Audit at a Glance—Report 2—Oversight of Federally Regulated Pipelines

Audit at a Glance Report 2—Oversight of Federally Regulated Pipelines

What we examined (see Focus of the audit)

The audit focused on key aspects of the National Energy Board oversight of federally regulated pipeline operations. More specifically, it examined whether the Board:

  • was verifying that regulated companies were complying with pipeline project approval conditions and regulations,
  • was prepared to fulfill its role in pipeline emergency response and had verified that companies’ emergency manuals were complete and up to date, and
  • had assessed its capacity to deliver on its responsibilities.

Why we did this audit

This audit is important because Canadians rely on the Board to verify that companies are complying with all conditions of pipeline approval and with applicable regulations. The Board’s ability to fulfill its roles and responsibilities in emergency preparedness and response, supported by sufficient human resources, is critical to the safe and efficient transportation of oil and gas and to minimizing the risks of pipeline operations to the safety of Canadians and the environment.

What we concluded

Our audit examined some key aspects of National Energy Board regulatory oversight of federal pipelines. Overall, there was progress in some areas, such as providing more access to information on incidents and compliance. However, we observed that the Board needs to do more to effectively adapt and evolve to keep pace with pipeline project proposals, the corresponding public interest and expectations, and recent regulatory changes.

We concluded that the Board did not adequately track company implementation of pipeline approval conditions, or consistently follow up on deficiencies in company compliance with regulatory requirements. Although the Board could demonstrate through a manual search of its records that companies had taken most of the required corrective actions, the information management systems used for this purpose were not integrated with each other, and were outdated and inefficient.

We concluded that the Board has been fulfilling its current role as lead federal regulatory agency in pipeline emergency response but could consolidate risks with its emergency management plan in preparation for new responsibilities under the Pipeline Safety Act, to come into force by 18 June 2016. We also noted that the Board has improved its review of company emergency procedures manuals since our last audit and enhanced public access to information on pipeline incidents.

We also concluded that, although the National Energy Board has assessed its human resource capacity and has taken steps to address the issues identified, it is still facing ongoing challenges to recruit and retain specialists in key areas such as pipeline integrity and regulatory compliance.

What we found

Tracking company compliance

Overall, we found that the National Energy Board’s tracking of company compliance with pipeline approval conditions was inadequate. Although the National Energy Board has taken steps to improve its follow-up on company non-compliances with regulations, more work remains. We also found that the information management systems the Board used for this work were not integrated with each other, and were outdated and inefficient. Finally, we found that the Board has taken steps to improve public access to information on company compliance with regulatory requirements, but has yet to take similar steps for pipeline approval conditions.

This is important because pipeline approval conditions and regulatory requirements exist so that pipelines can be built and operated safely. Effective regulatory oversight by the Board is important to reducing the risk of company non-compliance, and to protecting the safety of Canadians and the environment.

Emergency preparedness

Overall, we found that although the Board is currently fulfilling its role as lead federal agency in pipeline emergency response in the areas we examined, there are important opportunities for improvement. We found that the Board could consolidate the results of risk assessments to inform its mandate-specific emergency management plan. While the Board has improved its review process for companies’ emergency procedures manuals since our last audit, a third of the reviews still lacked important information. We also observed that the Board has developed and made public an interactive map of spills and other pipeline incidents.

This finding is important because incidents involving pipelines could lead to significant environmental damage and potential harm to humans. The Federal Policy for Emergency Management requires government institutions to develop mandate-specific emergency management plans, based on an all-hazards risk assessment. Consolidation of all risk assessment activities that the Board conducts will be important as the Board prepares to assume new responsibilities, including powers to take over emergency response in certain circumstances, when the Pipeline Safety Act comes into force no later than June 2016.

Capacity

Overall, we found that although the National Energy Board had taken steps to address the issues, it has experienced challenges in recruiting and retaining skilled and experienced staff. This was particularly true for certain types of high-demand job families, such as engineering.

This is important because the Board relies on specific expertise to conduct its pipeline approval process and perform its oversight of pipeline operations, to verify that pipelines are being built and operated safely.

  • The Board has faced on-going challenges to recruit and retain key staff

    Recommendation. The National Energy Board should review its overall resource assessment and, in consultation with other relevant federal authorities, where appropriate, should further explore avenues to address and resolve its challenges in the recruitment and retention of key staff.

Entity Responses to Recommendations

The audited entities agree with our recommendations, and have responded (see List of Recommendations).

Related Information

Report of the Commissioner of the Environment and Sustainable Development
Type of product Performance audit
Topics
Audited entities
Completion date 5 October 2015
Tabling date 26 January 2016
Related audits Chapter 1—Transportation of Dangerous Products, 2011 December Report of the Commissioner of the Environment and Sustainable Development

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The Commissionner’s Comments

National Energy Board has not adequately tracked companies’ compliance with safety requirements

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