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ARCHIVED – Administrative Monetary Penalty – Melcor Developments Ltd. – AMP-011-2015

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Administrative Monetary Penalty – Melcor Developments Ltd. – AMP-011-2015 [PDF 60 KB]

NOTICE OF VIOLATION

REFERENCE NUMBER: AMP-011-2015

Information for Pipeline Company / Third Party / Individual:

Information for Pipeline Company / Third Party / Individual
Name: Melcor Developments Ltd.
Contact: Brian Baker
Title: President and CEO
Address: 900, 10310 Jasper Avenue
T5J 1Y8
City: Edmonton
Province / State: Alberta
Telephone: Information not available
Fax: Information not available
E-mail: Information not available

TOTAL PENALTY AMOUNT:
$28,000

Date of Notice:
29 July 2015

Regulatory Instrument #:
n/a

On 31 March 2015 Melcor Developments Ltd. was observed to be in violation of a NEB regulatory requirement. This violation is subject to an administrative monetary penalty, as outlined below.

1. VIOLATION DETAILS

Date of Violation:
from: 31 March 2015 to: 31 March 2015
Total Number of Days: 1

Has compliance been achieved?

 X Yes

   No

If no, a subsequent NoV may be issued.

Location of Violation:

e.g. Facility/plant/head office or nearest geographical point
Rosenthal Blvd and 224 Street, Edmonton, Alberta

Short Form Description of Violation
(Refer to Schedule 1 of the AMP Regulations)

Provision and Short-form Description

NEB Act

112(1) Construction of a facility or excavation without leave (Type B)

   
Contravention of an Order or Decision made under the Act (ss. 2(2) of the AMP Regulations)
   

Failure to comply with a term or condition of any certificate, licence, permit, leave or exemption granted under the Act (ss. 2(3) of the AMP Regulations)

