ARCHIVED – National Energy Board Onshore Pipeline Regulations (OPR) – Final Audit Report of the Alliance Pipeline Ltd. Third Party Crossings Program – OF-Surv-OpAud-A159-2014-2015 02

National Energy Board Onshore Pipeline Regulations (OPR) – Final Audit Report of the Alliance Pipeline Ltd. Third Party Crossings Program – OF-Surv-OpAud-A159-2014-2015 02 [PDF 777 KB]

File OF-Surv-OpAud-A159-2014-2015 02
31 March 2016

Mr. Terrance Kutryk
President and Chief Executive Officer
Accountable Officer under the NEB Act
Alliance Pipeline Ltd.
800, 605 – 5^th Avenue S.W.
Calgary, AB  T2P 3H5

Dear Mr. Kutryk:

Alliance Pipeline Ltd. (Alliance)
National Energy Board Onshore Pipeline Regulations, (OPR)
Final Audit Report – Third Party Crossings Program

The National Energy Board has completed its Final Audit Report for its audit of Alliance’s Third Party Crossings Program.

A draft report documenting the Board’s evaluation of Alliance’s Third Party Crossings Program was provided to Alliance on 26 February 2016 for review and comment. On 17 March 2016, Alliance submitted its response.

The Board has considered Alliance’s comments and has made changes to the Final Audit Report and its Appendices as it determined to be appropriate.

The findings of the audit are based upon an assessment of whether Alliance was compliant with the regulatory requirements contained within:

• National Energy Board Act;
• National Energy Board Onshore Pipeline Regulations
• National Energy Board Pipeline Crossing Regulations, Parts I and II; and
• Alliance’s policies, programs, practices and procedures.

Alliance was required to demonstrate the adequacy and effectiveness of the methods selected and employed within its Programs to meet the regulatory requirements listed above.

The Board has enclosed the Final Audit Report and associated appendices with this letter. The Board will make the Final Audit Report and Appendices public on the Board’s website.

Alliance is required to file a Corrective Action Plan (CAP), which describes the methods and timing for addressing the Non-Compliant findings identified through this audit, for approval by the Board prior to 2 May 2016.

The Board will make the CAP public and will continue to monitor and assess all of Alliance’s corrective actions with respect to this audit until they are fully implemented. The Board will also continue to monitor the implementation and effectiveness of Alliance’s Third Party Crossings Program and management system through targeted compliance verification activities as a part of its on-going regulatory mandate.

If you require any further information or clarification, please contact Tim Sullivan, Lead Auditor, Operations Business Unit at 403-801-1289 or toll-free at 1-800-899-1265.

Yours truly,

Original signed by

Sheri Young
Secretary of the Board

Attachment – Final OPR Audit Report documents

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National Energy Board Onshore Pipeline Regulations (OPR)

Final Audit Report of the Alliance Pipeline Ltd. Third Party Crossings Program

File Number: OF-Surv-OpAud-A159-2014-2015 02

 

Executive Summary

Companies regulated by the National Energy Board (NEB or Board) must demonstrate a proactive commitment to continual improvement in safety, security and environmental protection. Pipeline companies under the Board’s regulation are required to incorporate adequate, effective and implemented management systems into their day-to-day operations. These systems and associated technical management programs include the tools, technologies and actions needed to ensure NEB regulated pipelines are safe and remain that way over time. In the public interest, the Board holds companies accountable for safety and environmental outcomes.

This report documents the Board’s comprehensive audit of Alliance’s Third Party Crossings (Crossings) program as it applies to its NEB pipeline facilities. The audit was conducted based on the requirements contained within the National Energy Board Pipeline Crossings Regulations (PCR), Canadian Standards Association Standard Z662-11 – Oil and Gas Pipeline Systems (CSA Z662-11) as well as the National Energy Board Onshore Pipeline Regulations (OPR) as amended on 21 April 2013. The Board has incorporated these requirements within its audit protocol.

The Board conducted the audit following its published audit protocol, which identifies five management system elements. These five elements are broken into 17 sub-elements. Each sub-element reflects several regulatory requirements. Companies must comply with 100 per cent of the regulatory requirements of each sub-element being assessed. If a company’s program is found to be deficient with respect to any regulatory requirement, the entire sub-element will be found Non-Compliant.

The Board notes that the companies it regulates must establish and implement documented management systems and apply them to the programs as described within the OPR as well as their Crossings and Public Awareness programs. The specific management system requirements are described within section 6 of the OPR and within the referenced CSA Standard Z662, Oil and Gas Pipeline Systems in clause 3.1 Safety and Loss Management System.

