Trans Mountain Pipeline ULC – Pre-Construction Compliance Audit Report – OF-Surv-OpAud-T260-2016-2017 0101

Topic: Integration within the Management System

Regulatory Requirement: OPR s. 6.1: The company shall establish, implement and maintain a management system that (a) is systematic, explicit, comprehensive and proactive; (b) integrates the company’s operational activities and technical systems with its management of human and financial resources to meet its obligations under section 6;

Can the company demonstrate they have integrated the pipeline construction project’s safety and environmental protection considerations into their management system?

NC

According to the Integrated Safety and Lost Management System, dated October 2016, “The Vice President, Trans Mountain Expansion Project is responsible for the implementation of the ISLMS within the Trans Mountain Expansion Project.” As stated in TMPU’s Major Projects Management Plan (MPMP) “The Major Projects Program, is one of the management programs within the ISLMS.” The Board noted that the MPMP document is dated 15 May 2017.

The MPMP document states “KMC is committed to the development, implementation, and maintenance of an Integrated Safety and Loss Management System (ISLMS) that addresses all aspects of the pipeline lifecycle to protect the safety and security of people, the environment and KMC’s business assets.” The document goes on to say the following “The Major Projects Management Program is responsible for the technical development, design, construction, and commissioning of a portfolio of growth related pipeline projects, facilities projects, and integrated projects that include both pipelines and facilities.”

The Board noted that this demonstrates how construction activities are to be integrated into the MPMP and as a result part of the TMPU management system.

The MPMP document states “(the Plan) is the governing document for the Major Projects Program. The Plan outlines the key components of the program and describes how the standards, procedures and practices that the program utilizes will be applied to comply with ISLMS requirements.” The MPMP document explains how a major project would interact with existing ISLMS standards, procedures, frameworks and programs. Some examples of these from the MPMP document would include the following:

• Hazard and Risk Management;
• Legal Requirements;
• Goals, Objectives, Targets, and Performance Measures; and
• Training, Competency and Evaluation.

The Board was informed during interviews that TMPU Intends to develop a Project Management Plan to incorporate management system elements into the Project. However this was not available at the time of the audit.

While the Project is using pieces of the TMPU management system, such as the ISLMS Legal Requirements Standard, TMPU was unable to demonstrate to the Board how the Project has been fully integrated into the their management system in a manner that meets the requirements of OPR.

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.1(a) and (b) at the time of the audit.

Regulatory Requirement: OPR s. 6.3 (1): The company shall establish documented policies and goals for meeting its obligations under section 6, including (a) 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;

Does the company have a policy for the internal reporting of hazards and has it been provided to its employees and contractors?

NC

The Board was advised through interviews and verified through document review that TMPU intends to use and follow the KMC Safety and Loss Management Policy for the internal reporting of hazards, potential hazards, incidents and near-misses.

However, this policy does not meet the requirements of the OPR. The KMC policy states that “immunity from disciplinary action is granted for persons who in good faith internally report hazards, potential hazards, accidents and near misses”. The issue of concern is the term “good faith”, which is not clearly understandable to workers as required by the OPR s. 6.3(1).

The Board found TMPU to be non-compliant with the requirements of the OPR s. 6.3(1) at the time of the audit.

Topic: Organizational Structure, Roles and Responsibilities

Regulatory Requirement – OPR 6.4: The company must have a documented organizational structure that enables it to: (a) meet the requirements of the management system and meet its obligations under section 6 (of the OPR); (b) determine and communicate the roles, responsibilities and authority of the officers and employees at all levels of the company;

Additional applicable requirements:

• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clauses 3.1.2 3(b),(c)

Has the company created an organizational structure to provide effective oversight of the pipeline construction project and to meet the requirements of the management system and meet its obligations under section 6 (of the OPR)?

NC

The Board found that TMPU has not yet created an org structure for the TMEX Project which meets the requirements of the OPR.

In accordance with the KMC Major Projects Management Plan Section 7.1.6, “the project specific organizational structure and roles and responsibilities are to be established within a Project Execution Plan (PEP) or functional area sub-plan”, neither of which were available at the time of the audit.

The Board found TMPU to be non-compliant with the requirements of the OPR s. 6.4 at the time of the audit.

Has the company established a process to ensure field staff with authority on the construction spread is aware of legal requirements so they can take appropriate action if issues arise?

NA

The Board was unable to verify this due to the fact that TMPU stated that the development of the organizational structure for the construction management and inspection organization will be directed by Trans Mountain, in consultation with the construction management and inspection contractors and will include the determination of the required number and types of positions as well as the establishment of the roles, responsibilities and competencies for each position. This had not been completed at the time of the audit.

Based on the scope of the audit and the Project stage, the Board was unable to assess this item as compliant or non-compliant at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Has the company established a process to manage multiple contractors over multiple construction spreads for both normal and abnormal construction conditions?

NA

The Board was unable to verify that the company has established a process to manage multiple contractors over multiple spreads. TMPU advised the Board that the development of the organizational structure for the construction management and inspection organization will be directed by Trans Mountain, in consultation with the construction management and inspection contractors and will include the determination of the required number and types of positions as well as the establishment of the roles, responsibilities and competencies for each position, but this had not been completed at the time of the audit. Until the organizational structure is created it will not be possible to assess the adequacy of the organization to manage multiple contractors over multiple construction spreads for both normal and abnormal conditions.

Based on the scope of the audit and the Project stage, the Board was unable to assess this item as compliant or non-compliant at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Has the company established a process to ensure the workload and geographic area of responsibility assigned to employees and inspectors are manageable under normal operating conditions and a contingency plan established to deal with abnormal conditions?

NA

The Board was unable to verify this due to the fact that TMPU advised the Board that the development of the organizational structure for the construction management and inspection organization will be directed by Trans Mountain, in consultation with the construction management and inspection contractors and will include the determination of the required number and types of positions as well as the establishment of the roles, responsibilities and competencies for each position.

This had not been completed at the time of the audit. Until the organizational structure is created it will not be possible to assess if the workload and geographic area of responsibility assigned to employees and inspectors are manageable or if contingency plans are required.

