ARCHIVED — Vol. 146, No. 43 — October 27, 2012

Regulations Amending the Onshore Pipeline Regulations, 1999

Statutory authority

National Energy Board Act

Sponsoring agency

National Energy Board

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

1. Background

The National Energy Board Act (the Act) provides the National Energy Board (NEB) with the authority to make regulations governing pipeline design, construction, operation and abandonment for the protection of people, property and the environment. The Onshore Pipeline Regulations, 1999 (the Regulations) are the NEB’s principal safety regulations for onshore pipelines.

Pursuant to the Regulations, a company must have a management system that sets out the policies, processes and procedures for the planning and execution of the core business of the organization in a manner that provides for the protection of people, property and the environment. The management system must also apply to the key program areas for which companies are responsible — safety, pipeline integrity, security, emergency management and environmental protection. These programs must each follow management system processes to anticipate, prevent, manage and mitigate conditions that have the potential to harm people, property or the environment throughout the lifecycle of the pipeline.

The current Regulations also prescribe individual and specific emergency preparedness and response related requirements. They do not, however, specifically reference the requirement for an emergency management program. In 2002, the NEB issued a letter to regulated companies stating that the expectation is that companies have emergency management programs.

In addition, the federal government added security to the mandate of a number of federal agencies, including the NEB, after the events of September 2001. The Act was amended in 2004 through the Public Safety Act, 2002 to ensure that security was specifically included in the NEB’s mandate. Since 2006, NEB guidance material has set out that companies are expected to have pipeline security programs in place in order to meet the security mandate legislated in the Act in 2004. In 2010, the NEB issued a notice of proposed regulatory change and directed companies to have a pipeline security program that meets the Canadian Standards Association (CSA) standard for pipeline security — CSA Z246.1, which was completed in 2009.

2. Issue

Since the promulgation of the Regulations in 1999, the NEB has observed that the management system requirements have been inconsistently applied. It was concluded that the management system requirements, and how they apply to the key program areas in the Regulations, should be made clearer in order to provide the best protection for people, property and the environment.

The NEB has heard from industry and other stakeholders that the various styles and references for management system requirements, and the related programs required to meet industry’s obligations under the Regulations, result in a lack of clarity. The current layout of these requirements is confusing for stakeholders.

Specifically, management system requirements are found in various locations, including outcome-based provisions within the Regulations; the CSA standard for oil and gas pipeline systems (CSA Z662), which is incorporated by reference in the Regulations; and various notices and guidance material issued by the NEB since the Regulations were promulgated in 1999.

Also, while the requirements for safety, integrity and environmental protection programs are referenced in the Regulations, the requirement for an emergency management program is referenced in guidance material. Similarly, the current requirement for a security program is referenced in a notice of proposed regulatory change and not in the Regulations.

3. Objectives

The objectives of the proposed amendment are to

  • clarify and consolidate requirements under the Regulations so that a consistent approach in meeting the requirements is taken across the industry; and
  • include pipeline security management provisions in the Regulations, which are required pursuant to the amended Act.

4. Description

Management system requirements

The proposed amendment would clarify management system requirements for NEB-regulated companies. Currently, management system requirements are identified in outcome-based provisions in the Regulations, in a technical standard incorporated by reference in the Regulations, and also in various notices and guidance material issued by the NEB. The proposed amendment would confirm that NEB-regulated companies must carry out their activities within the framework of a comprehensive management system. The proposed amendment includes the appointment of an accountable officer who would be responsible for ensuring that the company’s management system and programs are in compliance with those requirements. As in any management system, companies would also need to identify the policies and goals of their management system, establish and implement processes and procedures to achieve those goals and develop performance measures to assess their success.

Security program

The proposed amendment would give effect to certain amendments to the Act introduced by the Public Safety Act, 2002 by obliging NEB-regulated companies to develop and implement a security program. Specifically, a company would be required to have a security program that anticipates, prevents, manages and mitigates conditions that could adversely affect people, property or the environment. The proposed amendment would also incorporate by reference the CSA standard for security (CSA Z246.1), which the company must follow in its security program.

Emergency management program

The proposed amendment would also oblige NEB-regulated companies to develop and implement an emergency management program. The specific emergency preparedness and response related requirements currently in the Regulations would be included under this provision.

