assessment. The process itself is comprised of, and enabled by, a number of tools including the HS&E Risk Assessment TransCanada Operating Procedure (TOP) and the HS&E Risk Registry.

The HS&E Risk Assessment TOP applies to the identification and assessment of all hazards and risks associated with TransCanada’s operations in North America, and establishes the conditions that trigger a risk assessment. These triggers include: a significant incident or trend of similar incidents; a change in regulatory requirement or social condition; need identified through an audit, or, in the absence of these, the elapsing of 12 months since the last risk assessment. The HS&E Risk Assessment TOP requires that a risk assessment be conducted that will result in an HS&E Risk Registry and that will facilitate the proactive selection and implementation of controls to eliminate or mitigate identified or potential risks. The HS&E Risk Registry is a hierarchical inventory of the identified health safety and environmental risks at an organizational level at TransCanada, and includes regulatory, operational and line of business risk.

TransCanada has a number of formalized hazard identification and management processes including the following key documents:

• Health, Safety and Environment Risk Assessment Operating Procedure dated 09 January 2013;
• Job Safety Analysis Procedure dated 09 January 2013;
• Job Safety Analysis (JSA) Form dated 25 January 2013;
• Health Safety Environment Risk Assessment Inventory Form dated 11 January 2013; and
• Pre-job Planning Procedure dated 24 May 2013.

TransCanada has a Health, Safety and Environment Risk Assessment procedure for semi-quantitative methodology for identifying, assessing and prioritizing HS&E Risks associated with TransCanada’s business. The procedure includes the development of a registry or inventory of HS&E Risks and the identification of controls to eliminate or mitigate identified and/or potential HS&E Risks and includes a process for evaluating the risks associated with the identified hazards. The procedure assigns responsibilities/accountabilities to various Directors and/or Managers (i.e. CS&E, Business Unit, Compliance etc.) and the HS&E Risk Assessment Working Team.

TransCanada’s risk registers have been initiated but not completed for all of TransCanada’s facilities. As well, sampling of the JSA and Pre-job Planning processes was performed at various locations during the audit field activities. Some minor errors were identified on two sampled JSAs at the Burstall compressor station; however, this does not appear to be systemic in nature.

The Board finds that TransCanada was not able to demonstrate records of an implemented and effective process for identifying and analyzing all hazards, establishing and maintaining an inventory of hazards and potential hazards, and evaluating the risks including normal and abnormal operating conditions. In addition to the above regulatory reference for the OPR, this is also a non-compliance to the Canada Labour Code Part II, PART XIX Hazard Prevention Program, sections 19.4 and 19.5.

It was also identified that TransCanada has a formalized electronic system called IIT (Incident Issue Tracking) that allows any TransCanada personnel to enter hazards, potential hazards, incidents and near-misses and for taking corrective and preventive actions, including the steps to manage imminent hazards. The IIT system allows for the monitoring and analysis of trends in hazards, incidents and near-misses.

The IIT program was demonstrated by TransCanada personnel. The Board reviewed several incident investigation reports that included, among other subjects, a deer strike, vehicle backing-up incidents and a valve failure. The investigation reports include a description of the incident, causation, action items, responsibilities and tracking mechanism. There were no identified issues with the investigation reports sampled.

TransCanada has a documented Harassment-Free Workplace Policy with an effective date 26 July 20 10. This policy was observed posted at several TransCanada inspected locations and applies to all personnel (including full-time and part-time employees, contract workers, contractors and independent consultants) of TransCanada. The policy comprehensively describes the harassment policy and company requirements with respect to complaints, confidentiality, retaliation, immediate actions to take, responsibilities, resolution process, definitions and compliance.

TransCanada has a number of mechanisms to communicate controls to employees and contractors including:

• a formal LMS (Learning Management System) that outlines training requirements and tracks training;
• job-site orientations;
• job safety analyses; and
• pre-job.