Based on the scope of the audit and the Project stage, the Board was unable to assess this item as compliant or non-compliant at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Regulatory Requirement – OPR 18(1)(d): The company shall authorize a person to halt a construction activity in circumstances where, in the person’s judgement, the construction activity is not being conducted in accordance with the manual developed under section 20 or is creating a hazard to anyone at the construction site.

Has the company designated an authorized person to halt a construction activity in circumstances where, in the person’s judgement, the construction activity is not being conducted in accordance with the company’s construction safety manual or is creating a hazard to anyone at the construction site?

C

The Board was advised that four senior people on the Project Management Team have been authorized to halt construction along an entire spread. The Board also noted in the Project HSMP Appendix A, Section 38 that it indicates that anyone has the authority to halt work on their particular section of pipeline if they encounter unsafe practices or issues with the potential to cause environmental harm.

Based on the scope of the audit, the Board did not identify any issues of non-compliance for this item at the time of the audit.

Topic: Competency, Training and Evaluation

Regulatory Requirement – OPR s. 6.5(1)(j): establish and implement a 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;

Additional applicable requirements:

• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clauses 3.1.2 (b),(c)
• Canada Labour Code Part II, Sections 124, 125. (1)(q),(z)

Has the company established an inventory of jobs, occupations, tasks and activities for the construction project and established a process that defines and aligns the required skills, knowledge and training for each?

NA

The Board was informed during interviews and the Board verified through document review of the CEP that TMPU intends to rely on the construction management and inspection contractor to prepare an organizational structure to manage and oversee the work of the construction contractors. This will include defining the roles, responsibilities and competencies for the technical oversight positions, including inspectors and submit their proposed structure to the Project management team for review and approval. However the construction management and inspection contractor had not been hired at the time of the audit. Therefore, the organizational structure had not yet been developed for the Project and corresponding competencies, skills, knowledge and training requirements had not yet been determined.

Based on the scope of the audit and the Project stage, the Board was unable to assess this item as compliant or non-compliant at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Regulatory Requirement – OPR s. 6.5(1)(k): establish and implement a 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.

Additional applicable requirements:

• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clauses 3.1.2 (b),(c)
• Canada Labour Code Part II, Sections 124, 125. (1)(s),(z)

Has the company established a process for contractor selection to ensure they select and retain the services of contractors with safe practices?

C

The Board reviewed TMPU’s Quality Management Plan, the TMEP Procurement Management Plan, and the Kinder Morgan Corporate Bidding Policy. The Board verified through document review that TMPU has a contractor selection process, which included an assessment of financial stability, capability of performing the work or supplying the materials, past performance, rating in ISNetworld®, technical expertise, safety performance, and others. ISNetworld® is a contractor management company that manages the safety compliance for many oil & gas companies globally. ISNetworld® collects safety, procurement, quality and regulatory information from contractors and suppliers and verifies its accuracy and reports on its results. TMPU provided the Board with the RFP used to retain contractor services for work at the Edmonton Terminal as an example of the process. The document explained how TMPU reviewed contractor RFPs and the assessment matrix. Records associated with the process used to retain contractor services.

Based on the scope of the audit, the Board did not identify any issues of non-compliance for this item at the time of the audit.

Has the company established a training program to ensure employees are aware of the identified hazards and controls and knowledgeable of the process to identify and report hazards and incidents?

NA

The Board was advised during interviews that TMPU intends to provide orientation training to incorporate Project-related health and safety, security, environmental, indigenous and cultural training. Environment and safety training will have several different tiers of training, with the training becoming more focussed for supervisor and management positions. However, the training materials had not yet been completed at the time of the audit.

Based on the scope of the audit and the Project stage, the Board was unable to assess this item as compliant or non-compliant at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Has the company established a process to assess and evaluate worker competencies?

NA

TMPU informed the Board during interviews that it will be directly contracting the services of general construction contractors for the construction of the pipeline and facilities. Part of the general contractor competency evaluation process will be carried out using ISNetworld®. TMPU explained that the construction management and inspection contractor will play a role in evaluating the qualifications and competencies of the general construction contractors’ personnel and inspection contractors brought on to the Project.

The Board was advised during interviews and the Board verified through document review that the Project will be using the CCAP which is an existing set of processes for verifying that contractors conducting work on behalf of TMPU are qualified and competent to perform their duties. The CCAP establishes the systems and requirements to ensure that contractors conducting their work “are qualified and perform their assigned tasks in a manner that is safe, ensures the security of the pipeline, and protects the environment”.

As part of the CCAP process, the initial qualification and competency verification begins when contractors provide documentation as specified in ISNetworld®.

Once this stage has been successfully achieved, the Project team will apply the CCAP to the roles and positions identified by the construction management and inspection contractor, including construction contractors.

The Board was advised that field verification checks will be carried out by a qualified Project representative to ensure the general construction contractors are demonstrating competent performance in the execution of their work.

However, given that the construction management and inspection contractor had not been hired at the time of the audit, the Board was unable to assess this item as compliant or non-compliant at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Topic: Hazard Identification, Risk Assessment and Control

Regulatory Requirement – OPR s. 6.5(1)(c): establish and implement a process for identifying all hazards and potential hazards;

Has the company identified hazards and potential hazards related to the TMEP pipeline construction project?

NC

The Board was provided with TMPU’s ‘Unified Hazard Listing and Risk Register for its existing operational facilities. However, these documents are not specific to the Project and don’t contain Project specific hazards and risks. It was not deemed to be sufficiently detailed for construction related activities to meet the requirements of this protocol item.

The Project management team advised the Board during interviews that they intend to provide the construction contractors with a basic list of hazards and direct each contractor to review and update the list with the specific hazards applicable to their construction spread. The Project management team will then combine the individual construction contractor lists into a Project-specific unified hazard inventory. However, at the time of the audit, this had not been completed.

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(c) at the time of the audit.

Regulatory Requirement – OPR s. 6.5(1)(d): establish and maintain an inventory of the identified hazards and potential hazards;

Does the company have an inventory of hazards and potential hazards related to the pipeline construction project?

NC

At the time of the audit TMPU had not yet developed an inventory of all hazards and potential hazards specific for the Project.

