ARCHIVED – National Energy Board – 2013-14 Departmental Performance Report – Section I: Organizational Expenditure Overview

• Implemented changes to the NEB Act resulting from the Government’s plan for Responsible Resource Development as enacted by the Jobs, Growth and Long-Term Prosperity Act and the Economic Action Plan (2012). In 2013-14, the NEB:
  • Developed and implemented administrative monetary penalties (AMPs) framework to promote compliance with the NEB Act;
  • Increased planned inspections for regulated companies from 100 to 150 (conducted 153); and
  • Doubled the number of comprehensive audits from three to six.
• As a key component of the NEB’s Action Plan on Safety and Environmental Protection, the Board held a Safety Forum in June 2013. The event facilitated dialogue among experts, academics, landowners, youth, industry leaders, and regulators on safety management and opportunities to improve safety outcomes. Several key areas were identified to support safety and environmental protection, including efforts to advance safety culture; provide greater online transparency and access to facility locations, product type, and performance data; improve collaboration with other North American regulators; and, enhance understanding of human and organizational factors related to process safety outcomes.
• Developed and publicly released the draft Safety Culture definition and framework (in concert with the Canada-Nova Scotia Offshore Petroleum Board and the Canada-Newfoundland and Labrador Offshore Petroleum Board) to raise awareness and understanding of the role that organizational culture plays in preventing catastrophic events. The public consultation process was completed 30 January 2014.^[3]
• Built internal capacity related to management system regulatory oversight (inspectors, auditors, and other staff). There will be additional need for audit staff, staff to support investigations, and senior staff to support more sophisticated compliance work. Potential pipeline mega projects will also require unprecedented levels of NEB oversight.
• Increased focus on data management with a view of enhancing the collection and analysis of data on pipeline performance and the causes of unsafe situations and/or non-compliance:
  • The Board developed and implemented processes for data analysis which enabled faster and more robust reporting and trending on incidents and increased transparency. This information will gain importance given increased levels of public interest. Future analysis undertaken will be critical for informing the NEB’s compliance and enforcement program and ensuring resources are effectively and efficiently targeted at the right issues and risks.
  • The Safety and Environmental Performance Dashboard went live on the NEB website in March 2014, which presents key industry performance data and information and makes this information easily available to Canadians.
• A Memorandum of Understanding (MOU) with the Department of Fisheries and Oceans (DFO) that would transition assessment of fisheries impacts on NEB projects from DFO to the NEB was signed in December 2013. Applications are being assessed under the new MOU. The NEB is working with DFO on further implementation details.
• As a result of the Jobs, Growth and Long-term Prosperity Act, amendments were made to the NEB Act and COGOA. These changes require the Board to consider project effects on navigation and navigation safety for NEB-regulated pipeline and power line crossings of navigable waters before recommendations or decisions are made under s. 52 and 58 of the NEB Act and s. 5.1 of COGOA. The amendments to the NEB Act and COGOA were enacted through an Order in Council, which was issued in the Canada Gazette, Part II on 3 July 2013.
  • To ensure an effective transition of these responsibilities between Transport Canada and the NEB, the organizations signed an MOU that describes the cooperative relationship between the organizations, as well as providing guidance on when a project is regulated by the NEB or Transport Canada.
  • As a result of the legislative change, the NEB now performs reviews of project effects on navigation and navigation safety for pipeline and power line crossings of navigable waters.
• In 2012, Parliament provided the NEB with an additional $13.5 million^[4] in multi-year funding to enhance the number and frequency of inspections of oil and gas pipelines, increase the number of audits of pipeline company programs, enable more complete follow-up on corrective actions and undertake comprehensive investigations of root causes of incidents. This provided the NEB with additional “boots on the ground” to conduct a suite of compliance verification activities (CVAs) including inspections, audits, evaluations of emergency exercises and technical meetings to verify the pipelines we regulate are operating safely. In 2013-14, the Board conducted over 280 CVAs in addition to increasing the number of inspections for regulated companies and doubling the number of audits of pipeline company programs. Following up on these safety activities to ensure compliance and address issues which come to light as a result of inspections, audits and investigations will require additional work. As pipelines age, and new pipeline development increases, additional compliance verification will also be required.
• As a result of compliance verification activities, the NEB issued 21 active safety orders that are used to impose preventative measures to ensure the safety of workers and the public and/or to protect property and the environment.