2. RELEVANT FACTS

Briefly describe reasonable grounds to believe a violation has occurred

  1. Subsection 112(1) of the National Energy Board Act (NEB Act) states that “Subject to subsection (5), no person shall, unless leave is first obtained from the Board… excavate using power operated equipment… within thirty metres of a pipeline.” The National Energy Board Pipeline Crossing Regulations Part I section 6 provides that such leave "...is not required for an excavation, other than an excavation referred to in section 7, if (b) the excavator obtains written permission from the pipeline company prior to the excavation and accepts any conditions set out in the permission." Section 138 of the NEB Act states: "In any proceedings under this Act against a person in relation to a violation, it is sufficient proof of the violation to establish that it was committed by an employee, or agent or mandatary, of the person, whether or not the employee, agent or mandatary is identified or proceeded against in accordance with this Act."
  2. Melcor Developments Ltd. (Melcor) is a real estate development and property management company based in Edmonton, Alberta with developments across Western Canada and the United States. Melcor is currently developing a large, residential community called Rosenthal in Edmonton located in the vicinity of Rosenthal Boulevard and 217 to 224 Streets NW (the Facility). This development is located near the TransMountain Pipeline (TMPL) which is owned and operated by Kinder Morgan Canada (KMC).
  3. Melcor states it employs the services of IBI Group (IBI) as prime consultant and Ketek Group Inc., including its Safety Services Division (collectively “Ketek”) as prime contractor for construction of the Facility. As agents of Melcor, both IBI and Ketek procure the services of sub-contractors including Economy Landscape, Jatec Electric Ltd. (Jatec) and McCaw Environmental Protection Alberta Ltd. (McCaw Environmental), all of whom are also and thereby agents of Melcor.
  4. On 14 October 2014, KMC reported an unauthorized ground disturbance by Melcor sub contractor Economy Landscape, whose operator conducted an excavation within the 30 meter safety zone of TMPL using an auger digger. KMC advised the National Energy Board(NEB or the Board) in its report that it discovered the unauthorized ground disturbance occurred on 27 September 2014. KMC also reported that despite having placed an Alberta One-Call request, and set up appointments in order for KMC to issue relevant permits, Economy Landscape completed its excavation activity before KMC's arrival on site and without receiving written permission to do so. KMC held an on-site discussion with Economy Landscape to remind them of requirements for ground disturbances within 30 metres of NEB-regulated facilities.
  5. On 17 October 2014, the NEB issued a letter to Economy Landscape noting an unauthorized ground disturbance had occurred and reminding it of requirements for working near NEB-regulated pipelines.
  6. On 19 December 2014, KMC reported a second unauthorized excavation within the 30 metre safety zone of the TMPL to the Board. KMC discovered that Jatec, a Melcor sub-contractor, used a backhoe to conduct excavations on 15 December 2014. KMC confirmed this subcontractor did not have an Alberta One-Call authorization or written permission from KMC to conduct the activity at that location. As a result, work was stopped, a valid Alberta One-Call was requested, and KMC issued a permit for the excavation work. KMC held an on-site safety meeting with Jatec regarding the incident.
  7. On 22 December 2014, KMC sent a letter to Melcor along with Winterburn Developments Inc., IBI, Ketek and Jatec, describing the unauthorized excavations which had taken place. KMC reminded Melcor and its sub-contractors of the dangers of unauthorized ground disturbances and requirements for working near federally regulated pipelines. In this letter, KMC reminded Melcor and its sub-contractors that the NEB has the discretion to investigate this matter further and that unauthorized excavations and ground disturbances could result in regulatory action.
  8. On 9 January 2015, the NEB issued a letter to Melcor, IBI, Ketek and Jatec, noting that a second unauthorized ground disturbance by a Melcor sub-contractor had occurred within the safety zone of the TMPL. The NEB noted this event was a repeat unauthorized activity near the TMPL and its right-of-way (RoW) and therefore met the NEB's criteria for a high-risk unauthorized activity as per section 4 of the NEB's Excavation and Construction Near Pipelines guidance document. The letter also reminded Melcor that such events could be considered for further enforcement action including an Administrative Monetary Penalty (AMP). The NEB reminded Melcor, its contractors and subcontractors of requirements for working near NEB-regulated pipelines. The Board required all parties to submit in writing, the events that led to the unauthorized activity and the steps to be taken going forward to prevent further unauthorized activities around federally regulated pipelines. The NEB further required Melcor and IBI Group to provide a number of items in writing to the NEB by 30 January 2015 including their:
    • Safety process and Safety procedure which ensures that work is done in compliance with the Regulations when excavating and/or constructing near a federally regulated pipeline;
      • What is(are) the accountable position(s) that is(are) responsible for ensuring this process and procedure is kept current?;
      • Where are the documents located?; and
      • How will this be communicated within your organization?
    • Documentation of employee training and work instructions on this safety procedure; and - Job safety analysis and Job hazard analysis records for the work performed at Rosenthal Blvd. and 224 Street, Edmonton AB.
  9. On 13, 16 and 29 January 2015, the NEB received responses to its 9 January 2015 letter from Ketek, Jatek and IBI respectively. Along with additional e-mail correspondence which clarified some items, these letters were responsive to the Board’s requests.
  10. On 22 January 2015, the Board received Melcor’s letter in response to the NEB's 9 January 2015 letter. In it, Melcor indicated that it (on behalf of Winterburn Developments Inc.) employed IBI Group as Prime Consultant and Ketek Group Inc. as Prime Contractor and relied on them to enforce NEB requirements. Melcor’s letter suggests that Ketek's response to the Board’s letter of 9 January 2015 should be considered as submitted on Melcor’s behalf.
  11. On 9, 10 and 15 April, the NEB placed phone calls to Melcor requesting responses which remained outstanding to the requests contained in the Board's 9 January 2015 letter.
  12. On 6 April 2015, KMC reported a third unauthorized excavation by Melcor subcontractor McCaw Environmental. KMC reported that McCaw Environmental was operating a skid steer on the RoW and conducted a 1 metre excavation within the 30 metre safety zone, as confirmed in IBI's 29 April 2015 letter. The unauthorized excavation was discovered to have occurred on 31 March 2015. KMC confirmed McCaw Environmental did not have an Alberta One-Call authorization or written permission from KMC to conduct the excavation activities within the 30 meter safety zone. Work was stopped, and McCaw Environmental was asked to notify Alberta One-Call before proceeding further. Alberta One-Call authorization was obtained. KMC remained on-site to ensure its requests were followed and contacted the development companies to inform them of what had occurred.
  13. On 9 April 2015, Melcor responded to an e-mail sent out by IBI Group, reminding sub-contractors to follow safety policies and procedures set out for them, including those set by the NEB. The e-mail also reminded sub-contractors of the serious repercussions that could take place if a pipeline strike were to occur.
  14. On 15 April, the NEB sent a letter to Melcor, IBI, and McCaw Environmental noting that a third unauthorized ground disturbance by a Melcor sub-contractor had occurred within the safety zone of the TMPL. The NEB noted this event was a repeat unauthorized activity near the TMPL and its right-of-way (RoW) and therefore met the NEB's criteria for a high-risk unauthorized activity as per section 4 of the NEB's Excavation and Construction Near Pipelines guidance document. The letter also reminded Melcor that such events could be considered for further enforcement action including an Administrative Monetary Penalty (AMP). In this letter, the NEB required Melcor to provide in writing, by 30 April 2015:
    • The events that led to this unauthorized activity and the steps Melcor will take going forward to prevent future unauthorized activities by contractors and sub-contractors acting on your behalf;
    • Melcor policy with respect to contractor and sub-contractor oversight;
    • How is Melcor ensuring that safety policies and procedures are communicated to the employees of the contractors and sub-contractors conducting work on your behalf; and
    • Who, within Melcor, is accountable for ensuring contractor and sub-contractor oversight?
  15. On 30 April 2015, Melcor provided a partial response to the NEB's 15 April 2015 letter. In its response, Melcor provided information on the event that led to the 31 March 2015 unauthorized activity and the detailed steps Melcor would take going forward to prevent future unauthorized activities by contractors and sub-contractors acting on its behalf.
  16. On 4 May 2015, the NEB e-mailed Melcor in response to the company's 30 April 2015 letter. In this e-mail, the NEB acknowledged Melcor’s response but noted that certain information requested pertaining to contractor and sub-contractor oversight, accountability for that oversight, the communication of safety policies and procedures remained outstanding. The Board also requested Melcor’s new ground disturbance procedure to which Melcor referred in its 30 April 2015 letter.
  17. On 3 June 2015, Melcor responded that Ketek was retained as its prime contractor to take on all contractor oversight. Melcor indicated that Ketek is responsible for reviewing all safety programs of contractors on site and that, as a part of the Prime Contractor Safety Program, all contractors must sign-off to indicate they will endeavor to ensure all employees comply with the Ketek Safety Program. The email included, as an attachment, Ketek’s ground disturbance procedure.