Although TransCanada demonstrated that it has established and implemented a SM Program that incorporates several processes for the identification of hazards and controls, it was not able to demonstrate that it has established an exhaustive hazard inventory or a fully compliant process for the evaluation of risk, as described in the Board’s expectations. The Board finds TransCanada in Non-Compliance with the requirements associated with this sub-element.

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:

TransCanada demonstrated that it tracks changes in legal requirements using various methods including its subscription to an online, third party regulatory tracking and notification service, its own internal, regular monitoring of government websites, and its participation in industry groups such as the Canadian Energy Pipelines Association (CEPA). Legislative changes are then entered into its IIT database as an ‘issue’, which is then delegated to the appropriate staff to address appropriately and formally.

TransCanada 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 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 or referenced standards. As such, the Board views its scope as not meeting the Board’s expectations. The Board is of the view that this lack of specificity does not support TransCanada’s assertion that it has a fully compliant process as specific provisions are often updated without an impact on the legislation’s title. Regardless of the adequacy of the process, the Board reviewed the implementation of the Legislative Monitoring Process. Record review indicated that TransCanada has not fully implemented the process as outlined. As an example, the records indicated that a written assignment of a "Person Assigned" was not being implemented consistently as required by the process. Additionally, the Board is concerned with the internal use and implementation of this document as demonstrated by a lack of awareness by staff interviewed. The audit also identified issues with the adequacy of the review it has undergone. Specifically, the Board’s review of the document noted that, while it had a revision date within the bi-annual review period requirements, the current version provided by TransCanada during the audit contained significantly outdated information. As an example, Appendix A - Register of Applicable Regulatory agencies for Canadian and Mexican Pipelines and Canadian Gas Storage, contains outdated information with respect to contact information including that of NEB staff and the Alberta Energy Regulator.

TransCanada has not demonstrated 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.

TransCanada also indicated that it has incorporated the management of its legal requirements directly into its operating procedures through the TransCanada Operations Procedures (TOP) Program. TransCanada implemented this program to manage and control it’s over 200 operational procedures and their related documents. TransCanada indicated that within the TOP Program database, it has included its list of legal requirements. According to TransCanada staff, the TOP database lists all of the relevant legislation associated with the TOP procedures as well as the legislative driver, the contact of the person responsible for managing the TOP, and any changes that are required. Further, company staff indicated that the TOP database also lists the regulation, and has the functionality to allow staff to electronically access the listed regulations. According to company staff, TOP owners in their respective business units are responsible for monitoring the legal requirements that will impact its procedures during annual reviews. During interviews, TransCanada confirmed that individual TOP owners are responsible for ongoing monitoring of any legal change that would impact their respective programs. While this TOP process may function to track changes to legal requirements and integrate them to some extent, the Board has determined that it is not effective to address changes that would affect the SM Program, again given the legislation it lists for consideration includes predominantly legislative titles absent reference to their particular provisions.

In addition to the Legislative Monitoring Process document, TransCanada referenced other documents to demonstrate its compliance with these requirements. These included its Management System Framework Document and the Occupational Safety and Emergency Management TOP Regulations List. However, the Board notes these documents do not establish the expected process for determining specific legal requirements that apply to the SM Program and do not compile a complete list of regulatory requirements for the SM Program.

While TransCanada demonstrated that it is tracking, listing and conducting internal notifications regarding some regulatory changes, it did not demonstrate that it maintains a complete list of legal requirements or an effective process to ensure that regulatory changes trigger either program changes or communication to all staff involved in the SM Program. As a result, the Board finds TransCanada to be Non-Compliant with the requirements associated with this sub-element.

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:

During the audit, TransCanada demonstrated through provided documentation and records and during interviews that it is undertaking significant program management with respect to performance management program monitoring. Company staff indicated in 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). Record review confirmed company staff interviews.

