NEB's Regulatory Framework

  1. Overview
  2. Lifecycle Compliance Monitoring
  3. Compliance Verification
  4. Enforcement
  5. Responding to Emergencies
  6. Conclusion

I. Overview

The National Energy Board (NEB) promotes safety and security, environmental protection and efficient energy infrastructure and markets in the Canadian public interest.

In order to deliver on its mandate, the NEB has put a regulatory framework in place to promote safety and security, environmental protection and efficient energy infrastructure and markets in the Canadian public interest. The regulatory framework has the following components:

  • sets expectations of industry and others
  • monitors compliance with requirements
  • enforces requirements
  • measures performance of the NEB’s regulatory framework
  • focuses on continual improvement of the regulatory framework

Goals

The NEB has set four Goals for the regulation of pipelines, energy development and trade in the Canadian public interest. They are:

  1. NEB-regulated facilities and activities are safe and secure.
  2. The environment is protected throughout the lifecycle of NEB-regulated facilities and activities.
  3. Canadians benefit from efficient energy infrastructure and markets.
  4. The rights and interests of those affected by NEB-regulated facilities and activities are respected.

Flowing out of these goals are the NEB’s management and protection compliance programs. The NEB organizes itself and its regulatory activities under these programs which are mirrored in the National Energy Board Onshore Pipeline Regulations (OPR).

These compliance programs are:

Goal 1: Safety and Security

  • Safety Management Program
  • Integrity Management Program
  • Emergency Management Program
  • Damage Prevention Program
  • Security Program

Goal 2: Environmental Protection Program

Regulations

NEB Approach to the Design of RegulationNEB regulation is focused on outcomes and is as specific as necessary:

  1. It starts by defining the safety and security, environmental protection and economic efficiency outcomes to be achieved. This approach requires regulated companies to determine the means to achieve the outcomes to effectively manage risk. This approach also encourages innovation and the use of the most appropriate technology.
  2. It then sets the necessary management processes, operational standards and reporting requirements to achieve the desired outcomes.

Management System Approach in NEB Regulations
The NEB is of the view that carefully designed and well-implemented management systems are the fundamental method to be used by industry to keep people safe and protect the environment. A “management system” means the system set out in sections 6.1 to 6.6 of the OPR. It is a systematic approach designed to effectively manage and reduce risk. It includes the necessary organizational structures, resources, accountabilities, policies, processes and procedures for an organization to fulfil all tasks related to safety, security and environmental protection.

II. Lifecycle Compliance Monitoring

The Board monitors and enforces compliance with requirements concerning the safety and protection of employees, the public, and the environment, as they may be affected throughout the life of a project.

Pipeline Lifecycle

Phase one: planning and application assessment

In the planning and application assessment phase of the project, the NEB assesses whether the project is in the public interest and can be built and operated safely and in a manner that protects the environment. The NEB assessment includes an evaluation of:

  • compliance with design, construction and environmental protection requirements which include:
    • requirements outlined in statutes and regulations
    • commitments by regulated companies including those made during an application process
    • the protection of navigation and the promotion of safe navigation
    • any measures to avoid, mitigate, or offset fish and fish habitat impacts
    • DFO referral where a Fisheries Act Authorization may be required
    • any measures to avoid, mitigate, or offset impacts on listed species and their critical habitat under SARA
    • notification of the competent Minister whenever a SARA species is likely to be impacted
    • terms and conditions on approvals
    • other direction provided by the NEB from time to time
  • the capacity of the regulated company to develop required safety, security and environmental protection programs and systems.
  • the risks posed to people or effects on the environment by the project plans and whether these risks will be prevented, managed and mitigated through appropriate planning

If a project is approved, the NEB will impose terms and conditions to mitigate the risks and effects posed by the project.