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(d) at the time of the audit.

Regulatory Requirement – OPR s. 6.5(1)(e): establish and implement a process for evaluating and managing risks associated with the identified hazards including the risks related to normal and abnormal operating conditions;

Additional applicable requirements:

• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clauses 3.1.2 (f),(h)(vii)

Has the company assessed the risks associated with the identified hazards?

NC

As noted in protocol question #12 above, TMPU does not yet have a compliant hazard inventory for the Project. Instead, the Board was provided with TMPU’s ‘Unified Hazard Listing and Risk Register’ which included risk assessments for its existing operational activities, however these risk assessments were not done not specifically for the Project.

The Board was also provided with a copy of the ‘TMEP Project Internal Risk Register’ which was used to evaluate the risks associated with the overall Project development but it was not granular enough to show the individual risks associated with the construction activities. At the time of the audit TMPU had not assessed the risks associated with the identified hazards and potential hazards related to the Project.

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(e) at the time of the audit.

Has the company established a process for its construction activities where performance measures, hazards, risk and incident investigation results and lessons learned receive management review?

C

TMPU provided the Board with the ISLMS Management Review Procedure document as the process that it intends to follow for the management review of Project. The Board reviewed the ISLMS Management Review Procedure and identified that it specifically identifies the VP TMEP as part of the Quality Assurance Management Review (QAMR) process, which in turn reports directly to the AO. The QAMR process includes a review of: goals, objectives and targets; data from hazard analysis and risk assessments; trends in hazards, potential hazards, incidents and near-misses; lessons learned and corrective and preventative actions from incident investigations; results from audits and assessments; results from inspections and monitoring activities; year-end safety and loss management results and proposed performance measures and targets for the coming year; and others.

Based on the scope of the Board did not identify any compliance issues for this item at the time of the audit.

Has the company established a process that ensures that hazard assessments are reviewed and updated as required when there is a change in work scope or work conditions such as changes in lighting, changes in crew members, temperature, or encroaching work activities?

C

The Board was advised during interviews and the Board verified through document review that TMPU will require contractors to carry out risk reviews on a regular basis in accordance with the requirements of Project HSMP which states, “It is expected that Contractors will conduct their own, formal Risk Assessments to be used in conjunction with the following TMEP Risk Assessment to ensure that PSSP’s properly identify and plan for mitigation of the identified risks. Risk reviews must be completed on a regular basis by the Contractor.”

The Project management team indicated to the Board that daily tailgate meetings will be used to update job hazard analysis as work scope or work conditions require it.

Based on the scope of the Board did not identify any compliance issues with this requirement at the time of the audit.

Regulatory requirement – OPR s. 6.5(1)(f): establish and implement a process for developing and implementing controls to prevent, manage and mitigate the identified hazards and the risks and for communicating those controls to anyone who is exposed to the risks;

Additional applicable requirements:

• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clause 3.1.2 (f)

Has the company established a process for developing and implementing controls to prevent, manage and mitigate the identified hazards and the risks?

NC

The Project HSMP states, “A RA, indicating risks, their potential to occur and the potential consequences, for the TMEP can be found in Appendix B of this HSMP. Appendix B also contains the criteria used to construct the RA. The TMEP RA defines and rates the risks for the entire project in addition to identifying the actions required to control or mitigate the risks noted.” However, through document review the Board found that the HSMP Risk Assessment Process only provided several risks and controls, it was not reflective of the Project, and it does not include a process to develop controls.

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(f) at the time of the audit.

Regulatory requirement: OPR s. 19: A company shall, during the construction of a pipeline, take all reasonable steps to ensure that (a) the construction activities do not create a hazard to the public or the environment.

Has the company established a process to ensure construction activities do not create a hazard to the public or environment?

C

The Board noted that TMPU has developed a number of plans, manuals and programs to ensure construction activities do not create a hazard to the public or the environment. Some examples of these documents include: the Project HSMP; the various EPPs; the Navigation and Safety Plan; the Access Management Plan; the Traffic and Access Control Management Plan and the Geotechnical Field Changes Manual.

Based on the scope of the audit, the Board did not identify any compliance issues with this item at the time of the audit.

Regulatory Requirement: OPR s. 47.1: A company shall develop, implement and maintain a security management program that anticipates, prevents, manages and mitigates conditions that could adversely affect people, property or the environment.

Has the company established a security management program that anticipates, prevents, manages and mitigates conditions that could adversely affect people, property or the environment?

NA

This protocol question will be assessed by other NEB compliance verification activities.

Topic: Communications

Regulatory Requirement – OPR s. 6.5(1)(m): establish and implement a process for the internal and external communication of information related to safety, security and protection of the environment;

Additional applicable requirements:

• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clauses 3.1.2 3(d),(g)(v)
• Canada Labour Code Part II, Sections 124, 125. (1)(q),(s),(w)

Has the company established a two-way communication process for information exchange between company management and employees, contractors and consultants, stakeholders and land managers and the NEB?

NA

The Board verified through document review that the process for communicating with regulators is provided in the Project Compliance Management Plan.

TMPU informed the Board during interviews that it intends to develop a Project Internal Communication Plan based on the TMPU corporate ISLMS Internal Communication Standard. The Board was also advised that construction communication plans for communications between the Project management team and its contractors are under development. The Board was provided with a draft version of the Comprehensive Stakeholder Engagement and Communications Construction Execution Plan for communications with external stakeholders.

Based on the scope of the audit, the Board was unable to assess this item as compliant or non-compliant as the communication plans were under development at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Has the company established a process to communicate roles, responsibilities and authorities for worker safety and environmental protection to officers and employees and employees at all levels of the company and to others working on behalf of the company?

NA

As discussed in protocol item AP-TMPU-20, TMPU informed the Board during interviews that it intends to develop a Project Internal Communication Plan based on the ISLMS Internal Communication Standard. The Board was also advised that construction communication plans for communications between the Project and its contractors are under development.

TMPU informed the Board during interviews that the development of the organizational structure for the construction management and inspection organization will be directed by Trans Mountain, in consultation with the construction management and inspection contractors and will include the determination of the required number and types of positions as well as the establishment of the roles, responsibilities and competencies for each position.