The Board’s requirements clearly require companies to demonstrate that they have established goals, objectives and targets for directing and measuring the required management system and programs. Companies are free to utilize their own internal management terminology within their management systems; however, they must be able to clearly demonstrate compliance to the individual requirements. During interviews TransCanada staff used a varied, but similar, vocabulary when describing what constitutes a company goal, objective or target. During interviews at the management level, TransCanada staff articulated multiple terms interchangeably in their description of the performance measurement and program management. For example, in reviewing the information TransCanada provided, it was 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 documentation provided. However, TransCanada also refers to the Corporate Performance Scorecard which uses the term "Key Performance Area" (KPA). 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. Consequently, during the audit, and to advance the Board’s assessment of this sub-element, the Board’s auditors requested clarification from TransCanada via a table of concordance to confirm the appropriate correlation between TransCanada’s varied internal terminology and the regulatory requirements. This table was not, however, provided to Board auditors during the audit. As a result, the Board finds that TransCanada did not demonstrate compliance with respect to the requirements associated with this sub-element. In developing the Corrective Action Plan for this finding, TransCanada will have to demonstrate clearly how it is meeting these expectations.

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:

During the audit, TransCanada demonstrated that it has established an organizational structure which meets the Board’s requirements. TransCanada provided documentation and records outlining its procedures and practices for establishing its Safety Management Program organizational structure and developing roles and responsibilities for management, staff and contract personnel at each level and for each job function.

As per supplied documentation and interviews with company staff, TransCanada’s health safety and environment governance structure is outlined in its HS&E Management System documentation. This governance structure includes TransCanada’s HS&E Committee of Corporate Board members that monitors health, safety and environmental practices and procedures, considers implementation and effectiveness of same, and makes recommendations to its Corporate Board with respect to HS&E policies and procedures. This HS&E Committee meets monthly, validates HS&E performance and goals and reviews both incidents and investigations.

The Board reviewed documentation and records that indicated that TransCanada has established an HS&E MS Responsibility Matrix that sets out responsibilities and accountabilities for the HS&E Management System for all employees.

During the Audit, TransCanada provided documentation that demonstrated that, in addition to the HS&E MS Responsibility Matrix it has established a number of mechanisms for documenting its organizational structure. Within these documents are requirements and procedures for establishing, developing and communicating the SM program structure(s) and roles and responsibility documentation. These mechanisms include the following key documents:

• Organizational charts;
• Health, Safety and Environmental Management System;
• TransCanada Operating Procedures;
• Role profiles and personal performance contracts;
• Joint Health Safety and Environmental Committee responsibilities;
• Health, Safety Environmental Committee charter;
• Formal letter outlining assignment of Accountable Officer;
• Contractor Management Program; and
• Orientation Program.

With respect to establishing and managing the roles and responsibilities for its contract personnel, the audit Team verified that TransCanada has a formal documented program titled ‘Contractor Safety Management Program’, dated 04 June 2010, that is comprised of a three element Strategic and three element Tactical focus. The following are the key elements:

• Element 1 - Planning for Contractor Safety;
• Element 2 - Contractor Safety Pre-Qualification;
• Element 3 - Contractor Safety Selection;
• Element 4 - Pre-job Contractor Safety Activities;
• Element 5 - On-the-job Contractor Safety; and
• Element 6 - Contractor Safety Closeout.

Additionally, it was verified that TransCanada utilizes ISNetworld as a mechanism to evaluate contractors safety programs, performance and documentation and is outlined in Element 1 - Planning for Contractor Safety and Element 2 - Contractor Safety Pre-Qualification. Additional key documents within the TransCanada Contractor Safety Management Program includes:

• Contractor Safety Handbook;
• Construction Worksite HS&E Inspection Procedure;
• Job Safety Analysis;
• General Work Permit; and
• Excavation Specification.

With respect to management of appropriate resourcing of its Safety Management Program, TransCanada demonstrated that it has established and implemented processes for formally monitoring and evaluating its SM Program resourcing requirements. This included records of oversight, evaluation and increases to resources where deemed appropriate.