In reviewing the results of Alliance’s Crossings program audit the Board notes that Alliance did not demonstrate it had developed and implemented a management system that directly applies to this program. The Board notes that the Crossings program management system requirements can be met by being directly subsumed within the programs referenced in the OPR or as part of a documented Safety and Loss Management System compliant with clause 3.1 of CSA Z662 Oil and Gas Pipeline Systems. The Board did not see evidence that Alliance had implemented either approach. Further, the Board notes that the requirements to have a documented, implemented and maintained Safety and Loss Management System are not new. The Board is of the view that this management system deficiency could have been prevented if Alliance had ensured that appropriate compliance identification and monitoring processes had been established.

The Crossings program is part of Alliance’s Land, Right of Way and Corridor Management department. During the audit, Alliance provided evidence that it was in the process of applying its corporate Operational Risk Management System to its Land, Right of Way and Corridor Management department. Alliance demonstrated that some of the required processes had already been integrated into its program management activities; however, at the time of the audit, the Operational Risk Management System had not been fully documented, established or implemented for the Land, Right of Way and Corridor Management programs. Alliance will need to develop and implement corrective actions to ensure establishment and implementation of a compliant management system.

It is important to understand that the Board’s finding regarding Alliance’s management system primarily reflects the company’s stage in developing and applying its management system. It does not necessarily reflect the lack of technical management activities being undertaken to ensure the safety of the pipeline. The Board found that, regardless of the lack of a compliant management system, Alliance had developed and implemented a Crossings program that was addressing the majority and most significant of its hazards and the majority of its regulatory requirements.

The Board has made a significant number of Non-Compliant findings. The Board’s analysis of these findings indicates that most of the non-compliances relate to the establishment and implementation of the management system processes and consequently its Safety and Loss Management System. All of the Board’s findings are documented in Appendix I of this audit report.

The majority of the Non-Compliant findings fall into two categories:

• lack of integration of its Crossings program into the overall operational oversight management system processes: and
• failure to implement management system sub-elements that are consistent with the Board’s expectations.

The Board has determined that no enforcement actions are immediately required to address the Non-Compliant findings identified in this audit. Within 30 days of the Final Audit Report being issued, Alliance must develop and submit a Corrective Action Plan for Board approval. The Corrective Action Plan must detail how Alliance intends to resolve non-compliances identified by this audit. The Board will assess the implementation of the corrective actions to confirm they are completed in a timely manner and applied consistently across Alliance’s regulated system. The Board will also continue to monitor the overall implementation and effectiveness of Alliance’s management system through targeted compliance verification activities as a part of its ongoing regulatory mandate.

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Table of Contents

• 1.0 Audit Terminology and Definitions
• 2.0 Abbreviations
• 3.0 Introduction: NEB Purpose and Framework
• 4.0 Background
• 5.0 Audit Objectives and Scope
• 6.0 Audit Process and Methodology
• 7.0 Audit Activities
• 8.0 Management System Evaluation
• 9.0 Program Summary
• 10.0 Summary of Audit Findings
• 11.0 Conclusions
• Appendix I: Audit Evaluation Table
• Appendix II: Facility Summaries and Maps
• Appendix III: Company Representatives Interviewed
• Appendix IV: Documents Reviewed

1.0 Audit Terminology and Definitions

(The Board has applied the following definitions and explanations in measuring the various requirements included in this audit. They follow or incorporate legislated definitions or guidance and practices established by the Board, where available.)

Adequate: The management system, programs or processes complies with the scope, documentation requirements and, where applicable, the stated goals and outcomes of the NEB Act, its associated regulations and referenced standards. Within the Board’s regulatory requirements, this is demonstrated through documentation.

Audit: A systematic, documented verification process of objectively obtaining and evaluating evidence to determine whether specified activities, events, conditions management systems or information about these matters conform to audit criteria and legal requirements and communicating the results of the process to the company.

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

Corrective Action Plan: A plan that addresses the non-compliances identified in the audit report and explains the methods and actions that will be used to correct them.

Developed: A process or other requirement has been created in the format required and meets the described regulatory requirements.

Effective: A process or other requirement meets its stated goals, objectives, targets and regulated outcomes. Continual improvement is being demonstrated. Within the Board’s regulatory requirements, this is primarily demonstrated by records of inspection, measurement, monitoring, investigation, quality assurance, audit and management review processes as outlined in the OPR

Established: A process or other requirement has been developed in the format required. It has been approved and endorsed for use by the appropriate management authority and communicated throughout the organization. All staff and persons working on behalf of the company or others that may require knowledge of the requirement are aware of the process requirements and its application. Staff has been trained on how to use the process or other requirement. The company has demonstrated that the process or other requirement has been implemented on a permanent basis. As a measure of “permanent basis”, the Board requires the requirement to be implemented, meeting all of the prescribed requirements, for three months.

Finding: The evaluation or determination of the compliance of programs or elements in meeting the requirements of the National Energy Board Act and its associated regulations.

