ARCHIVED – National Energy Board – 2017–18 Departmental Results Report – Operating context and key risks

Operating context

As Canada’s federal energy regulator, the NEB is not just an organization that conducts pipeline hearings. The NEB is also mandated to regulate safety and environmental protection for 72,126 km of interprovincial and international pipelines, which if laid end-to-end, would wrap around the earth nearly two times. We also regulate about 1,462 km of international and designated power lines; imports of natural gas; and exports of crude oil and natural gas liquids. The NEB is a lifecycle regulator, which means we oversee a pipeline project from the application assessment phase, through to construction, operation, and eventual abandonment.

The NEB’s work places us squarely in the midst of the most important public policy debates in Canada. Pipeline safety, controversial pipeline projects, the rights and interests of Indigenous Peoples, regional issues, climate change policy and the transition to lower carbon energy systems all impact the work we do. These inter-related issues continue to create a deeply complex and evolving regulatory environment.

This requires us to listen carefully to what the people and communities who interact with us have to say, and to be prepared to respond transparently to evolving values and needs. It also requires us to analyze and share the data we collect on industry and market performance, using that information to make factual, evidence-based decisions and drive improvements not only in our own regulatory performance, but in the performance of the industry as a whole. While our role on behalf of Canadians has not changed much over time, the approach we take in fulfilling it has evolved continually.

Under a mandate from the Prime Minister, Natural Resources Canada conducted a review of the NEB’s structure, role, and mandate in order to strengthen the regulatory process and ensure that Canada continues to have a modern, efficient and effective regulator. In early 2018, the Government introduced Bill C-69: An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act^{Footnote 1}. Among other measures, this proposed legislation introduces a new impact assessment system and a new Canadian Energy Regulator. The NEB welcomes measures that strengthen our regulatory framework and supports our transformation to a robust and modern regulatory regime.

We have been mindful of this opportunity in work we have undertaken in the past year. We have fully implemented and are using our DRF, as well as developing our capacity to use and analyze data more strategically, to drive better outcomes in industry safety performance. We have forged new ways of working with Indigenous communities through IAMCs. We focused on providing more in-depth information about energy infrastructure and its safety performance to regions and communities, and actively sought to provide energy information products that will add to how Canadians discuss and respond to energy issues. Each aspect of this work has helped prepare us to respond to change and quickly adapt to the legislative changes that modernization will bring to the Canadian energy landscape.

Key risks

Key risks

Risks	Mitigating strategy and effectiveness	Link to the department’s Core Responsibilities	Link to mandate letter commitments and any Government wide or departmental priorities
Incident involving NEB-regulated infrastructure Incident involving NEB-regulated infrastructure resulting in a serious injury, fatality or significant environmental damage.	Completion of Compliance Verification Activities, including inspections and audits, according to risk-informed Compliance Verification Plan and incident trend information. NEB audits plans were risk-informed and verified that audited companies had effective management systems. Staff were trained and ready to respond to emergency incidents; company Emergency Management Manuals are accessible. Damage Prevention outreach programs reduced third party damage to buried infrastructure. Engagement undertaken with stakeholders and Indigenous groups to inform and improve regulatory oversight activities and incident reduction activities. Risk identified in the 2017–18 Departmental Plan. Strategies reduced risk exposure. Risk identified in the 2017–18 Departmental Plan. Strategies reduced risk exposure.	Safety and Environment Oversight	Linked to Government-wide commitment to protect the environment and keep all Canadians safe.
Strengthening stakeholder relationships Ineffective strategies or actions to strengthen diverse stakeholder relationships (Indigenous Peoples, landowners, regional interests, industry, Canadians).	Provided further resources for the NEB’s work with the Indigenous Advisory Monitoring Committees. Leveraged regional offices through the use of integrated engagement planning across the NEB. Continued to expand the use of the Client Relationship Management System to capture and analyze data to inform and improve organizational engagement planning and reporting capabilities. Continued to formalize ways for Indigenous Peoples and stakeholders to provide input/feedback into the development process of the NEB’s regulatory framework. Risk identified in the 2017–18 Departmental Plan. Strategies reduced risk exposure.	Engagement	Linked to Government-wide commitment to strengthen relationships with Indigenous Peoples, and seek public input as it relates to environmental impacts and major resource development projects.
Incomplete data and information Incomplete data and information due to differing and/or outdated business systems, business rules and processes, which could result in a compromised ability to conduct analysis, deliver on regulatory initiatives, or provide accurate information to the public.	Developed and implemented a comprehensive Data Management Framework. Designated a Data Management Committee and associated roles and responsibilities. Created project plans for data management system enhancements. Developed a road map for identifying, drafting and prioritizing various information systems projects. Established a dedicated Business Unit for Data and Information Management. Risk identified in the 2017–18 Departmental Plan. Strategies reduced risk exposure.	Safety and Environment Oversight Energy Information	Linked to the Treasury Board Secretariat (TBS) Management Accountability Framework and the TBS Directive on Open Government.
Disclosure of sensitive information Accidental or intentional disclosure of sensitive information that could impact financial markets, pose a breach of the Government of Canada Policy on Government Security, or lead to a loss of public trust.	Maintained use of physical security controls (e.g., access controls, locks, barriers, safes) Implementation of IT security controls (e.g., firewalls, passwords) and adhered to Shared Services Canada guidelines. Provided staff with training on aspects of information security. Implemented guidelines, manuals and testing of staff. Made IT security improvements based on audit of IT security. Risk identified in the 2017–18 Departmental Plan. Strategies reduced risk exposure.	Energy Information	n/a
Harm to a member of the public, NEB staff or a Board Member An action, conduct, threat or gesture that could cause harm to a member of the public, NEB staff, or a Board Member (for instance, in conducting lifecycle activities, during a hearing, or other engagement activity).	Hearing security policy and procedures were put in place. Consulted with national, regional and local lead security agencies to assist in security risk assessment and applying safeguards. Risk identified in the 2017–18 Departmental Plan. Strategies reduced risk exposure.	Energy Adjudication Safety and Environment Oversight Energy Information	Linked to Government-wide commitment to protect the environment and keep all Canadians safe.

Risk Analysis

The NEB takes all available action to prevent harm to the environment and the public through the lifecycle of energy-related infrastructure, with a focus on preventing incidents that result in a serious injury, fatality or significant environmental damage. The NEB uses risk-informed compliance verification activities determine company compliance with regulatory requirements. We require all companies to have a management system that identifies and controls hazards and risks, and we examine data and trends in incidents and non-compliances to focus our efforts on improving company management systems via controls that fix the root causes and mitigate the hazards. While the prevention of incidents is our top priority, the NEB also believes that being prepared for any situation is a critical part of energy safety. NEB regulated companies must have robust emergency management programs, that will anticipate and prevent incidents and manage conditions during an emergency.

The NEB’s regulatory processes impact many different stakeholders and groups in a variety of ways. It is critical that the NEB be able to connect, communicate and understand those impacts, and that each different group is able make its voice heard, to avoid a loss of trust in the regulatory process and negative impacts on those affected by energy infrastructure. The NEB works to strengthen our relationships with Indigenous Peoples as well as landowners, regional representatives, industry, and other government groups. Implementing a public engagement strategy that includes a plan for meeting the distinct engagement needs of differing groups, combined with a regional NEB presence, will facilitate relationship-building now and into the future.

One aspect of building trust and relationships is being able to provide open, transparent data and information about the NEB’s performance and that of the industry we regulate. Enhancing current systems and processes, while streamlining data and information management practices, reduces the risk of incomplete or inaccurate data and information. At the same time, the NEB takes every precaution to protect the data and information we manage. Accidental or intentional disclosure of sensitive information has the potential to impact financial markets, pose a breach of the Government of Canada Policy on Government Security^{Footnote 2}, or lead to a loss of public trust. Physical and information technology security controls and improvements, coupled with ongoing employee training on proper information management practices, mitigate this risk.

Canadian energy development remains a sensitive and often divisive issue that can touch the values of individuals and communities. There is a risk that such tensions can escalate to disruption or threats that may result in harm to members of the public, NEB staff, or a Board Member. The NEB will always provide an opportunity for Canadians to be heard, and so we continually review and consult on security assessments and strategies in order to conduct our processes in a way that protects the safety of individuals and upholds the right to be heard with respect.