Based on the information provided by TransCanada during the audit, the Board did not identify any non-compliances with TransCanada’s processes with respect to this sub-element. Accordingly, the Board views this process as being Compliant in meeting its expectations for this sub-element.

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:

During the audit, TransCanada demonstrated that its SM Program controls are contained and/or managed within its TOP procedures and practices. With the exception of the issues identified in Sub-element 2.2 Legal Requirements above, through document and record review, and during interviews with staff, it was verified that TransCanada has an established an adequate process for developing and maintaining controls to address its hazards and legal requirements. Additionally, TransCanada demonstrated that TOPs are maintained on the TransCanada electronic document management system (EDMS) and access is provided to all TransCanada personnel or its contractors, as required.

Based on the information provided by TransCanada during the audit, the Board did not identify any non-compliances with TransCanada’s processes with respect to this sub-element. Accordingly, the Board views this process as being Compliant in meeting its expectations for this sub-element.

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 EM and SM Program staff indicated that the company was able to demonstrate that it has appropriate controls to minimize, respond to or mitigate the safety hazards 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 SM Program staff are trained as first responders and as well as other roles within the Incident Command Structure (ICS). Further, through document and record review and in interviews with company staff that TransCanada’s standard TOPs contain the safety practices and procedures which will be applied if abnormal or upset conditions were detected or were occurring. The assessment of the management of the content and TOPs program is contained in other sub-element assessments within this audit.

TransCanada was able to demonstrate that its SM Program staff plays a role in supporting the Emergency Management Program by fulfilling and being trained on various technical roles within the ICS framework. This sub-element has therefore been found by the Board 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 identified that it had developed and implemented two separate MOC processes to manage and document changes that affect its SM Program. The first process was developed and implemented as part of its Integrity Management Program, and is captured in the Management of Change 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 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 its protection programs leverages some of the functionality of the TransCanada Operating Procedures (TOPs) database and the TOPs Framework Process. The TOPs database contains the operating procedures and some related documents for each of the protection programs.

Following the review of both MOC processes that TransCanada was following at the time of the audit, the Board has determined:

• The Pipeline Integrity MOC process is narrow in scope in that it is reserved for asset based changes; and
• While the TOPs framework manages changes that are captured by the existing scope of the TOPs. As the TOPs framework is intended to manage versions of operational and procedural documents, it does not meet all of the requirements of an MOC as outlined in the OPR. This gap is includes aspects of change that could exist outside of the scope of TOPs but could be "a 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."

Based on these issues, the Board has determined that by using the Integrity MOC process and TOPs framework process TransCanada has operationalized some aspects necessary for an MOC by documenting and communicating of some types of change through document versioning, these processes are not adequate separately or in combination to satisfy the Board’s legal requirements. Further, the Board determined that neither of these processes includes an aspect of proactively identifying change that could affect safety, security or the protection of the environment. The Board’s expectation is that the company’s MOC process be proactive and include requirements for the identification and evaluation of changes by various levels in order to determine that could affect the protection programs.

During the audit, TransCanada indicated that it had a project underway to implement a singular MOC process that should be rolled out Company-wide in 2014. It should be noted that due to the finding described in 2.2 (Legal Requirements) of this report, it is unclear whether the new MOC process incorporates changes occurring at the regulatory requirement level. Through interviews it was verified the management of change process had been ‘piloted’ at several locations over the past calendar year.