Implemented: A process or other requirement has been approved and endorsed for use by the appropriate management authority. It has been communicated throughout the organization. All staff and persons working on behalf of the company or others that may require knowledge of the requirement are aware of the process requirements and its application. Staff has been trained on how to use the process or other requirement. Staff and others working on behalf of the company have demonstrated use of the process or other requirement. Records and interviews have provided evidence of full implementation of the requirement, as prescribed (i. e. the process or procedures are not partially utilized).

Inventory: A documented compilation of required items. It must be kept in a manner that allows it to be integrated into the management system and management system processes without further definition or analysis.

List: A documented compilation of required items. It must be kept in a manner that allows it to be integrated into the management system and management system processes without further definition or analysis.

Maintained: A process or other requirement has been kept current in the format required and continues to meet regulatory requirements. With documents, the company must demonstrate that it meets the document management requirements in OPR, section 6.5 (1)(o). With records, the company must demonstrate that it meets the records management requirements in OPR, section 6.5 (1)(p).

Management System: The system set out in OPR sections 6.1 to 6.6. It is a systematic approach designed to effectively manage and reduce risk, and promote continual improvement. The system includes the organizational structures, resources, accountabilities, policies, processes and procedures required for the organization to meet its obligations related to safety, security and Emergency Management.

(The Board has applied the following interpretation of the OPR for evaluating compliance of management systems applicable to its regulated facilities.)

As noted above, the NEB management system requirements are set out in OPR sections 6.1 to 6.6. Therefore, in evaluating a company’s management system, the Board considers more than the specific requirements of section 6.1. It considers how well the company has developed, incorporated and implemented the policies and goals on which it must base its management system as described in section 6.3; its organizational structure as described in section 6.4; and considers the establishment, implementation, development and/or maintenance of the processes, inventory and list described in section 6.5(1). As stated in sections 6.1(c) and (d), the company’s management system and processes must apply and be applied to the programs described in section 55.

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

Practice: A repeated or customary action that is well understood by the persons authorized to carry it out.

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

Process: A documented series of actions that take place in an established order and are directed toward a specific result. A process also outlines the roles, responsibilities and authorities involved in the actions. A process may contain a set of procedures, if required.

(The Board has applied the following interpretation of the OPR for evaluating compliance of management system processes applicable to its regulated facilities.)

OPR section 6.5(1) describes the Board’s required management system processes. In evaluating a company’s management system processes, the Board considers whether each process or requirement: has been established, implemented, developed or maintained as described within each section; whether the process is documented; and whether the process is designed to address the requirements of the process, for example a process for identifying and analyzing all hazards and potential hazards. Processes must contain explicit required actions including roles, responsibilities and authorities for staff establishing, managing and implementing the processes. The Board considers this to constitute a common 5 w’s and h approach (who, what, where, when, why and how). The Board recognizes that the OPR processes have multiple requirements; companies may therefore establish and implement multiple processes, as long as they are designed to meet the legal requirements and integrate any processes linkages contemplated by the OPR section. Processes must incorporate or contain linkage to procedures, where required to meet the process requirements.

As the processes constitute part of the management system, the required processes must be developed in a manner that allows them to function as part of the system. The required management system is described in OPR section 6.1. The processes must be designed in a manner that contributes to the company following its policies and goals established and required by section 6.3.

Further, OPR section 6.5(1) indicates that each process must be part of the management system and the programs referred to in OPR section 55. Therefore, to be compliant, the process must also be designed in a manner which considers the specific technical requirements associated with each program and is applied to and meets the process requirements within each program. The Board recognizes that single process may not meet all of the programs; in these cases it is acceptable to establish governance processes as long as they meet the process requirements (as described above) and direct the program processes to be established and implemented in a consistent manner that allows for the management system to function as described in 6.1.

Program: A documented set of processes and procedures designed to regularly accomplish a result. A program outlines how plans, processes and procedures are linked; in other words, how each one contributes to the result. A company regularly plans and evaluates its program to check that the program is achieving the intended results.

(The Board has applied the following interpretation of the OPR for evaluating compliance of programs required by the NEB regulations.)

The program must include details on the activities to be completed including what, by whom, when, and how. The program must also include the resources required to complete the activities.

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2.0 Abbreviations

Alliance: Alliance Pipeline Ltd.

CAP: Corrective Action Plan

CLC: Canada Labour Code Part II

CSA Z662-11: CSA Standard Z662 entitled Oil and Gas Pipeline Systems, 2011 version

COHSR: Canada Occupational Health and Safety Regulations

GOT: Goals, Objectives and Targets

LRCM: Land, Right of Way and Corridor Management

NEB: National Energy Board

PA: Public Awareness

OPR: National Energy Board Onshore Pipeline Regulations

ORMS: Alliance’s Operational Risk Management System

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3.0 Introduction: NEB Purpose and Framework

The NEB’s purpose is to promote safety and security, environmental protection, and efficient energy infrastructure and markets in the Canadian public interest within the mandate set by Parliament in the regulation of pipelines, energy development and trade. In order to ensure that pipelines are designed, constructed, operated and abandoned in a manner that ensures: the safety and security of the public and the company’s employees; safety of the pipeline and property; and protection of the environment. To do this, the Board has developed regulations requiring companies to establish and implement documented management systems applicable to specified technical management and protection programs. These management systems and programs must take into consideration all applicable requirements of the NEB Act and its associated regulations, as well as the Canada Labour Code Part II (CLC).