Phase two: construction

In the construction phase of a project, the NEB monitors and verifies compliance with construction-related requirements. Specifically, the NEB:

  • Reviews and approves key company program manuals which typically address:
    1. Joining
    2. Pressure Testing
    3. Quality Assurance/Quality Control of Materials
    4. Construction Safety
    5. Environmental Protection Plan
    6. Emergency Procedures
    Manuals are used by a regulated company to communicate requirements to its staff and contractors. Depending on the nature of the project, the NEB may require other types of manuals for the project. The purpose of this review is to verify compliance with requirements. This assessment is often done before a facility is permitted to begin operation; manuals can also be reviewed as part of annual compliance verification activities.
  • Conducts on-site construction inspections. Inspections during construction focus on pipeline integrity, worker safety and environmental protection.

Phase three: operation

In the operation phase of a project, the NEB monitors and verifies compliance with operation-related requirements. Specifically, the NEB:

  • holds compliance meetings with regulated companies to exchange information, verify compliance, assess implementation of requirements and provide critical feedback to senior executives on aspects of their programs and systems
  • audits regulated companies’ management and protection programs and systems to assess the adequacy and implementation of system elements such as:
    • policies and performance objectives
    • proactive identification of hazards, evaluation of risk and risk mitigation
    • clarity of responsibilities and accountabilities
    • training and competency of personnel
    • documentation management, reporting, evaluation and continual improvement
  • inspects facilities to assess compliance with requirements in all program areas
  • reviews and approve key documents (e.g., regulated company program manuals)
  • evaluates regulated company emergency response exercises for the ability to respond to an emergency

Conducting audits, inspections and compliance meetings, are key tools the NEB uses to regulate a company’s safety culture and system effectiveness. Effective systems provide a strong foundation for a pervasive culture of safety and the NEB expects that company safety systems are: forcefully affirmed by the organization’s leadership; rigorously documented in writing; known to all employees involved in safety and environmental protection; and consistently implemented in the field.

Phase four: deactivation, decommissioning or abandonment

In the deactivation, decommissioning or abandonment phase, the NEB assesses whether the applied-for plan can be conducted safely and whether risks to people or the environment can be reduced or avoided. Specifically, the NEB:

  • assesses a deactivation plan for maintaining the facility in order that it will be fit for service in the future
  • inspects decommissioning and abandonment activities to assess compliance with requirements

III. Compliance Verification

Once a project is approved, the NEB will monitor and verify compliance with requirements during construction, operation and abandonment. The NEB also investigates compliance as a result of complaints, reports of high-risk activity or incidents.

Risk-Informed Approach to Monitoring Compliance

The NEB evaluates regulated companies and their facilities and installations via a risk model to determine appropriate compliance verification activities. This evaluation includes:

  1. identification of potential consequences to people and the environment posed by facilities or an installation, based on its location, type, age, operating history, etc.
  2. a review of historical information on the company’s or operator’s management of these consequences collected through previous compliance monitoring activities

Compliance Verification Toolkit

The NEB may use the tools outlined below to verify compliance.

Audit
An audit is a systematic evaluation of management systems, including programs, practices, procedures, plans, processes, manuals, records, systems, and activities. The objective is to verify compliance with requirements using a Management and Protection Program Evaluation and Audit Protocol. After being audited, a corrective action plan may be required to resolve findings of non-compliance within specific time limits.

Inspection
An inspection is an on-site, methodical examination and assessment of regulated activities or operations against requirements. Inspections may occur at any time during the life of a project.

Compliance Meetings
The NEB conducts compliance work through meetings with regulated companies. These meetings can involve:

  • Regulated Company Manual and Report Reviews
    Regulated companies submit their manuals and post-construction environmental reports to the NEB for review. This assessment is often done before a facility is permitted to begin operation or manuals can be reviewed as part of annual compliance verification activities.
  • Annual Operator Safety and Environmental Reports
    Under the Canada Oil and Gas Operations Act, operators must submit Annual Safety and Environmental Reports.
  • Emergency Response Exercise Evaluation
    An emergency response exercise evaluation is an on-site evaluation of the regulated company or operator’s capability to respond to an emergency in accordance with its procedures and plans.
  • Emergency Procedures Manual Review
    This review is often done when a company submits updates to their Emergency Procedures Manuals or before a regulated-company is permitted to begin operations.