While TransCanada has implemented some aspects of an MOC, at the time of the audit, TransCanada did not demonstrate that it has an established and implemented a 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 design, specification or standard or procedure and any change in the company’s organizational structure or the legal requirements. Accordingly, the Board finds TransCanada in Non-Compliance with the requirements associated with 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:

TransCanada demonstrated that it assigns, tracks and manages the training for staff involved in Safety Management by utilizing its Learning Management System (LMS). Through the LMS, staff are notified when they are due to take or refresh training. In order to ensure that training is current and monitored, managers are also notified if any of their staff’s training has expired. The training program for the Safety Management staff is described in each employee’s role profile. Additionally, TransCanada demonstrated in documents and records provided that it creates role profiles, personal performance contracts and outlines required competency and training for each individual employee. Verification of training occurs through various mechanisms such as course quizzes and job evaluation. The tracking of proficiency is performed for certain courses with a focus on technical skills and capabilities.

With respect to the management of the training and competency requirements of its contract personnel, document and record review indicated that TransCanada maintains a contractor management program that includes processes for evaluation of the contracting company and review of the scope of work, skills and training, licenses and requirements for contractor work personnel.

Based on the information provided by TransCanada during the audit, the Board did not identify any non-compliances with TransCanada’s processes with respect to this sub-element. Accordingly, the Board views this process as being Compliant in meeting its expectations for this sub-element.

Compliance Status: 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:

TransCanada has numerous committees at the corporate, operations and site level for the communication and management of safety issues. Examples include Joint Health Safety and Environment Committees (JHS&EC) and the TransCanada Corporate Health, Safety and Environment Committee. The roles and responsibilities of these Committees are set out in JHS&EC Roles and Responsibilities 01 March 2010 and the TransCanada Corporate Health, Safety and Environment Committee purpose documents. Sites have specific meetings and communication processes to discuss safety issues.

TransCanada has established emergency and incident procedures for creating an incident command system and has established public and stakeholder communication processes.

TransCanada was able to demonstrate that it has established an external communication plan that identifies the appropriate stakeholders and has developed standard messaging relating to maintaining the safety and security of the pipeline and protection of the environment. The company was also able to demonstrate that it has established an internal communication plan to ensure that relevant safety information is communicated to internal stakeholders.

Based on the information provided during the audit, the Board did not identify any non-compliances with TransCanada’s process relating to external and internal communication requirements. Accordingly, the Board views these processes as being Compliant in meeting the expectations for this sub-element.

Compliance Status: 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:

During the audit TransCanada indicated that the majority of its SM Program documentation is kept in the form of its TOPs. 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 Safety Management documents (design standards, manuals, plans, etc.) outside of the TOPs Framework do not have documented review and revision cycles. While these documents primarily function as over-arching guidance documents with respect to the various 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.

Based on the information provided during the audit, 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. Accordingly, the Board views these processes as being Non-Compliant in meeting its expectations associated with this sub-element.

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), 56

Finding:

During the audit it was confirmed that TransCanada has a document procedure titled "Planned Inspection" dated 11 January 2013, that provides a standardized and consistent approach to conducting formal workplace and facility inspections at TransCanada. Planned inspections are based on a templated form and include some regulatory requirements such as required postings of CLC documentation, etc. The results of planned inspections were observed to be included for review in the regular Joint Health Safety and Environment Committee (JHS&EC) meetings. As well, the inspection results are inputted into the IIT system and a work order issued within Avantis (TransCanada’s work order system) if corrective actions are required.

The Board’s audit included samplings of the planned inspection records. The review identified that the inspection were primarily focused on housekeeping and selected safety topics. The standard safety topics included (among other things):

• General Work Permits / Work Authorizations / Job Safety Analyses Forms (JSA) - Are readily available at the work site;
• Confined space inventory form - Current and any new space have been added to the list; and
• Crane Operational Inspection - Available and complete.