This will include defining roles, responsibilities and competencies for the various construction management and inspection positions and submit their proposed structure to the Project management team for review and approval. As the construction management and inspection contractor had not yet been hired, the organizational structure was not complete at the time of the audit.

Until the organizational structure is fully developed it will not be possible to communicate roles, responsibilities and authorities for worker safety and environmental protection to officers and employees and employees at all levels of the company and to others working on behalf of the company.

Based on the scope of the audit and the Project stage, the Board was unable to assess this item as compliant or non-compliant at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Has the company established a process to communicate management-of-change related items such as changing regulatory requirements or the implementation of design changes or the implementation of corrective and preventive actions stemming from incident investigations?

NC

TMPU provided the Board with two distinct MOC processes. One is used for existing and ongoing operational activities and one specifically for the Project. The operational MOC process covers all existing operational changes to pipelines and facilities. OPR s. 6.5(1)(i) indicates that a company shall have a single process, not multiple processes.

As stated in the Project MOC document the “procedure shall be followed for any change to any aspect of the Trans Mountain Expansion Project (the Project). The MOC process applies irrespective of whether KMC, the Contractors, or subcontractors initiate the change, though the MOC process will be initiated and approved by KMC. Every change causing variation in cost, schedule, or regulatory approval process will be controlled through this MOC process.” The Board was advised that critical and important communication will be communicated utilizing the Project MOC Process, however, the

Board’s review of the Project MOC process did not identify procedures for managing critical and important communications.

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(i) at the time of the audit.

Has the company established a process to communicate corrective actions and learnings to ensure employees or persons working on behalf of the company are informed?

C

The Board verified through document review that TMPU intends to use the ISLMS Incident Reporting and Investigation Standard for the Project. This document explains the process by which feedback will be provided to workers on the causes and preventive and corrective actions associated with incidents. In the section titled, Incident Investigation Feedback to Employees it states, “Causes and corrective and preventative actions associated with incidents will be provided to affected workers as well as to other business units who may be similarly affected.

1. The KMC Incident Investigation Committee will create an Incident Corrective and Preventative Action Summary related to formal investigation to be communicated to all operational supervisors and affected areas biannually.
2. Each ISLMS Program will provide a summary of lessons learned as the result of investigations, as appropriate to all employees that could benefit from and apply this information to prevent similar incidents from occurring.”

TMPU committed to the development of a Project Management Plan to integrate the Project into the ISLMS. With TMPU’s commitment this standard will work for the Project. The Board is of the view that TMPU will meet its commitment and it will be creating a Project Management Plan specific to this Project.

Based on the scope of the audit, the Board did not identify any compliance issues with this item at the time of the audit.

Has the company established a process to inform those who may have access to the construction site, but who are not involved in the construction of the pipeline of the practices and procedure that are to be followed for their safety?

NA

TMPU informed the Board during interviews that there will be a contractor site orientation training requirement for site visitors, and they be escorted while onsite. However, the training material for visitor orientation was under development at the time of the audit and could not be reviewed by the Board to verify the adequacy of the process.

Based on the scope of the audit and the Project stage, the Board was unable to assess this item as compliant or non-compliant at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Has the company established a process to make employees and others who work on behalf of the company aware of what constitutes a reportable incident to be reported internally and to the Board, and they have established a process to ensure these reports are submitted?

NA

The Board noted that both the Project HSMP document and the EPPs state what is reportable to the Board. However, the training materials that will be used to communicate these requirements to all employees and others working on behalf of TMPU were under development at the time of the audit and could not be reviewed by the Board to verify what was in the training materials.

Based on the scope of the audit and the Project stage, the Board was unable to assess this item as compliant or non-compliant at the time of the audit. The Board will monitor the implementation and effectiveness of this item through targeted compliance verification activities as a part of its on-going regulatory mandate.

Regulatory Requirement – OPR s. 18(1): If the company contracts for the provision of services in respect of the construction of a pipeline, the company shall (a) inform the contractor of all special conditions associated with the construction; (b) inform the contractor of all special safety practices and procedures necessitated by the conditions or features specific to the construction; (b.1) inform the contractor of the contractor’s responsibilities referred to in paragraph 6.5(1)(l) (of the OPR);

Additional applicable requirements:

• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clause 3.1.2 (d)

Has the company established a process to communicate all special conditions associated with the construction project; all special safety practices and procedures necessitated by the conditions or features specific to the construction; and inform the contractor of the contractor’s responsibilities referred to in paragraph 6.5(1)(l) of the OPR?

NC

The Board was advised during interviews that TMPU is in the process of developing various levels of training for workers that will be used to convey safety and environmental information. However, this was not provided to the Board at the time of the audit.

The Board was advised during interviews that the RFPs associated with retaining the services of contractors will be another method used to relay information to the contractors to make them aware of special conditions associated with the Project. Specific requirements that the potential contractors will be responsible for are explained in the RFP documents so contractors are aware of what they will be required to do if they win the contract.

The Board reviewed the Project Procurement Execution Plan and the Project RFP & Contracts Award Procedure. The Board found that while the two documents indicated that bidding packages would be assembled for contractors to bid on, TMPU was unable to demonstrate that special conditions are communicated to potential contractors in these documents. Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(l) at the time of the audit.

Regulatory Requirement – OPR s. 34: A company shall take all reasonable steps to inform all persons who may be associated with an emergency response activity on the pipeline of the practices and procedures to be followed and make available to them the relevant information that is consistent with that which is specified in the emergency procedures manual.

Additional applicable requirements:

• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clause 3.1.2 3(d)
• Canada Labour Code Part II, Sections 124, 125(1)(q),125(1)(s)

Has the company established a process to communicate its emergency response practices and procedures to everyone who may be impacted by the construction activities?

C

The Board noted that the TMPU draft Project specific Emergency Response Manual describes how emergency response procedures will be communicated to third party emergency responders and the TMPU Operations Team. It also describes how the construction contractors are to communicate their ERPs to adjacent contractors and advise them whenever there are changes.