3. PENALTY CALCULATION

(a) BASELINE PENALTY (Gravity Value = 0)

(a) BASELINE PENALTY (Gravity Value = 0)
Category Individual Any Other Person
(Type A)     $1,365     $5,025
(Type B)     $10,000  X  $40,000

[Refer to AMP Regulations, Subsection 4(1)]

(b) APPLICABLE GRAVITY VALUE

[Refer to AMP Regulations, Subsection 4(2)]

Mitigating Aggravating
-2 -1 0 +1 +2 +3
    Other violations in previous seven (7) years -- --             --
n/a
    Any competitive or economic benefit from violation -- --             --
n/a
    Reasonable efforts to mitigate / reverse violation’s effect                     --
n/a
    Negligence on part of person who committed violation -- --             --
n/a
    Reasonable assistance to Board with respect to violation                     --
n/a
    Promptly reported violation to Board                     --
n/a
 X  Steps taken to prevent reoccurrence of violation      X              --
In its response to the NEB's 15 April 2015 letter, Melcor provided information on the event that led to the 31 March 2015 unauthorized activity and the steps Melcor would take going forward to prevent future unauthorized activities by contractors and sub-contractors acting on its behalf.
    Violation was primarily reporting / record-keeping failure             -- -- --
n/a
    Any aggravating factors in relation to risk of harm to people or environment -- --                
n/a
(c) TOTAL GRAVITY VALUE
-1

(d) DAILY PENALTY
(The baseline penalty, adjusted for the final gravity level)

$28,000

(e) NUMBER OF DAYS OF VIOLATION
(If more than one day, then the justification must be provided.)

1

Notes to explain decision to apply multiple daily penalties, or "Not Applicable"

n/a

4. TOTAL PENALTY AMOUNT

$28,000

Note: The total penalty amount shown is based on the period described in Step 1 above. If compliance has not been achieved, a subsequent Notice of Violation may be issued.

5. DUE DATE

(30 days from receipt of Notice of Violation)
27 August 2015

Notes

You have the right to make a request for a review of the amount of the penalty or the facts of the violation, or both, within 30 days after the Notice of Violation was received.

If you do not pay the penalty nor request a review within the prescribed period, you are considered to have committed the violation and you are liable for the penalty set out in the Notice of Violation. The penalty is due on the date indicated above.

The unpaid penalty amount is a debt due to the Crown and may be recovered by collection procedures stipulated in the Financial Administration Act.

The information regarding the violation may be posted on the NEB website:

  1. 30 days from the date this Notice of Violation was received or;
  2. upon issuing a decision following a Request for Review.

To Make Payment:

You may remit your fee payment by Electronic Funds Transfer (EFT) or by cheque payable to the order of Receiver General for Canada.

EFT payments can be arranged by contacting the Director of Financial Services, Monday to Friday, from 09:00 to 16:00 Mountain Time:

  • Telephone: 403-606-0779 / 800-899-1265
    Fax: 403-292-5503 / 877-288-8803

Cheques should be made out to the "Receiver General for Canada" and mailed to:

  • National Energy Board
    Attention: Finance
    Centre 10, 517 - 10th Avenue SW
    Calgary, Alberta
    T2R 0A8

Your completed Payment form should be enclosed with your payment.

To Request a Review

Pursuant to the NEB Act, Section 144, you may file a request for a review of this Notice of Violation by the Board.

The date of filing is the date on which the document is received, as indicated by the date on an e-mail submission or the stamped on the document by a NEB employee.

If you elect to make a request for a review, complete and submit the attached Request for Review form to:

  • Administrative Monetary Penalty - Reviews
    National Energy Board
    Centre 10, 517 - 10th Avenue SW
    Calgary, Alberta
    T2R 0A8

For more information on reviews, please see the Administrative Monetary Penalties Process Guide available on the NEB's website.

Sincerely,

Robert Steedman

Designated Officer
Administrative Monetary Penalties

403-299-3178

Date modified: