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ARCHIVED – Warning Letter to AltaGas Limited (AltaGas)
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22 January 2019
Executive Vice-President, Gas
1700, 355 - 4th Avenue SW
Calgary, AB T2P 0J1
Warning Letter to AltaGas Limited (AltaGas)
As part of the National Energy Board’s (the Board or NEB) 2017-2018 audit program, the NEB notified AltaGas on 20 June 2018 of its intent to audit the company. In its notification letter, the Board indicated that the audit would focus on the establishment and implementation of a Quality Assurance Program as part of AltaGas’ management system pursuant to the National Energy Board Onshore Pipeline Regulations (OPR). At the 31 October, 2018 audit close-out meeting, the NEB discussed, among other things, their finding of non-compliance to section 6.6 of the OPR, which states:
- 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.
As part of the audit activities of AltaGas' Quality Assurance Program, NEB auditors inquired about the company's annual management system review process, and requested to see a copy of its annual reports for the past four years, pursuant to subsection 6.6(1) of the OPR. The company was unable to produce a copy of the reports as requested.
The NEB had received signed statements by the company’s Accountable Officer (AO), to confirm that AltaGas had completed its annual report for each of the years 2013-2017 regarding performance of the company's management system. The Board notes that, despite these signed confirmations, its audit found that these annual reviews and subsequent reports were not completed as required.
At the time of the audit, AltaGas acknowledged that it did not have an annual report specific to NEB-regulated assets. In lieu of an annual report as described in subsection 6.6(1) of the OPR, AltaGas provided auditors with a copy of its Environmental Health and Safety (EHS) annual summary that is generated for the annual meeting of the Board of Directors EHS Sub-Committee. This annual meeting, attended by executives of the company including the AO, occurs in February each year and is documented through the Board of Directors EHS Sub-Committee meeting minutes.
The NEB determined that this EHS annual summary does not constitute an annual report that meets the requirements of subsections 6.6(1) and (2) of the OPR for the following reasons:
- The EHS annual meeting notes are a summary of outcomes from some, but not all, of the company’s relevant programs and activities.
- This summary, as provided by AltaGas, did not include all the content as required by the OPR.
- These meeting notes were not signed off by the AO, as required by subsection 6.6(1) of the OPR.
As part of its review, the NEB confirmed that AltaGas’ Accountable Officers have submitted signed statements accepting the responsibilities of the position. The NEB is therefore of the view that each Accountable Officer acting between the years of 2013 and 2017 has been aware of:
- the requirements to ensure the appropriate establishment and oversight of the company’s management system and programs for meeting the OPR obligations related to the safety of the people and protection of the environment; and
- the responsibilities to report on the performance of that management system, as outlined in section 6.6 of the OPR.
At the end of the audit, the Lead Auditor advised AltaGas that the fact that it could not provide documented evidence of having produced annual reports in accordance with subsection 6.6(1) signed by the AO for the years 2013 to 2017 inclusive, constituted a violation of the OPR and had been referred for enforcement action.
This warning indicates a non-compliance with section 6.6 of the OPR. It is intended to bring this matter to your attention in order for you to take the necessary preventive measures to ensure compliance with the National Energy Board Act, and its associated Regulations.
As part of the 2018 Quality Assurance Program Audit, this finding has been included in the report to the Board. The company will be expected to address this issue through its approved corrective and preventive action plan, and submit its 2018 Annual Report to the NEB for review and assessment to ensure that it meets the regulatory requirements.
The NEB views the position of the Accountable Officer to be fundamental to the proper functioning of a company’s management system. It is for this reason that the position is to be held by an individual with the requisite authorities and seniority within the company. The NEB expects that AOs would take their responsibilities seriously, in accordance with the requirements of the OPR.
Please be advised that this letter will form part of AltaGas’ compliance history, and any future reported incidences may result in further enforcement action, including administrative monetary penalties, in accordance with the NEB's enforcement policy and procedures. More information on the Board's compliance and enforcement activities are available on the website.
If you have any questions regarding this review or any related topic, please contact , Technical Specialist - Investigations, by telephone toll-free at 1-800-899-1265 or directly at , or by email at .
Original signed by
Director, Audit, Enforcement and Investigations
Systems Operations Business Unit
c.c. , VP Operations, AltaGas Ltd.
, Senior Regulatory Counsel, AltaGas Ltd.
, Compliance Manager, Ltd., AltaGas Ltd.
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