• The NEB is committed to strengthening its regulatory framework for the North to ensure that future decisions on applications will address the safety of workers and the public and the protection of the environment. Carrying on this commitment, in 2013-14:
  • The NEB actively engaged Northerners and Northern institutions that could be affected by potential activities, in support of shared safety and environmental protection objectives;
  • NEB staff traveled to the Northwest Territories, Inuvialuit Settlement Region, and Nunavut to meet with hunters and trappers, Aboriginal leadership and co-management boards. Continued engagement has developed trust and credibility among Northerners and Northern institutions; and
  • Members of the Board and NEB staff visited the Mackenzie Delta as well as communities in the Beaufort Sea and Baffin Island to better understand the Northern way of life.
• Clarified our expectations of regulated companies through the development of guidance:
  • Released Filing Requirements for Onshore Drilling Operations Involving Hydraulic Fracturing;
  • Continuing to develop Filing Requirements for Geoscience Programs;
  • Continuing to develop an Audit Protocol for the Drilling and Production Regulations to clarify how the Board will audit management system requirements in the North; and
  • Continuing to develop Standby Vessel Guidance in collaboration with Offshore Boards and the supply vessel industry to promote industry best practice
• Joined FracFocus.ca, which is a collaboration between provinces, territories, regulators and industry to provide Canadians with objective information on hydraulic fracturing and what legislation and regulations are in place to protect the environment including groundwater, and transparency on the ingredients that make up hydraulic fracturing fluids. Additionally, we requested operators regulated under COGOA to submit information on hydraulic fracturing fluid composition, 30 days after hydraulic fracturing operation has finished, for disclosure on FracFocus.ca.
• Continued work on the Frontier and Offshore Regulatory Renewal Initiative (FORRI^[5]), which includes the modernization of existing operational regulations under COGOA.
• Completed devolution of oil and gas regulatory functions to the Government of the Northwest Territories (GNWT) and signed a Service Agreement to allow the NEB to provide GNWT with technical services and advice to support projects, and transfer records post-devolution.

Changes to the NEB Act resulting from the Government’s plan for Responsible Resource Development, as enacted by the Jobs, Growth and Long-Term Prosperity Act imposed time limits and the requirement to ensure timely handling of applications. As well, an increase in industry activity is resulting in unprecedented demand on NEB services. A flexible and efficient organization is required for the Board to achieve its strategic outcome and priorities in an effective and efficient manner. In support of meeting our third strategic priority, the NEB:

• Strengthened the Board’s integrated planning process to better link financial and human resource allocations to programs and outcomes. The NEB developed and communicated an organizational Integrated Business Plan, which leaders can refer to during the year to align business unit initiatives with what matters most. As the year evolves and priorities change or emerge, the plan offers a foundation from which priorities can be adjusted and resources realigned, while managing work-life balance at the NEB. The Integrated Business Plan captures our strategic priorities, key corporate risks, key focus areas and drivers, and links them to our planned activities for the fiscal year.
• Strengthened the NEB’s risk management processes and their integration with strategic planning. The NEB has a formal Integrated Risk Management Policy in place, and an environmental scan, risk identification and risk assessment is completed annually. The status of risks and mitigation activities identified in the Corporate Risk Profile are reviewed quarterly.
• Assessed and addressed current and emerging resource needs in light of record demand on NEB services:
  • Monitored activity levels to ensure resource planning was strategically managed;
  • Regularly reviewed organizational priorities in light of available staff resources; and
  • Reviewed NEB’s People Strategy and staffing plans throughout the year.
• Updated the Business Continuity Framework so that the delivery of essential services is not compromised by external events. In the summer of 2013, the NEB activated its Business Continuity Plan in response to the flooding of Southern Alberta and ensured continuity of service to Canadians without interruption.
• Implemented new ways of doing business that strengthened processes and streamlined work:
  • Developed an online portal for Applications to Participate, which has received positive feedback from testers;
  • Introduced videos on topics including our hearing process, participant funding, and an overview of the NEB, to promote information sharing and access to the NEB processes;
  • Improved the Land Matters section of the NEB website to provide better information in a simpler format;
  • Introduced more dynamic project websites for hearings including subscription forms to sign up for process updates; and
  • Further implementation of web-ex in application engagement and oral hearings to reach larger audiences, reduce costs and improve process efficiencies.
• Enhanced our strategic issues management capacity to anticipate, identify, assess and respond to issues, and to provide a corporate-wide, single-window approach to escalating issues. This enhancement will help ensure NEB’s leadership is aware of potential issues and the linkages between them. Increased public interest will drive a need for improving this strategic approach to communications and enhanced community relations.
• Developed the NEB Communications Strategy, which better defines and focuses Board activity relating to proactive public engagement, media relations and stakeholder outreach. A reorganized and proactive communications function will be more aligned to the Board’s regulatory responsibilities. The Government of Canada relies upon the NEB hearings process to the extent possible to ensure that its obligations with regard to Aboriginal engagement and consultation are discharged with respect to a project. To manage increasing interest by Aboriginal peoples, the NEB, the through its enhanced Aboriginal engagement activities, is engaging communities well before the beginning of a hearing process. This helps to identify potential issues and ensure that Aboriginal peoples have the information required to meaningfully participate in the hearing process.
• Continued to use multi-stakeholder advisory committees, such as the Land Matters Group^[6], established by the Board to increase the dialogue amongst members of the public, Aboriginal groups and industry who have an interest in land matters and are impacted by the activities of NEB-regulated companies. The Land Matters Group met several times during the year and discussed topics including proposed changes to Damage Prevention Regulations, Safety Culture Framework, NEB’s online Application to Participate form, and AMPs.