To achieve compliance, regulated companies must demonstrate established, implemented, adequate and effective methods for identifying and managing hazards and risks. The Board reviews the documented compliance and incident history of the company. This review determines the appropriate scope for the audit. During the audit, the Board reviews documentation and some company records, and interviews of both corporate and regionally-based staff.

The Board also conducts separate but linked technical inspections of a representative sample of the company’s facilities to evaluate the adequacy, effectiveness and implementation of the management system and programs. The Board bases the scope and location of the inspections on the needs of the audit. The inspections follow the Board’s standard inspection processes and practices. Although they inform the audit, inspections are considered independent of the audit. If unsafe or non-compliant activities are identified during an inspection, they are actioned in accordance with the Board’s standard inspection and enforcement processes to ensure ongoing safe operation

After completing its field activities, the Board develops and issues a Final Audit Report. The Final Audit Report outlines the Board’s audit activities, provides an evaluation of the company’s management system and programs identifies deficiencies and communicates compliance findings. The audit report follows the format of the Board’s published Audit Protocol. Once the Board issues the Final Audit Report, the company must submit and implement a Corrective Action Plan to address all Non-Compliant findings for Board approval. Final Audit Reports are published on the Board’s website. The audit results are integrated into NEB’s risk-informed lifecycle approach to compliance assurance.

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4.0 Background

Alliance operates approximately 1,600 km of pipeline in three Canadian provinces. These pipeline facilities include mainline and lateral compressor stations, mainline block valves and associated operational assets. All of these facilities are within the definition of a “pipeline” as included in the NEB Act. Alliance also has a considerable amount of infrastructure in the United States, which completes its North American system. Alliance’s system allows it to transport rich natural gas from the Western Canadian Sedimentary Basin and the Williston Basin to end-users in the United States Midwest and other downstream markets. In order for Alliance to operate its pipelines effectively, it has developed a management structure that reflects its safety and security management, and environmental obligations, as well as its corporate, national, and regional needs.

For Alliance facility information, refer to Appendix II of this report.

During audit planning, company staff indicated that Alliance operates its pipelines and facilities using a common management system and technical programs. In order to effectively evaluate compliance of such an expansive system within a reasonable timeframe, the Board chose to conduct individual, comprehensive audits of Alliance’s required technical programs and management system. This report documents one of five management system and program audits. The audits are titled:

• Alliance Safety Management Program Audit;
• Alliance Environmental Protection Program Audit;
• Alliance Emergency Management Program Audit;
• Alliance Third-Party Crossings Program Audit; and
• Alliance Public Awareness Program Audit.

Audit results confirmed that Alliance operates its facilities using a common organizational structure to implement a common governance management system that applies to all of its business and operational activities. Some findings are therefore similar in each audit and the individual audit reports reflect this.

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5.0 Audit Objectives and Scope

The objective of the audit was to determine the establishment and implementation of Alliance’s management system and the adequacy and effectiveness of its Crossings program. Alliance was audited against the requirements contained within the following:

• The National Energy Board Act;
• The National Energy Board Onshore Pipeline Regulations;
• The Canada Labour Code, Part II (CLC);
• The National Energy Board Pipeline Crossing Regulations Part I and Part II;
• The Safety and Health Committees and Representatives Regulations;
• Canadian Standards Association (CSA) Z662-11 – Oil and Gas Pipeline Systems; and
• Alliance’s policies, programs, practices and procedures.

This audit was conducted using the National Energy Board Onshore Pipeline Regulations (OPR) as amended on 21 April 2013. This amendment clarified the Board’s expectations for establishing and implementing a documented management system and Crossings program. Before issuing the amendment, the Board consulted and communicated with its regulated companies with respect to the new requirements; therefore, an implementation grace period was not given when the OPR was promulgated. As a result, when evaluating compliance, this audit did not consider any extra time Alliance may have needed to implement changes.

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6.0 Audit Process and Methodology

In undertaking this audit, the Board has applied its standard audit practice following its published protocols. The Board’s standard practice and audit activities include:

• Formal notification of the Board’s intent to audit by letter;
• Interactive planning processes with the company;
• Information gathering;
• Documentation and record review;
• Program presentations by company personnel and interviews with company personnel;
• Associated inspections and facility reviews;
• Close-out discussions and meetings;
• Developing and Issuing Draft Audit Report to Alliance;
• Developing, finalizing and issuing the Final Audit Report;
• Reviewing and approving any required Corrective Action Plans;
• Reviewing implementation of Corrective Action Plans; and
• Issuing closure letters.