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

While TransCanada was able to demonstrate that it has established an inspection process applicable to its SM Program, the process did not meet the requirements associated with this this sub-element. Accordingly, the Board views these processes as being Non-Compliant in meeting its expectations associated with this sub-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 injuries and illnesses, spills or releases 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 (among other things): 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 SM Program, was adequate to meet the Board’s expectations. A sampling of completed and outstanding safety 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 documented processes for evaluating and prioritizing audit 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 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 in TransCanada’s 2009 Tier 4 third party audit, the auditor provided recommendations to TransCanada’s management to conduct third party audits to measure compliance with HSE laws and regulations. This recommendation is consistent with the Board’s findings in this audit; however, as per records reviewed during the audit, TransCanada management decided not to act on the recommendation. 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:

During the audit TransCanada demonstrated that it has established a Business Information Management Program to manage the records that are generated in support of or in performance of its operational activities. The Records Classification System and Records Retention Schedule documents have been developed to reflect regulatory and business information retention requirements.

Additionally, the Audit confirmed through documentation and record review that TransCanada has implemented a record retention process as outlined in the Operating Procedures Program Framework Document, Revision: 04 Effective Date: 13 June 2012, section 2.3. This process addresses the controls of records related to TOPs and includes appropriate types of records to be retained, retention and disposition timeframes and disposal methods.

The Audit Team verified TransCanada has several repositories for safety-related information including key processes such as:

• IIT system is used for tracking incidents;
• Learnings management system for training related record retention; and
• Minutes of meetings, inspections, job safety analysis and Pre-job plans are maintained at facility locations.

The Audit Team requested, received and reviewed several safety related records, such as job safety analyses, minutes of safety committees meetings, inspections and pre-job plans.

The audit did identify one issue with respect to records management at TransCanada. A review of safety related records at several regional/facility locations indicated varying record storage and retention practices for site related information. Interviews confirmed there were no formal procedures for retaining these safety related records such as permits, minutes and contractor documentation. The missing processes relate to the collection and storage of information used in the course of workers’ duties.

While TransCanada demonstrated many of the records management process required, the audit identified deficiencies relating to the collection, storage and access of information at regional sites. The Board finds TransCanada in Non-Compliance with the requirements associated with this sub-element.

Compliance Status: Non-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:

The Health, Safety and Environment Management System Framework (HS&E Framework) document describes the HS&E Governance Structure for TransCanada. An HS&E Committee of the TransCanada Board is comprised of Directors that monitor practices and procedures to ensure compliance with legislation, conformity with policies, procedures and programs, and the prevention and mitigation of losses. The HS&E Committee of the TransCanada Board also considers implementation and effectiveness of policies, procedures and programs and makes recommends to the Board. The HS&E Committee meets monthly, validates HS&E performance and goals, and conducts a critical review of incidents and incident trends. The HS&E Management System Responsibility Matrix sets out responsibilities, accountabilities, consultation and information for the HS&E Management System for all employees. Annually, the HS&E committee sets goals and objectives, with overall key performance indicators to monitor progress through scorecards. The scorecards are based on a vast number of metrics. TransCanada provided records of the HS&E Committee meetings conducted on a monthly basis over the last two years. These records demonstrate the review of performance and incidents, and the assignment of actions.

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 Health, Safety and Environmental (HS&E) programs.

TransCanada has a description of a Management Review process in the Health, Safety and Environment Management System document dated 18 July 2011. This document outlines a high level overview for: collecting health, safety and environmental management system (HS&E MS) metrics; evaluation of the HS&E MS; development of management recommendations; communication of findings to senior management; and for the implementation of program modifications. Interviews indicated there are several processes for reviewing safety related performance including scorecards, issues, audit findings and other information. These reviews are performed at several organizational levels within TransCanada and flow vertically throughout the organization. However, a comprehensive management review process that included a system, element, procedural, statistics, audit, monitoring, performance and other information compiled into a formal management review was not demonstrated.

The Board’s audit conformed that 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 and programs. 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.

While the Board was able to confirm that TransCanada is undertaking several management review activities consistent with the descriptions included in the HS&E Framework document, it was not able to review a documented and comprehensive management review process applicable to the SM Program that described activities for adequately and effectively undertaking its management reviews and for ensuring continual improvement as described in the Board’s expectations. This sub-element has therefore been found by the Board to be 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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