The draft ERP defines the minimum requirements which must be met by contractors in the development of site-specific ERPs (SSERPs), which are to be submitted to the Project management team for review and approval. The draft document details the division of responsibility between TMPU and contractors for various types of emergencies.

The draft ERP requires contractors to ensure local authorities and other contractors working adjacent are provided with the SSERP.

“Local Emergency Response authorities are to be engaged prior to the start of work to ensure effective coordination and communication with local fire, health and ambulance personnel and resources.”

“Contractors are expected, prior to the start of work, to meet with relevant, local (Municipal, Regional, District, Provincial) Emergency Response Authorities. Information from these authorities, including procedures and communications protocols in the event of an emergency, must be considered in the Contractor’s development of their SSERP.”

“Work maps will be made available to local emergency responders as required during a review of their SSERP with local first responders and health care officials.”

The document requires contractors to communicate any changes to their SSERPs to other contractors and sub-contractors on their scope of the Project.

According to the Project specific Condition, the ERP was due to be filed with the Board 2 months prior to the start of construction as part of Condition compliance. The Board reviewed the ERP from the perspective of this audit only, not for condition compliance reasons. As this part of the audit process was completed very close to the Condition being filed, the Board is of the view that it addressed the requirements of the audit.

Based on the scope of the audit, the Board did not identify any compliance issues with this item at the time of the audit.

Has the company established a process to test its emergency response communication plan?

C

The Board noted that in the draft ERP that TMPU indicated it will conduct emergency response drills including the ERP communications plan at least twice per year with no more than six months between drills.

According to the Project specific Condition, the ERP was due to be filed with the Board two months prior to the start of construction as part of Condition compliance. The Board reviewed the ERP from the perspective of this audit only, not for condition compliance reasons. As this part of the audit process was completed very close to the Condition being filed, the Board is of the view that it addressed the requirements of the audit.

Based on the scope of the audit, the Board did not identify any compliance issues with this item at the time of the audit.

Has the company identified all areas of the pipeline that may have limited or intermittent cell phone coverage, and has established a means to ensure alternate means of communication are made available?

C

TMPU informed the Board during interviews that TMPU has identified several areas along the Project right of way where cell phone communications are of poor quality. TMPU informed the Board they will have satellite phones and two-way radios and other back-up communications alternatives in place. All contractors will be required to have alternative means of communication as well.

Based on the scope of the audit, the Board did not identify any compliance issues with this item at the time of the audit.

Topic: Inspection, Measurement and Monitoring

Regulatory Requirement – OPR s. 6.5(1)(u): establish and implement a process for inspecting and monitoring the company’s activities and facilities to evaluate the adequacy and effectiveness of the programs referred to in section 55 (of the OPR), and for taking corrective and preventive actions if deficiencies are identified;

Additional applicable requirements:

• OPR 6.5(1)(p): establish and implement a process for generating, retaining and maintaining records that document the implementation of the management system and the programs referred to in section 55 (of the OPR) and for providing access to those who require them in the course of their duties;
• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clauses 3.1.2 (h)(iv),(v),(vi);
• Canada Labour Code Part II, Sections 124, 125(1)(t)

Has the company identified what monitoring activities are to be carried out; the method and frequency; and the records to be kept?

NC

The Board was informed during interviews and the Board verified through document review that TMPU would be relying on the construction management and inspection contractor to determine monitoring requirements, but as of the date of the audit, the services of the construction management and inspection contractor had not yet been retained. In accordance with the requirements of the MPMP, “Each project or applicable functional area within a project will develop and update periodically, as necessary, a Monitoring Plan, which outlines the rationale, timing, frequency, and accompanying methodology for the execution of monitoring activities performed by the project or functional area.”

The Board is concerned that at this stage of the Project there is no process to identify what monitoring activities are to be carried out and at what frequency. Pre-construction Project work, that may involve physical activities, is still taking place regardless of whether or not a construction management and inspection contractor is in place.

The Board verified through document review that records are to be kept in accordance with the requirements of the MPMP which states that major projects are to follow the ISLMS records management standard. Based on the scope of the audit, the Board did not identify any compliance issues with this part of the protocol requirement. Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(u) at the time of the audit.

Has the company established a process to ensure issues of concern found during monitoring activities are properly addressed in a timely manner?

NC

The Board was informed during interviews and the Board verified through document review that TMPU would be relying on the services of the construction management and inspection contractor to determine monitoring requirements for the Project. However, at the time of the audit the services of the construction management and inspection contractor had not yet been retained. Therefore, at the time of the audit, TMPU had not yet developed a process to ensure issues of concern found during monitoring activities are properly addressed in a timely manner.

The Board is concerned that at this stage of the Project there is no process to ensure that issues of concern are quickly and appropriately addressed. Pre-construction work, which may involve physical activities, is still taking place on the Project regardless of whether or not a construction management and inspection contractor is in place.

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(u) at the time of the audit.

Has the company established a process for handling deficiencies found during monitoring activities that require immediate attention?

NC

The Board was informed during interviews and the Board verified through document review that TMPU would be relying on the services of the construction management and inspection contractor to determine monitoring requirements for the Project. The Board would expect the monitoring plan to include the process for addressing deficiencies found during monitoring activities that require immediate attention. At the time of the audit TMPU had not yet developed a process for addressing deficiencies found during monitoring activities that require immediate attention.

The Board is concerned that at this stage of the Project there is no process to ensure that deficiencies identified during monitoring activities that require immediate attention can be corrected immediately. Pre-construction work is still taking place on the Project regardless of whether or not a construction management and inspection contractor is in place.Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(u) at the time of the audit.

Has the company established a process to ensure appropriate corrective and preventative actions are put in place and followed up on?

C

The Board was provided and reviewed the Project Compliance Management Plan sections on: Non-Compliance Correction; Continuous Improvement; and Non-Compliance Tracking and Documenting. These sections describe how the Project management team will rectify non-compliances found during inspection and monitoring activities. The Board was informed during interviews and the Board verified through document review that the responsibility for ensuring corrective and preventive actions stemming from issues found during inspections are implemented will be the responsibility of the Project management teams, TMPU’s, Senior Inspectors.

While the Board found TMPU non-compliant for the lack of a monitoring plan, the Board found that the Project does have a documented process for ensuring appropriate corrective and preventive actions are put in place and followed up on.