5. Consultation

The NEB issued a notice of proposed regulatory change to clarify management system requirements in the Regulations in January 2011 for stakeholder feedback. Overall, the responses received focused on requests for clarification, which the NEB provided in subsequent guidance material. One specific suggestion was that the NEB should seek to address management system requirements through the CSA and the related standard for oil and gas pipelines (CSA Z662). In its published response to this suggestion, the NEB noted that it has a long history of using CSA standards as a starting point to help fulfill its regulatory mandate. However, with the proposed amendment, the NEB is providing clarity and consolidation for management system requirements in the Regulations, and this can exist alongside the CSA standard. The NEB provided further clarification and addressed questions at meetings with industry associations and individual companies.

After the review period, the NEB notified industry and interested parties in July 2011 that the clarification of management system requirements would be included in proposed amendments to the Regulations. The NEB offered to hold information sessions with industry associations and individual companies upon request to address any questions with respect to the proposed amendment.

Overall, stakeholders have responded positively to the proposed amendment for management system requirements, expressing support for clarified provisions in the Regulations. Industry has confirmed that company management systems are key to safety outcomes.

In order to meet its obligations for security oversight pursuant to the amended Act, the NEB issued a notice of proposed regulatory change for a pipeline security management program in 2005 for stakeholder feedback. After the review period, the NEB notified industry and interested parties in May 2006 that the requirement for a security program would be included in proposed amendments to the Regulations. The notice directed that, in the interim, companies would be expected to develop pipeline security programs and related guidance material was provided.

The NEB re-issued the notice of proposed regulatory change for pipeline security programs in November 2009 to include the completed standard for security (CSA Z246.1), which is to be incorporated by reference into the Regulations. The responses received showed that industry was generally receptive to the approach.

One specific suggestion received was that the NEB consider using CSA Z246.1 as guidance rather than an enforceable standard. In its published response to this comment, the NEB noted that, taking into consideration the importance of protecting energy infrastructure, it would proceed with the proposed amendment to adopt CSA Z246.1 into the Regulations.

After the review period, the NEB notified industry and interested parties in May 2010 that the updated pipeline security program requirement would be included in proposed amendments to the Regulations. The notice directed that, in the interim, companies would be expected to develop pipeline security programs in accordance with CSA Z246.1. NEB staff continue to review and discuss security programs with companies, and provide advisories when deficiencies are noted.

6. “One-for-One” Rule

Most of the requirements in the proposed amendment are already requirements in the Regulations, and have also been provided as direction and guidance to industry. The proposed amendment contains new administrative requirements to ensure safety outcomes. They are related to the safety culture of a management system and focus on accountability for the company’s safety performance.

The federal government’s “One-for-One” Rule applies to the new administrative requirements in the proposed amendment. The new administrative requirements in the proposed amendment for the Regulations require a company to

  • submit a statement signed by the officer appointed by the company as accountable for its management system, accepting the responsibilities of the position; and
  • submit a statement signed by the accountable officer indicating that the company has completed the annual report on its management system.

These requirements would involve the time of professionals to manage the related processes, the time of administrative support to prepare letters for signature by the accountable officer, the time of legal services to review the documents, and the time of the accountable officer to review and sign the letters.

The Standard Cost Model provided by the Treasury Board Secretariat was used to estimate the new costs. The ongoing annual administrative costs related to these provisions are estimated to be $30,129 across the companies currently regulated by the NEB pursuant to the Regulations, or $307 annually per company.

7. Rationale

The proposal would provide greater clarity and consolidate management system requirements in all areas for which a company is responsible to meet its obligations under the Act and the Regulations. Additionally, the proposed amendment would provide that a management system be scalable, and correspond to the scope, size, nature and complexity of the company and its activities, and the hazards and risks associated with those activities. This proposal would provide consistency and predictability in regulatory compliance for industry, which in turn would enhance the protection of people, property and the environment.

The proposal would also fulfill the NEB’s obligation to address pipeline security and include provisions to this effect in the Regulations, as provisions are currently only set out in notices providing direction and guidance. The new regulatory provisions will hold companies accountable for the security of their current operations as well as for ongoing modifications to these operations in order to address security issues. The provisions include direction for early detection of potential security issues.

The benefits of the proposed amendment includes

  • clarification and consolidation of management system requirements in the Regulations;
  • regulatory clarity that provides for the protection of people, property and the environment; and
  • regulatory certainty resulting from clarification, which provides benefits for industry, society, and the regulatory community.