These audit activities allow the company to demonstrate whether its management system and programs comply. Audits also allow the Board to evaluate the company with respect to: assuring compliance to regulatory requirements; and assuring appropriate safety, security and environmental outcomes as described in the Board’s expectations.

As noted, Alliance uses a common management system and Crossings program and at the time of the audit divided its Canadian assets into four operational regions: Grande Prairie, Whitecourt/Morinville, Kerrobert, and Regina. The Board therefore developed its audit plan to evaluate Alliance’s management system and Crossings program and to assure that it was appropriate to manage and applied to all of its regulated facilities regardless of location. To this end, the Board conducted interviews, inspections and documentation and record reviews in each region as well as the Calgary office. It is the Board’s expectation that any audit Non-Compliant findings made and corrective actions required by the Board must be applied across all of Alliance’s Board regulated systems.

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7.0 Audit Activities

The Board informed Alliance of its intent to audit its NEB regulated facilities in a letter dated 24 June 2014. Following the issuance of that letter, Board audit staff met with Alliance staff on a regular basis to arrange and coordinate this audit. The Board also provided Alliance with an information guidance document to help Alliance prepare for the audit as well as to provide access to documentation and records to demonstrate its compliance. Alliance established a digital access portal for Board staff to review documentation and records.

On 27 April 2015, an opening meeting was conducted with representatives from Alliance in Calgary, Alberta to confirm the Board’s audit objectives, scope and process. The opening meeting was followed by Calgary office interviews from 27 April to 1 May 2015, and various field level audit activities as described in the table below.

Crossings Program Audit Office and Field Activities

• Audit opening meeting (Calgary, AB) – 27 April 2015
• Calgary office interviews (Calgary, AB) – 27 April – 1 May
• Field verification activities:
  • Interviews – Grande Prairie, AB – 11 – 12 May 2015
  • Interviews – Morinville, AB – 13 – 14 May 2015
  • Interviews – Regina, SK – 25 – 28 May 2015
• Calgary office interviews (Calgary, AB) – 22 – 26 June 2015
• Audit pre-close-out meeting of information gaps (Calgary, AB) – 30 July – 6 August 2015
• Audit close-out meeting (Calgary, AB) – 30 September 2015

Throughout the audit, Board audit staff gave Alliance daily summaries with action items, where required.

From 30 July to 6 August 2015, the Board held an audit pre-close-out meeting with Alliance. At this meeting Board staff and Alliance staff discussed potential deficiencies identified during field activities and discussed additional information that could be of value to the Board prior to compiling its draft audit report. An audit close-out meeting was held on 30 September 2015 to provide Alliance with a description of the recommendations that staff would be bringing to the Board for decision.

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8.0 Management System Evaluation

The Crossings program activities are required to be formally managed within a documented and implemented management system. The Board notes that this program requires the development and implementation of a documented management system either directly subsumed within the management system and the applicable programs described in the OPR or as part of a documented Safety and Loss Management System required by clause 3.1 of CSA Z662 Oil and Gas Pipeline Systems.

The Board’s management system requirements are found in section 6 of the OPR and within the referenced CSA Z662 Oil and Gas Pipeline Systems clause 3.1 Safety and Loss Management System. The Board notes that the Crossings program is not specifically referenced within section 55 of the OPR and therefore is not subject to the same organizational requirements as other referenced programs.

The Board found that, while Alliance has demonstrated that it is in the process of applying its Operational Risk Management System to its Land, Right of Way and Corridor functions and has accounted for many of the processes described within the Board’s protocol and the legal requirements, it did not demonstrate that it has developed and implemented a documented management system that meets the Board’s requirements. Alliance did not provide evidence of an organized structure that was specifically designed, implemented and managed to meet the regulatory requirements. Further, the Board notes that some of the key management system activities were not designed appropriately or being undertaken as required. As an example, Alliance’s auditing practices were not designed in a manner that would require a full management system or compliance audit to be undertaken.

The Board found Alliance to be Non-Compliant with its requirements to develop, implement and maintain a documented management system. Alliance will need to develop and implement corrective actions to ensure establishment and implementation of a management system.

The Board notes that it is important to understand that the Board’s management system Non-Compliant finding reflects Alliance’s development and implementation of its management system. It does not necessarily reflect the lack of technical management activities being undertaken to ensure the safety of the public, workers or the environment.

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9.0 Program Summary

NEB-regulated companies must demonstrate a proactive commitment to continual improvement in safety, security, and environmental protection. Pipeline companies under the Board’s regulation are required to incorporate safety management programs into their day-to-day operations. These programs must include the tools, technologies and actions needed to ensure that workers are safe.