Investigation
The NEB investigates all incidents to determine cause and contributing factors leading to the incident. For serious incidents, such as a pipeline leak or rupture, NEB experts are often dispatched to the site of the incident to monitor the regulated company activities, to assess whether appropriate actions are being taken, and determine whether and when the facility or installation may be safely returned to service.

Response to concerns and complaints
The NEB may respond to complaints it receives on any matter for which it has a mandate to conduct activities and may conduct an investigation as a result of a landowner complaint.

IV. Enforcement

The NEB detects non-compliance through:

  • conducting compliance verification activities
  • through an investigation as a result of either an incident or a high-risk activity

The following tools can be used to obtain compliance, deter future non-compliance, and prevent harm:

  • Letter/notice
    The NEB will often provide notice that certain activities could lead to non-compliance or that it intends to investigate suspected areas of non-compliance. The most common form of this type of notice is the Board’s Safety Advisories.
  • Corrected Non-Compliance (CNC)
    A CNC is used when non-compliances observed in the field were addressed while the inspection officer was on-site. This tool is used when there is minimal safety risk or environmental harm as a result of the non-compliance and it is corrected immediately in the field. The non-compliance will be noted in the inspection report along with the corrective measures that were taken to return to compliance.
  • Notice of Non-Compliance (NNC)
    An NNC is a written undertaking issued by the inspection officer to a NEB-regulated company or third party when non-compliance with a low probability of harm to people or the environment is observed, and time is required to address the issue. It is intended to bring compliance issues to the attention of the company/individual, in order to generate the necessary action to return to compliance. The inspection officer will determine an effective corrective action, consult with the regulated company, and propose a reasonable timeline to correct the non-compliance. It is not a finding of guilt or civil liability, but will form part of the NEB’s records when planning its compliance verification activities and determining what enforcement action to take for future or re-occurring non-compliances.
  • Corrective Action Plans
    Corrective Action Plans are developed by regulated companies in response to audit findings of non-compliance or specific requests of the NEB. These plans must contain time commitments and be approved by the Board.
  • Administrative Monetary Penalties (AMP)
    An AMP is a financial penalty imposed on individuals or companies in response to contravention of legislative requirements to promote safety and environmental protection.
  • Orders
    The NEB has authority to enforce certain requirements or restrict operations through the use of Board Orders. Orders that restrict operations are commonly referred to as Safety Orders. In addition, designated Officers have the authority to direct and, in some situations, order parties to correct non-compliance.
  • Revocation of authorization
    If the NEB has lost confidence in the ability of a company to operate safely or in a manner that protects the environment, it may consider revoking an authorization that enables the company’s operation.
  • Disallow or Suspend Tariff
    If the NEB finds that the tolls and tariffs applied for or in place are not just and reasonable or are unjustly discriminatory, the NEB has authority to suspend or disallow the toll or tariff.
  • Prosecution
    It is an offence to contravene certain provisions of the NEB Act, COGOA and CLC, Part II. If serious offences are discovered, the NEB may refer the details of the offence to the Office of the Attorney General of Canada for prosecution. A Board Order can also be made an order of the Federal Court for the purpose of enforcement.

V. Responding to Emergencies

The NEB’s priorities in any emergency are the safety of people and the protection of property and the environment. The NEB has an Emergency Management Program in place and is ready to respond to an emergency situation at all times. The NEB develops working agreements with other government departments and agencies to: coordinate responses; deal with overlapping and adjoining jurisdictions; identify common regulatory objectives; and communicate effectively. 

Anytime there is a serious incident at an NEB-regulated facility, the NEB will monitor and oversee the company’s immediate and ongoing response and eventual clean-up. The NEB requires that all reasonable actions are taken to protect employees, the public and the environment. Further, the NEB verifies that the regulated company conducts an adequate and appropriate clean-up and remediation of any environmental effects caused by the incident.

VI. Conclusion

The NEB promotes safety, security and environmental protection through its compliance programs. The objective of these programs is to monitor compliance with the NEB’s requirements and enforce them as necessary.

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