The cost of the proposed amendment is minimal as it is focused on clarifying and consolidating the current requirements in the Regulations and related NEB notices and guidance material. The cost related to two new administrative provisions is described in the “One-for-One” Rule section.

8. Implementation, enforcement and service standards

Upon implementation of the proposed amendment, policy and guidance material would be updated as required and communicated to companies and interested parties. The NEB would hold information sessions with industry upon request to address any matters related to the proposed amendment to the Regulations. The NEB would continue to conduct compliance assessment meetings, audits, site visits and inspections to review a company’s compliance with the Act and the Regulations.

9. Contact

Alan Pentney
Technical Leader, Engineering
National Energy Board
444 Seventh Avenue SW
Calgary, Alberta
T2P 0X8
Telephone: 403-299-3726
Toll free telephone: 1-800-899-1265
Toll free fax: 1-877-288-8803
Email: alan.pentney@neb-one.gc.ca

PROPOSED REGULATORY TEXT

Notice is hereby given that the National Energy Board, pursuant to subsection 48(2) (see footnote a) of the National Energy Board Act (see footnote b), proposes to make the annexed Regulations Amending the Onshore Pipeline Regulations, 1999.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part Ⅰ, and the date of publication of this notice, and be addressed to Alan Pentney, Technical Leader, Engineering, National Energy Board, 444 Seventh Avenue SW, Calgary, Alberta T2P 0X8 (tel.: 403-299-3726; fax: 403-292-5503; email: onshorepipelineregs@neb-one.gc.ca).

Ottawa, October 18, 2012

JURICA ČAPKUN
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE ONSHORE
PIPELINE REGULATIONS, 1999

AMENDMENTS

1. The title of the Onshore Pipeline Regulations, 1999 (see footnote 1) is replaced by the following:

NATIONAL ENERGY BOARD ONSHORE
PIPELINE REGULATIONS

2. Section 1 of the Regulations is amended by adding the following in alphabetical order:

  • “accountable officer” means a person appointed as accountable officer under subsection 6.2(1). (dirigeant responsable)
  • “CSA Z246.1” means CSA Standard Z246.1 entitled Security Management for Petroleum and Natural Gas Industry Systems, as amended from time to time. (norme CSA Z246.1)
  • “management system” means the system set out in sections 6.1 to 6.6. (système de gestion)

3. (1) Subsection 3(1) of the Regulations is replaced by the following:

3. (1) Subject to subsection (2), sections 9 to 26 apply in respect of any construction, maintenance or repairs undertaken with respect to a pipeline.

(2) The portion of subsection 3(2) of the Regulations before paragraph (a) is replaced by the following:

(2) Sections 9 to 26 do not apply in respect of a pipeline or any part of a pipeline

4. (1) Subsection 4(1) of the Regulations is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

  • (e) CSA Z246.1 for all pipelines.

(2) Subsection 4(3) of the Regulations is replaced by the following:

(3) If there is an inconsistency between these Regulations and a standard referred to in paragraph (1)(b), (c), (d) or (e), these Regulations prevail to the extent of the inconsistency.

5. Section 6 of the Regulations is replaced by the following:

6. When a company designs, constructs, operates or abandons a pipeline, it shall do so in a manner that ensures

  • (a) the safety and security of the public and the company’s employees;

  • (b) the safety and security of the pipeline; and

  • (c) the protection of property and the environment.

MANAGEMENT SYSTEM

6.1 A 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 enable the company to meet its obligations under section 6;

  • (c) applies to all the company’s activities involving the design, construction, operation or abandonment of a pipeline and to the programs referred to in section 55;

  • (d) ensures coordination between the programs referred to in section 55; and

  • (e) corresponds to the size of the company, to the scope, nature and complexity of its activities and to the hazards and risks associated with those activities.

6.2 (1) The company shall appoint an officer as accountable officer to ensure on its behalf that its management system and the programs referred to in section 55 are established, implemented and maintained in accordance with section 6.1, this section and sections 6.3 to 6.6 and that its obligations under section 6 are met.

(2) Within 30 days after the appointment of its accountable officer, the company shall notify the Board in writing of the name of the person appointed and ensure that the accountable officer submits to the Board a signed statement accepting the responsibilities of their position.

(3) The company shall ensure that the accountable officer has authority over the human and financial resources required to

  • (a) establish, implement and maintain the management system and the programs referred to in section 55; and

  • (b) ensure that the company’s activities are carried out in a manner that enables it to meet its obligations under section 6.

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; and

  • (b) goals for the prevention of ruptures, liquid and gas releases, fatalities and injuries and for the response to incidents and emergency situations.

(2) The company shall base its management system, as well as the programs referred to in section 55, on those policies and goals.

(3) The accountable officer shall prepare a policy statement that sets out the company’s commitment to those policies and goals and shall communicate it to the company’s employees.

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;

  • (b) determine and communicate the roles, responsibilities and authority of the officers and employees at all levels of the company; and

  • (c) demonstrate that the human resources allocated to establishing, implementing and maintaining the management system are sufficient to meet the requirements of the management system and to meet the company’s obligations under section 6, based on an annual documented evaluation of need.

MANAGEMENT SYSTEM PROCESSES

6.5 (1) A company shall, as part of its management system and the programs referred to in section 55,

  • (a) establish and implement a process for setting the objectives and specific targets that are required to achieve the goals established under subsection 6.3(1) and for ensuring their annual review;

  • (b) develop performance measures for assessing the company’s success in achieving its goals, objectives and targets;

  • (c) establish and implement a process for identifying and analyzing all hazards and potential hazards;

  • (d) establish and maintain an inventory of the identified hazards and potential hazards;

  • (e) establish and implement a process for evaluating and managing the risks associated with the identified hazards, including the risks related to normal and abnormal operating conditions;

  • (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;

  • (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;

  • (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 a design, specification, standard or procedure and any change in the company’s organizational structure or the legal requirements applicable to the company;

  • (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;

  • (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;

  • (l) establish and implement a process for making employees and other persons working with or on behalf of the company aware of their responsibilities in relation to the processes and procedures required by this section;

  • (m) establish and implement a process for the internal and external communication of information relating to safety, security and protection of the environment;

  • (n) establish and implement a process for identifying the documents required for the company to meet its obligations under section 6;

  • (o) establish and implement a process for preparing, reviewing, revising and controlling those documents, including a process for obtaining approval of the documents by the appropriate authority;

  • (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 and for providing access to those who require them in the course of their duties;
  • (q) establish and implement a process for coordinating and controlling the operational activities of employees and other people working with or on behalf of the company so that each person is aware of the activities of others and has the information that will enable them to perform their duties in a manner that is safe, ensures the security of the pipeline and protects the environment;

  • (r) establish and implement a process for the internal reporting of hazards, potential hazards, incidents and near-misses and for taking corrective and preventive actions, including the steps to manage imminent hazards;

  • (s) establish and maintain a data management system for monitoring and analyzing the trends in hazards, incidents and near-misses;

  • (t) establish and implement a process for developing contingency plans for abnormal events that may occur during construction, operation, maintenance, abandonment or emergency situations;

  • (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 and for taking corrective and preventive actions if deficiencies are identified;

  • (v) establish and implement a process for evaluating the adequacy and effectiveness of the company’s management system and for monitoring, measuring and documenting the company’s performance in meeting its obligations under section 6;

  • (w) establish and implement a quality assurance program for the management system and for each program referred to in section 55, including a process for conducting audits in accordance with section 53 and for taking corrective and preventive actions if deficiencies are identified; and

  • (x) establish and implement a process for conducting an annual management review of the management system and each program referred to section 55 and for ensuring continual improvement in meeting the company’s obligations under section 6.

(2) In this section, a reference to a process includes any procedures that are necessary to implement the process.

(3) The company shall document the processes and procedures required by this section.

ANNUAL REPORT

6.6 (1) A company shall complete an annual report for the previous calendar year, signed by the accountable officer, that describes

  • (a) the performance of the company’s management system in meeting its obligations under section 6 and the company’s achievement of its goals, objectives and targets during that year, as measured by the performance measures developed under paragraphs 6.5(1)(b) and (v); and

  • (b) the actions taken during that year to correct any deficiencies identified by the quality assurance program established under paragraph 6.5(1)(w).

(2) No later than April 30 of each year, the company shall submit to the Board a statement, signed by the accountable officer, indicating that it has completed its annual report.