The Board found that Alliance has established and implemented a Crossings program to manage requests for permission from third parties to conduct excavation and construction work near its facilities. This program is comprised of the administrative function of managing the requests and ensuring that engineering reviews are conducted when required. The Crossings program also has a field component to conduct locates and supervise third party excavation and construction activities on the rights-of-way. Further, the Board found that Alliance’s Crossings program has been designed and implemented to reflect the requirements of the NEB Pipeline Crossings Regulations (PCR).

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10.0 Summary of Audit Findings

The Board conducted the audit following its published Audit Protocol, which identifies five Management System elements. These five elements are broken into 17 sub-elements. Each sub-element reflects several regulatory requirements. Companies must comply with 100 per cent of the regulatory requirements of each sub-element being assessed. If a company’s program is deficient in any regulatory requirement, the entire sub-element will be found non-compliant. The company will have to develop a corrective action plan to demonstrate to the Board that appropriate actions will be taken to achieve full compliance.

The following summary is a high-level overview of the Board’s audit findings for Alliance’s Crossings program based on information provided by Alliance during the audit.

Details of how each of the audited elements impacts the Crossings program and a full description of the Board’s assessment for each of its Management System sub-elements can be found in Appendix I of this report.

Element 1.0 – Policy and Commitment

Sub-element 1.1 – Leadership and Accountability

This sub-element of the audit requirements states that the company must appoint an Accountable Officer and notify the Board of the appointment.

Alliance had submitted a written notice to the NEB indicating that it had appointed an Accountable Officer. In its submission, Alliance confirmed that its Accountable Officer had authority over the human and financial resources required to meet the Board’s substantive expectations.

Based on the information provided by Alliance, the Board has not identified any non-compliance issues. The Board has therefore assessed this sub-element as Compliant.

Sub-element 1.2 – Policy and Commitment Statements

This sub-element of the audit requirements states that the company must have documented policies and goals to ensure the safety and security of the public, workers, and the pipeline and ensure protection of property and the environment. Further, as these policies and goals are to be used to establish and implement the management and programs, the Board requires that the policies and goals be explicit from the perspective of design, content and communication.

The Board found that Alliance has developed policies and policy statements to meet the requirement of OPR, section 6.3(1).

The Board found that Alliance has aligned its Crossing program with these policies.

Alliance did not demonstrate that it had a policy that was fully explicit on the internal reporting of hazards, potential hazards, incidents and near misses (in that there was no pointed reference to “potential hazards”). Furthermore, Alliance’s policy statement did not fully describe the conditions under which a person making a report will be granted immunity from disciplinary action (in that there was no explanation as to what constituted good-faith reporting).

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

Element 2.0 – Planning

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

This sub-element of the audit requirements states that the company must have an established, implemented and effective process for identifying and analyzing all hazards and potential hazards, assessing the degree of risk associated with the hazards, and implementing control measures to minimize or eliminate risk.

The Board found that Alliance has processes for identifying hazards that meet the Board’s requirements of established and implemented for the Crossings and Damage Prevention Programs.

The Board found that Alliance demonstrated that it has established and implemented a Crossing program that incorporates a process for the identification of hazards as well as a process to evaluate the risks related to requests for permission from third parties. The Board also found that Alliance has an established process to introduce and communicate the required controls related to the identified hazards.

Based on the Board’s evaluation of Alliances Crossings program against the requirements, the Board has not found any issues of Non-Compliance. The Board has determined that Alliance is Compliant with this sub-element.

Sub-element 2.2 – Legal Requirements

This sub-element of the audit requirements states that the company must have an established, implemented and effective process for identifying and monitoring compliance with all legal requirements applicable to the company. The company must also maintain a list of the legal requirements that apply to it.

The Board found that Alliance demonstrated that it was tracking, listing and communicating some of its legal requirements.

The Board found that Alliance had developed and implemented practices to communicate the legal requirements internally and with third parties. Alliance did demonstrate that it had effective methods for communicating new or revised legal requirements to third-parties through its Public Awareness program.

The Board also found that Alliance’s methods to monitor its legal requirements and compliance to them did not meet the Board’s requirements.

The Board found that Alliance’s legal list was not kept at the level of specificity required to enable the company to ensure and monitor its compliance with the legal requirements.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

Sub-element 2.3 – Goals, Objectives and Targets

This sub-element of the audit requirements states that the company must have an established, implemented and effective process for developing and setting goals, objectives and specific targets for the risks and hazards associated with the company’s facilities and activities. The company must also have established policies and goals for the prevention of ruptures, liquid and gas releases, fatalities and injuries as required by OPR, section 6.3(1)(b).

The Board found that Alliance has developed and measures targets related to meeting operational service standards for its Crossing program.

The Board also found that Alliance has defined an objective related to the safety of third parties working in proximity to its pipeline.