Based on the scope of the audit, the Board did not identify any compliance issues with this item at the time of the audit.

Regulatory Requirement – OPR s. 6.5(1)(g): A company shall, as part of its management system and the programs referred to in section 55, establish and implement a 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.

Additional applicable requirements:

• OPR 15: A company shall develop a quality assurance program for the purpose of ensuring that the pipe and component to be used in the pipeline meet the specifications referred to in section 14;
• National Energy Board Safety Advisory NEB SA 2016-01 – Pipeline Fittings Material Quality Assurance;
• National Energy Board Safety Advisory NEB SA 2016-01A – Pipeline Fittings Material Quality Assurance.

Assessed Area: The Process is Established

Has the company established a process to monitor construction activities for compliance to all legal requirements and applicable Board orders and conditions including the Board’s Safety Advisory NEB SA 2016-01 and NEB 2016-01A?

NC

The ISLMS Legal Requirements Standard is maintained by KMC Regulatory Services Team in a legal registry. The Board observed that TMPU has a list of legal and other requirements Conditions from Board Orders, Conditions specific to the Project approval, and Safety Advisories applicable to the Project, but did not include other applicable legal requirements such as referenced standards specifically included in the OPR.

The Board noted that the Project’s Chief Quality Lead position had not been staffed even though the Project is near the end of the pre-construction phase of work. In accordance with the Project’s Quality Management Plan, purchase order documents are to be reviewed by the VP TMEP, the Engineering Design Manager, Director of Quality and relevant SMEs. The Board noted that TMPU has purchased equipment and material for the Project without having the Senior Quality Assurance position staffed.

Regardless of the lack of staffing of the Chief Quality Lead, it was noted that required quality assurance activities were still being completed on an as needed basis. The Board verified through document review that TMPU had retained the services of a third-party engineering consultant witnessed and documented vendor equipment tests for four gate valves already purchased for the Project.

In addition, the Board was informed during interviews that TMPU had also retained the services of a third-party engineering firm to evaluate pipe manufacturing facilities and pipe coating facilities as a pre-construction activity and that TMPU had sent a representative to the pipe manufacturing and pipe coating facilities to conduct safety inspections. This process was verified by the Board through document review.

An additional issue relating to quality assurance was also noted during the audit. The Board noted that the pipe manufacturing companies and the vendors supplying the raw material (plate material) listed in the Pipe Purchase Agreement Contract are not listed in the Project’s Approved Manufacturer’s List, even though it is a requirement of the Project’s Quality Management Plan.

It was noted that TMPU’s Statement of Work for Vendor Quality Surveillance Services indicates that TMPU “will not assume any responsibility for the conformance of the work to codes and regulations.” The Board notes that the OPR’s quality assurance requirements are clear in that it is the regulated company’s responsibility to establish and implement the quality assurance program, not a third party vendor.

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 15 and s. 6.5(1)(g) at the time of the audit.

Topic: Management of Change

Regulatory Requirement – OPR s. 6.5(1)(i): establish and implement a process for identifying and managing any change that could affect safety, security or the protection of the environment including any new hazard or risk, any change in design, specification, standard or procedure and any change in the company’s organizational structure or the legal requirements applicable to the company;

Additional applicable requirements:

• National Standard of Canada, CAN/CSA-Z662-15, Oil and gas pipeline systems, Clause 3.1.2 (g)

Criteria Element 1: The company is to have a process to identify and manage any change that could affect safety, security or the protection of the environment including any new hazard or risk, any change in design, specification, standard or procedure and any change in the company’s organizational structure or the legal requirements applicable to the company.

Assessed Area: The process is established.

Has the company established a process to manage changes that occur during the pipeline construction project including design changes, regulatory changes and procedural changes?

NC

TMPU provided the Board with two distinct MOC processes. One is used for existing and ongoing operational activities and one specifically for the Project. OPR s. 6.5(1)(i) indicates that a company shall have a single process, not multiple processes.

The operational MOC process covers all operational changes to pipelines and facilities. As stated in the Project specific MOC document the “procedure shall be followed for any change to any aspect of the Trans Mountain Expansion Project (the Project).

The MOC process applies irrespective of whether KMC, the Contractors, or subcontractors initiate the change, though the MOC process will be initiated and approved by KMC. Every change causing variation in cost, schedule, or regulatory approval process will be controlled through this MOC process.” The OPR MOC requirements do not include variations in cost or schedule. However the OPR requirements do include an MOC that can manage changes during construction such as design changes, regulatory changes, and procedural changes. The Project specific MOC does not meet this requirement.

The Board could not determine how the Project specific MOC process and the operational MOC process will interact for changes that affect both TMPU ongoing operational activities and the Project itself. In addition, the Project MOC process does not describe how to manage any risk not specified by the process including any new risk, which is a requirement of OPR s. 6.5(1)(i).

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1)(i) at the time of the audit.

Topic: Legal Requirements

Regulatory Requirement: OPR s. 6.5(1)(g): establish and implement a 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; (h) establish and maintain a list of those legal requirements.

Criteria Element 1: The company is to have a process to identify and monitor legal requirements that relate to the project and have a list of those legal requirements including conditions for the project and have a process in place to demonstrate ongoing compliance.

Does the company have a concordance table or alternative in place to ensure it has incorporated compliance monitoring into how it oversees the project?

NC

The Board verified through document review that a list of legal requirements as defined by the ISLMS Legal Requirements Standard is maintained by KMC Regulatory Services Team in a legal registry. The Board reviewed KMC’s list of legal and other requirements and found it included Legal Requirements, Conditions from Board Orders, Conditions specific to the Project approval, and Safety Advisories applicable to the Project. However, the legal list did not include all other applicable legal requirements such as referenced standards specifically included in the OPR.

Based on the scope of the audit, the Board found TMPU to be non-compliant with the requirement of the OPR s. 6.5(1) (h) at the time of the audit.

Has compliance monitoring been integrated into the oversight model to ensure ongoing communication of requirements and resolution of non-compliances?