6. Section 8 of the Regulations is renumbered as section 5.1 and is repositioned accordingly.

7. Paragraph 11(d) of the Regulations is replaced by the following:

  • (d) designed so that the noise level during operation meets the noise level requirement approved by the Board pursuant to section 5.1.

8. Subsection 18(1) of the Regulations is amended by adding the following after paragraph (b):

  • (b.1) inform the contractor of the contractor’s responsibilities referred to in paragraph 6.5(1)(l);

9. Section 20 of the Regulations is amended by adding the following after subsection (1):

(1.1) If a company contracts for the provision of services in respect of the construction of a pipeline, the construction safety manual shall set out the contractor’s responsibilities referred to in paragraph 6.5(1)(l).

10. Subsection 29(1) of the Regulations is amended by adding the following after paragraph (b):

  • (b.1) inform the contractor of the contractor’s responsibilities referred to in paragraph 6.5(1)(l);

11. Section 31 of the Regulations is amended by adding the following after subsection (1):

(1.1) If a company contracts for the provision of services in respect of the maintenance of a pipeline, the maintenance safety manual shall set out the contractor’s responsibilities referred to in paragraph 6.5(1)(l).

12. The heading before section 32 of the Regulations is replaced by the following:

EMERGENCY MANAGEMENT PROGRAM

13. Subsection 32(1) of the Regulations is replaced by the following:

32. (1) A company shall develop, implement and maintain an emergency management program that anticipates, prevents, manages and mitigates conditions during an emergency that could adversely affect property, the environment or the safety of workers or the public.

(1.1) The company shall develop an emergency procedures manual, review it regularly and update it as required.

14. The heading before section 35 of the Regulations is repealed.

15. Section 40 of the Regulations and the heading before it are replaced by the following:

INTEGRITY MANAGEMENT PROGRAM

40. A company shall develop, implement and maintain an integrity management program that anticipates, prevents, manages and mitigates conditions that could adversely affect safety or the environment during the design, construction, operation, maintenance or abandonment of a pipeline.

16. Section 46(2) of the Regulations is amended by adding the following after paragraph (a):

  • (a.1) the security processes, procedures and measures applicable to the day-to-day operation of the pipeline;

17. Section 47 of the Regulations and the heading before it are replaced by the following:

SAFETY MANAGEMENT PROGRAM

47. A company shall develop, implement and maintain a safety management program that anticipates, prevents, manages and mitigates potentially dangerous conditions and exposure to those conditions during all activities relating to construction, operation, maintenance, abandonment and emergency situations.

SECURITY PROGRAM

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

18. Section 48 of the Regulations is replaced by the following:

48. A company shall develop, implement and maintain an environmental protection program that anticipates, prevents, manages and mitigates conditions that could adversely affect the environment.

19. (1) The portion of subsection 53(1) of the Regulations before paragraph (a) is replaced by the following:

53. (1) A company shall conduct inspections on a regular basis and audits, with a maximum interval of three years, to ensure that its pipeline is designed, constructed, operated and abandoned in compliance with

(2) Paragraph 53(1)(b) of the English version of the Regulations is replaced by the following:

  • (b) Part V of the Act, as it relates to the protection of property and the environment and the safety and security of the public and of the company’s employees;

20. The heading before section 55 of the Regulations is replaced by the following:

PROGRAM AUDITS

21. Subsection 55(1) of the Regulations is replaced by the following:

55. (1) A company shall conduct audits, with a maximum interval of three years, of the following programs:

  • (a) the emergency management program referred to in section 32;

  • (b) the integrity management program referred to in section 40, including the pipeline control system referred to in section 37;

  • (c) the safety management program referred to in section 47;

  • (d) the security program referred to in section 47.1; and

  • (e) the environmental protection program referred to in section 48.

22. The Regulations are amended by repealing the following headings:

  • (a) “PART 1”;

  • (b) “PART 2”;

  • (c) “PART 3”;

  • (d) “PART 4”;

  • (e) “PART 5”;

  • (f) “PART 6”;

  • (g) “PART 7”;

  • (h) “PART 8”;

  • (i) “PART 9”; and

  • (j) “PART 10”.

COMING INTO FORCE

23. These Regulations come into force on the day on which they are registered.

[43-1-o]

Footnote a
S.C. 2004, c. 15, s. 84(2)

Footnote b
R.S., c. N-7

Footnote 1
SOR/99-294