Environmental protection and safety:

There is a risk of an incident with respect to NEB-regulated company activities resulting in a serious injury, fatality(ies) or significant environmental damage.

• Monitored compliance through risk-informed verification activities, including concerns identified through the investigation of incidents and from the public.
• Doubled the number of audits conducted, and increased planned inspections from 100 to 150 per year, as a result of the Jobs, Growth and Long-term Prosperity Act.
• Monitored and analyzed emerging risks and trends within regulated companies’ operating environments.
• Compliance staff are competent and have required training to perform duties.
• A corrective action plan is in place for monitoring (or follow-up) for compliance verification activities.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Resource Constraints:

There is a risk that the volume of applications and demand on programs will be higher than expected.

• Monitored activity levels to ensure resource planning was strategically managed throughout the year.
• Regularly reviewed NEB priorities considering available staff resources.
• Reviewed our People Strategy and staffing plan during the year.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Energy Regulation

Energy Information

Internal Services

Loss of reputation as a regulator:

There is a risk that the Board will be unable to maintain public confidence if its actions are not considered expert, efficient, effective and independent.

• Continued to issue responsive, unbiased, transparent and evidence-based decisions.
• Strengthened data management processes in support of robust regulatory compliance.
• Established a system of AMPs to promote compliance with the NEB Act.
• Made all compliance and enforcement actions public on the NEB website.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Changes in public interest:

There is a risk that the public interest changes in a way that leaves the Board unable to factor those changes in a timely manner when it carries out its statutory mandate.

• Developed a robust, proactive Strategic Communications Plan to identify, plan and address stakeholder engagement opportunities with a focus on enhancing the Board’s reputation as a strong federal regulator.
• Monitored trends via reports, media and political debates and engaged stakeholders to ensure their views were heard.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Energy Regulation

Inability to recruit and retain staff:

There is a risk that the NEB will be unable to compete with industry and other employers to attract and retain the skilled staff required to deliver its mandate.

• Continued to measure employee engagement and work-life balance and effectiveness of improvement plans.
• Continued to provide training and development opportunities to ensure competent staff and a challenging work environment.
• Regularly reviewed People Strategy and staffing plan.
• Maintained status as a “Top 100” employer.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Energy Regulation

Energy Information

Internal Services

Inability to deliver effective internal services:

There is a risk that an ineffective alignment of the Board’s internal services and regulatory programs will impact the NEB’s ability to proactively manage program delivery and internal and external changes.

• Continued to strengthen internal/administrative functions, including Integrated Business Planning, Risk Management, and program evaluation.

Risk identified in the 2013-14 RPP

Strategies were effective in reducing risk exposure

Internal Services