The Board found that Alliance has developed goals for the prevention of ruptures, fatalities and injuries but has not developed goals for the response to incidents and emergency situations. The Board also found that Alliance goals for the prevention of liquid and gas releases is limited to its pipeline right-of-way and does not include its above ground facilities.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

Sub-element 2.4 – Organizational Structure, Roles and Responsibilities

This sub-element of the audit requirements states that the company must have a documented organizational structure that enables it to meet the requirements of its management system. The company must also complete an annual documented evaluation to demonstrate that there is adequate human resourcing to meet these obligations.

The Board found that Alliance had a documented organizational structure and communicates the roles, responsibilities and authorities of the officers and employees at all levels of the company.

The Board found that Alliance had established and implemented several mechanisms for reviewing its Crossings program workforce needs. The Board did not observe any resourcing issues during this audit.

The Board also found that Alliance’s evaluation of need did not specifically account for all staff with Crossings program responsibilities and, therefore, did not demonstrate that the human resources allocated to establishing, implementing and maintaining its management system and meeting its requirements are sufficient.

Based on the Board’s evaluation of Alliance’s Crossing program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

Element 3.0 – Implementation

Sub-element 3.1 – Operational Control-Normal Operations

This sub-element of the audit requirements states that the company must have an established, implemented and effective process for developing and implementing corrective, mitigative, preventive and protective controls for the hazards and risks identified in Elements 2.0 and 3.0.

The Board found that the Crossings program has incorporated the analysis of the hazards and risks associated with third party crossing applications within its program processes. In addition to the procedural controls introduced through the Crossings program, Alliance’s LRCM group has developed and implemented various programs as controls to protect its facilities from potential damage that complement and support the Crossings program.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Compliant with this sub-element.

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

This sub-element of the audit requirements states that the company must establish and maintain plans to identify the potential for upset or abnormal operating conditions, accidental releases, incidents and emergency situations. This sub-element also included requirements for companies to establish and implement a process for developing contingency plans for abnormal events that may occur during construction, operation, maintenance, abandonment or emergency situations.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Compliant with this sub-element.

Sub-element 3.3 – Management of Change

This sub-element of the audit requirements states that the company must have an established, implemented and effective process for identifying and managing any change that could affect safety, security or protection of the environment.

The Board found that Alliance demonstrated that it had established and implemented a number of management of change processes, procedures and practices to document and manage change. However, these processes, practices and procedures function independently of one another and thus are not systematic.

The Board also found that Alliance’s current management of changes activities do not account for changes to the company’s organizational structure as required by the Board.

Based on the Board’s evaluation of Alliance’s Crossing program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

Sub-element 3.4 – Training, Competence and Evaluation

This sub-element of the audit requirements states that the company must have an established, implemented and effective process for developing competency requirements and training programs for its employees and contractors. These competency requirements and training programs must enable employees and contractors to perform their duties in a manner that is safe, ensures the security of the pipeline, and protects the environment.

The Board found that Alliance has an established and implemented process for evaluating the competency with annual evaluations of performance of those employee-partners who conduct locates.

The Board also found that Alliance demonstrated that it manages training records as it pertains to the Crossings program.

The Board has found that Alliance has not established and implemented a process for developing competencies and training programs.

Based on the Board’s evaluation of Alliance’s Crossing program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

Sub-element 3.5 – Communication

This sub-element of the audit requirements states that the company must have an established, implemented and effective process for internally and externally communicating safety, security and environmental protection information.

The Board found that, at the Department level, Alliance demonstrated that it has a documented communication plan that supports the effective implementation and operation of the safety and loss management system.

The Board found that Alliance had established external communication practices applicable to its Crossings program that identified the appropriate stakeholders and developed messages relating to the maintenance of the safety and security of the pipeline and the protection of the environment while working around its pipeline.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Compliant with this sub-element.

Sub-element 3.6 – Documentation and Document Control

This sub-element of the audit requirements states that the company must have an established, implemented and effective process for identifying and managing the documents required to meet the company’s obligations for conducting activities in a manner that ensures the safety and security of the public, company employees and the pipeline, and that protects property and the environment.

The Board found that Alliance had established and implemented a Crossings program process for preparing, reviewing, revising and controlling its documents. However, this process does not include defined revision schedules for its documents.

The Board also found that Alliance had not established and implemented a Crossings program process for identifying the documents required for the company to meet its obligations under OPR section 6.

The Board found that Alliance has developed documents that would be typically expected for a company of its size and to the scope, nature and complexity of its activities.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

Element 4.0 – Checking and Corrective Action

Sub-element 4.1 – Inspection, Measurement and Monitoring

This sub-element of the audit requirements states that the company must establish and implement an effective process for inspecting and monitoring its activities and facilities. This is so that the company can evaluate the adequacy and effectiveness of the protection programs and take corrective and preventive actions if deficiencies are identified.