C

TMPU provided its Project Compliance Management Plan to explain how compliance monitoring and issue resolution are to be integrated into the Project oversight. As per this document, the Project’s senior Compliance Advisor has been assigned the responsibility to ensure there is ongoing communication of requirements and resolution of non-compliances.

The Compliance Management Plan describes how non-compliances will be identified, reported and corrected. It does show how they will be tracked, documented and how compliance advisories will be used to communicate requirements and resolution of non-compliances.

Based on the scope of the audit, the Board did not identify any compliance issues with this item at the time of the audit.

1

TMPU will establish a TMEP Management Plan for project construction that demonstrates how the construction project addresses the management system obligations and aligns, where applicable to Trans Mountain's Integrated Safety and Loss Management System (ISLMS) for ensuring safety, security and protection of the environment. The TMEP Management Plan will be a part of the overarching project Execution Plan.

The Board approves the CAP but with the following guidance. TMPU is reminded that section 6.1 of the OPR requires the management system to be systematic, comprehensive, and that it applies to all of the company’s activities, which includes construction. During Implementation Assessment meetings with the Board, TMPU will provide details on where the project and the existing TMPU management system align and don't align. TMPU will also provide an explanation of which management system elements TMPU believes are not applicable to this project and how it still function as a management system.

2

Trans Mountain will define as part of its integrated Safety and Loss Management System (ISLMS) the conditions that constitute "good faith" as applied in the ISLMS Safety and Loss Management Policy Statement for granting immunity from disciplinary action for persons who internally report hazards, potential hazards, incidents and near misses.

Trans Mountain will ensure the policy around immunity from disciplinary action for reporting hazards and incidents is explained as part of the project construction Site Orientation Training, including the definition of "good faith".

The Board approves these corrective action plans.

3

Trans Mountain's project construction organizational structure has been defined as part of TMEP Compliance to Condition 88, filed with the Board on July 23rd, 2017 and approved as compliant.

Condition 88 was not for approval, it had to be filed two months in advance of construction. In reviewing TMPU's condition filing the Board noted that TMPU provided the same high level organizational charts that were previously provided during the audit document review phase. There is no new information or new activities as part of this CAP to address this finding.

The Board directs TMPU to file their Project Execution Plan and Functional Area Sub-Plan which according to their own Major Projects Management Plan will address this CAP.

The Board rejects this CAP.

4

The Trans Mountain Hazard Coordinator will work with the applicable project team members to establish a TMEP Unified Hazard List (UHL) by reviewing Trans Mountain's UHL to identify existing hazards applicable to the construction project.

The Trans Mountain Hazard Coordinator will then work with the applicable project team members (i.e., Leads, Directors and SMEs) to identify and document in Trans Mountain's Hazard Application any additional hazards specific to the construction project. These newly identified construction related hazards will be added to the TMEP UHL which will be maintained and updated as a separate unified hazard listing used for the assessment of project specific construction hazards and risks.

The Board approves this CAP.

5

The TMEP Unified Hazard List will be established as per the steps outlined in CAP # TMPU-12-1 and TMPU-12-2;

The Board approves this CAP.

6

The project will implement the ISLMS Hazard and Risk Management Standard and the Operational Risk Management (ORM) Procedure. The Hazard Coordinator will work with the project team members to identify all risks associated with TEMP Unified Hazards List (UHL), including risks associated with newly identified project-specific construction hazards and any additional risks related to existing Trans Mountain hazards on the TMEP UHL.

The Hazard Coordinator will develop risk statements for all newly identified construction related hazards that incorporate credible contributing cause(s) and the possible event(s). The Hazard Coordinator will also identify existing risk statements on Trans Mountain's Unified Hazard and Risk Register (UHRR) that would be applicable to hazards identified by the project.

Trans Mountain will conduct facilitated risk assessment session(s) with applicable project personnel to assess the risk statements for the construction project using the Trans Mountain Risk Matrix and Operational Risk Management (ORM) Procedure. This will include the identification of control measures (preventative and mitigative) for the reduction of inherent risks. The risk assessment results will establish a project specific TMEP Unified Hazard and Risk Register.

The Board approves this CAP but directs TMPU to ensure the newly created project specific Hazard Inventory and Risk Register are shared with all contractors and others who will require it for the project.

7

Trans Mountain will communicate the TMEP Unified Hazard and Risk Register (UHRR) to all project contractors (EPC, GCC & CM&I), as part of contract requirements outlined in Exhibit C: Owner Requirements, along with requirements for the contractor to:

• Review the TMEP UHRR and identify all applicable hazards and associated risks related to the contractor's construction spread and scope of work, including any additional hazards and risks not identified on the TMEP UHRR;
• Develop a Contractor Specific Hazard and Risk Register (CSHRR) based on their identified hazards and associated risks;
• Identify in their CSHRR similar or equivalent controls to those in the TMEP UHRR, where applicable), that the contractor will use to address the specific hazards and associated risks,

Each project contractor shall submit their CSHRR (with their specific preventative and mitigative controls listed) for review and approval by Trans Mountain.

Trans Mountain will communicate as part of Exhibit C: Owner Requirements its expectations for project contractors (EPC, GCC or CM&I) to document as part of their Contractor Execution Plan (CEP), the control measures and contingencyplans the contractor will use to prevent and mitigate hazards and associated risks identified on their Contractor Specific Hazard and Risk Register (CSHRR).

Each contractor's CSHRR should reference control measures and contingency plans in the CEP used to address the specific contractor risks.

Each contractor shall submit for review and approval by Trans Mountain their CSHRR (with references to the controls and contingency in the CEP).

Trans Mountain will communicate to project contractors (EPC, GCC and CM&I) as part of Exhibit C: Owner Requirements its expectations for project contractors to document within their Contractor Execution Plan (CEP), the process they will implement for reporting hazards and potential hazards by any person on the construction site.

The process should include the steps for reporting and managing imminent hazards. Additionally, it shall describe the contractor's responsibility to:

• maintain a list of all reported hazards and potential hazards; and
• provide consistent reporting on any significant hazards (i.e., requiring corrective actions) to Trans Mountain's Construction Management and Inspection (CM&I) team, including a description of any preventative or mitigative actions taken by the contractor to address the reported hazards and potential hazards.