The Board found that Alliance conducted inspections of third party activities in accordance with the requirements of the PCR, Part II.

The Board found that Alliance was not conducting inspections to verify compliance to its legal requirements.

The Board also found that Alliance had not developed a surveillance and monitoring program that meets the requirement of OPR section 39.

The Board also found that Alliance did not demonstrate the effectiveness of the right of way patrol and other inspection practices based on reporting practice. The Board determined that Alliance did not have effective aerial patrol procedures implemented for the reporting of potentially unauthorized activity on its ROW. Steps were taken to address at the time of the audit that will be in place ahead of the corrective action plan implementation.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

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

This sub-element of the audit requirements states that the company must establish and implement an effective process for reporting hazards, potential hazards, incidents and near-misses, and for taking corrective and preventive actions to address them.

This includes investigating if the hazards, potential hazards, incidents and near-misses have or could have resulted in the safety and security of the public, employees and the pipeline, and protection of property and the environment. This sub-element also requires a company to have an established, maintained and effective data management system for monitoring and analyzing the trends in hazards, incidents and near-misses.

The Board found that Alliance had established and was maintaining a database for tracking unauthorized activities and monitoring and analyzing the trends in its hazards, incidents, and near-misses for the Crossings program.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Compliant with this sub-element.

Sub-element 4.3 – Internal Audit

This sub-element of the audit requirements states that a company must establish and implement an 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 Board found that Alliance had not established or implemented a quality assurance program that meets the Board’s requirements.

Although it had conducted an audit of its Crossings program, the Board found that the program had not been audited as per the Board’s requirements.

The Board also found that Alliance had not developed processes for conducting regular audits that meet the Board’s requirements.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

Sub-element 4.4 – Records Management

This sub-element states that a company must establish and implement an effective process for generating, retaining, and maintaining records that document the implementation of the management system and its protection programs.

The Board found that Alliance had implemented consistent records management practices to document the implementation of its Crossings program.

The Board also found that Alliance has not established and implemented a Crossings program process that meets the OPR requirements.

Based on the Board’s evaluation of Alliance’s Crossings program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

Element 5.0 – Management Review

Sub-element 5.1 – Management Review

This sub-element states that a company must establish and implement an 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. This sub-element also requires a company to complete an annual report for the previous calendar year, signed by the accountable officer, describing the performance of the company’s management system in meeting its obligations.

The Board found that Alliance had developed processes for and undertaken activities relating to its Management Review responsibilities.

The Board also found that Alliance’s processes did not meet all of the requirements outlined in the OPR.

The Board also found that some of the Non-Compliant findings in this audit are related to sub-elements where Alliance’s Senior Management has responsibilities to ensure that management direction, oversight and formal monitoring are occurring.

Based on the Board’s evaluation of Alliance’s management system and Crossings program against the requirements, the Board has determined that Alliance is Non-Compliant with this sub-element. Alliance will have to develop corrective actions to address the described deficiencies.

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11.0 Conclusions

Companies regulated by the NEB must demonstrate a proactive commitment to continual improvement in safety, security and environmental protection. Pipeline companies under the Board’s regulation must establish and implement effective management systems in their day-to-day operations. This includes the tools, technologies and actions needed to ensure the public, workers and the environment are safe.

The Board has made a significant number of Non-Compliant findings. The Board’s analysis of these findings indicates that most of the non-compliances relate to the establishment and implementation of the management system processes and consequently its Safety and Loss Management System. The majority of the Non-Compliant findings fall into two categories:

• lack of integration of its Crossings program into the overall operational oversight management system processes; and
• lack of implementation of management system sub-elements consistent with the Board’s expectations.

In reviewing the results of Alliance’s Crossings program audit the Board notes that Alliance did not demonstrate it had developed and implemented a management system that directly applies to this program. Further, the Board notes that the requirements to have a documented, implemented and maintained management system are not new as the Safety and Loss Management System requirements have been included in CSA Z662 for a number of years and pre-date the OPR requirements. In addition to the lack of management system implementation, Alliance did not demonstrate that its Crossings program had been the subject of an appropriate audit as required by the Board.

The Board found that, regardless of the lack of a compliant management system, Alliance had developed and implemented a Crossings program that was addressing the majority and most significant of its hazards and the majority of its regulatory requirements. The Board found that Alliance has established and implemented a Crossings program that provides safety information and timely assistance to third parties who excavate and construct near its pipelines.

The Board has determined that no enforcement actions are immediately required to address these non-compliant findings. Upon receipt of the Final Audit Report, Alliance must develop a corrective action plan describing its proposed methods to resolve the non-compliances identified and the timeline in which corrective actions will be completed. Alliance is required to submit its corrective action plan for Board approval within 30 days of the Final Audit Report being issued. The Board will make its Final Audit Report and Alliance’s approved corrective action plan public on the Board’s website.

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

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