The CM&I team will be expected to ensure all significant hazards have been appropriately addressed by the contractor and provide reporting to TMEP at least weekly, on all significant hazards and potential hazards, along with any mitigative actions taken and preventive controls implemented.

The Board approves this CAP but directs TMPU to ensure information on imminent or significant hazards is shared between all contractors involved in the project.

8

Trans Mountain will update its project specific Management of Change (MOC) process to document the requirements for all MOC decisions to be adequately communicated to those who require the information. This will include defining the roles and responsibilities of the MOC requestor for communicating information and the expectations of those receiving the MOC communication for disseminating the information to applicable project staff and contractors. The MOC process owner will also ensure changes to the project MOC process are appropriately communicated to Trans Mountain staff.

The Board approves the CAP but directs TMPU to demonstrate to the Board during Implementation Assessment meetings how one project MOC process will address all of the requirements of OPR 6.5(1)(i).

9

Trans Mountain communicates information to project contractors through its contract terms outlined in Exhibit C: TMEP Owner Requirements to make its contractors aware of special conditions associated with project construction. Trans Mountain will provide an example of contract owner requirements for project construction.

The Board has previously reviewed TMPU’s Project Procurement Execution Plan and the Project RFP & Contracts Award Procedure. TMPU had previously pointed to these documents to answer this audit protocol question. Without changes to these documents, the Board does not know where TMPU would have made the process changes needed to address the finding. TMPU will have to either re-submit this CAP or provide clear documentation to the Board during the Implementation Assessment meetings.

10

Trans Mountain will implement a process for inspection, measurement and monitoring activities that is consistent with the requirements established in the ISLMS Inspection, Measurement and Monitoring (IMM) Standard and the ISLMS Inspection, Measurement and Monitoring Procedure used by Tran's Mountain's existing operations.

Each project discipline will develop a Monitoring Plan which documents the planned inspection, measurement and monitoring activities for Health and Safety (including Damage Prevention and Emergency Response), Environmental, Security and Quality Management. These plans at a minimum will provide:

• an identification and description of the monitoring activities to be conducted;
• The Trans Mountain or contractor roles (CM&I, EPC or GCC) that will be responsible for conducting the IMM activities,
• The project personnel responsible for reviewing and following up on the monitoring results, and,
• the frequency/schedule for the planned monitoring,

These monitoring plans will be fluid and updated frequently over the projects lifecycle to reflect the changing risks and issues that will be encountered during project construction.

The Monitoring Plans will be consolidated into one comprehensive TMEP Project Construction Monitoring Plan and communicated to the contractors (CM&I, EPC and GCC) as part of Exhibit C – Owner Requirements with the expectation that the contractors use the information in developing their Contractor Execution Plans.

The Board approves this CAP.

11

Trans Mountain will develop a Project Construction Monitoring Plan Procedure applicable to all the project disciplines (Health and Safety, Environment, Quality and Security) that will define the process for each discipline to:

• conduct periodic reviews and updates to the Monitoring Plans to reflect any changes required over the lifecycle of the project,
• communicate and manage deficiencies identified during monitoring (with the contractors), including the process for handling of deficiencies requiring immediate attention,

The TMEP Project Construction Monitoring Plan Procedure will be a preamble to the TMEP Project Construction Monitoring Plan as part of Exhibit C – Owner Requirements provided to the contractors with the expectation that the contractors (CM&I, GCC and EPC) use the information to develop their project- specific Contractor Execution Plan (CEP).

The Board approves this CAP.

12

TMPU’s proposed corrective action for this non-compliance was addressed in NC Finding 12 (above).

The Board approves this CAP.

13

Trans Mountain will review its Approved Manufacturer's List (AML) and update it with any existing project contractors currently not on the AML.

Trans Mountain will also re-enforce with the project Supply Chain Management (SCM) team the importance of timely updates and maintenance of the Project AML.

TMPU has indicated in its CAP that the purpose and intent of the referenced language within the referenced contract was not to delegate Trans Mountain’s responsibilities for conformance of the work to codes and regulations to a third-party vendor.

Trans Mountain acknowledges in the CAP that it cannot delegate its responsibilities for conformance of work to codes and regulations.

Trans Mountain has hired a Chief Quality Assurance Lead for project execution. The QM Lead started August 8, 2017.

TMPU’s proposed actions will resolve the issue with the AML.

TMPU has acknowledged that it cannot and will not delegate its responsibilities for conformance of the work to codes and regulations to a third-party vendor.

The hiring of a qualified individual to fulfill the role of Chief Quality Assurance Lead, will resolve the concern the Board had with the position being vacant at the time of the audit.

The Board approves this CAP.

14

Trans Mountain will update its project specific Management of Change (MOC) process to reflect the liaison between existing Operations Management and the project Construction Management to identify operational issues and/or synergies during project construction that require review, and approval by Trans Mountain's existing operations. The project specific MOC process will describe the MOC responsibilities of designated operational personnel to:

• Evaluate the justification and impact of temporary impairments or permanent changes to operating systems requested by project construction management;
• Follow the ISLMS Operational Change Management Standard to develop and submit Change Management Request (CMR) forms for temporary impairments or permanent changes to operating systems as a result of project construction, with appropriate justification and back-up documentation; and
• Ensure the appropriate level of review and approval that is consistent with Trans Mountain's CMR Approval Authority Matrix, for changes affecting existing operating systems.

The project specific MOC process will also be updated to provide additional clarity and direction on the use the MOC process for addressing design, regulatory and procedural changes.

The Board approves the CAP but directs TMPU to demonstrate to the Board during Implementation Assessment meetings how one project MOC process will address all of the requirements of OPR 6.5(1)(i).

15

Trans Mountain will break down applicable standards referenced with the National Energy Board – Onshore Pipeline Regulations down to the sub- clause level.

Please note that CSA-Z276 – Liquefied Natural Gas (LNG) – Production, Storage and Handling and CSA – Z341 – Storage of Hydrocarbons in Underground Reservoirs do not apply to KMC operations and therefore will not be broken down to the sub-clause level as these Standards are not on the Legal List.

The Board approves this CAP.