Vol. 147, No. 14 — July 3, 2013
Registration
SOR/2013-138 June 18, 2013
NATIONAL ENERGY BOARD ACT
Administrative Monetary Penalties Regulations (National Energy Board)
P.C. 2013-825 June 18, 2013
The National Energy Board, pursuant to section 134 (see footnote a) of the National Energy Board Act (see footnote b), makes the annexed Administrative Monetary Penalties Regulations (National Energy Board).
Calgary, May 17, 2013
SHERI YOUNG
Secretary of the National Energy Board
His Excellency the Governor General in Council, on the recommendation of the Minister of National Resources, pursuant to section 134 (see footnote c) of the National Energy Board Act (see footnote d), approves the annexed Administrative Monetary Penalties Regulations (National Energy Board), made by the National Energy Board on May 17, 2013.
ADMINISTRATIVE MONETARY PENALTIES REGULATIONS (NATIONAL ENERGY BOARD)
INTERPRETATION
Definition of “Act”
1. In these Regulations, “Act” means the National Energy Board Act.
DESIGNATED PROVISIONS
Provisions of the Act or regulations
2. (1) The contravention of a provision of the Act or any of its regulations that is set out in column 1 of Schedule 1 is designated as a violation that may be proceeded with in accordance with sections 134 to 154 of the Act.
Orders and decisions
(2) The contravention of any order or decision made under the Act is designated as a violation that may be proceeded with in accordance with sections 134 to 154 of the Act.
Terms and conditions
(3) The failure to comply with any term or condition of any certificate, licence, permit, leave or exemption that is granted under the Act is designated as a violation that may be proceeded with in accordance with sections 134 to 154 of the Act.
Discrepancy
(4) In the event of a discrepancy between the short-form descriptions in Schedule 1 and the provision to which it pertains, the provision prevails.
CLASSIFICATION
Provisions
3. (1) The violation of a provision that is set out in column 1 of Schedule 1 is classified as a Type A or Type B violation as set out in column 3 of that Schedule.
Orders, decisions, terms or conditions
(2) The contravention of an order or decision referred to in subsection 2(2) or the failure to comply with a term or condition referred to in subsection 2(3) is a Type B violation.
PENALTIES
Penalty
4. (1) The penalty for a violation is the amount set out in column 2 or 3 of Schedule 2 that corresponds to the type of violation, the total gravity value set out in column 1 and whether the violation was committed by an individual or a person other than an individual.
Determination of final gravity level
(2) The total gravity value in respect of a violation is to be established by considering each of the criteria in column 1 of the table to this section, by ascribing to each criterion an appropriate gravity value, having regard to the circumstances of the violation, from those set out in column 2 and by adding the values obtained.
TABLE
| Item |
Column 1
|
Column 2
|
|---|---|---|
| 1. |
Whether the person who committed the violation has other violations in the previous 7 years |
0 to +2 |
2. |
Whether the person derived any competitive or economic benefit from the violation |
0 to +2 |
3. |
Whether the person made reasonable efforts to mitigate or reverse the violation’s effects |
–2 to +2 |
4. |
Whether there was negligence on the part of the person who committed the violation |
0 to +2 |
5. |
Whether the person provided all reasonable assistance to the Board with respect to the violation |
–2 to +2 |
6 |
Whether the person, after becoming aware of the violation, promptly reported the violation to the Board |
–2 to +2 |
7. |
Whether the person has taken any steps to prevent recurrence of the violation |
– 2 to +2 |
8. |
For type B violations, whether the violation was primarily a reporting or record-keeping requirement failure |
– 2 to 0 |
9. |
Whether there are any other aggravating factors in relation to the risk of harm to people or the environment |
0 to +3 |
SERVICE OF DOCUMENTS
Manner of service
5. (1) The service of a document required or authorized under section 139, 144 or 147 of the Act is to be made by
- (a) in the case of an individual,
- (i) leaving a copy of it with the individual,
- (ii) leaving a copy of it with someone who appears to be an adult member of the same household at the individual’s last known address or usual place of residence, or
- (iii) sending a copy of it by registered mail, courier, fax or other electronic means to the individual’s last known address or usual place of residence; and
- (b) in the case of a person other than an individual,
- (i) leaving a copy of it at the person’s head office or place of business with an officer or other individual who appears to manage or be in control of the head office or place of business,
- (ii) sending a copy of it by registered mail, courier or fax to the person’s head office or place of business, or
- (iii) sending a copy of it by electronic means other than by fax to any individual referred to in subparagraph (i).
Deemed service
(2) A document — other than a document that is personally served — is considered to be served
- (a) in the case of a copy that is left with an adult referred to in subparagraph (1)(a)(ii), on the day on which the document is left with the adult;
- (b) in the case of a copy that is sent by registered mail or courier, on the tenth day after the date indicated in the receipt issued by the postal or courier service; and
- (c) in the case of a copy sent by fax or other electronic means, on the day on which it is transmitted.
COMING INTO FORCE
S.C. 2012, c. 19
6. These Regulations come into force on the day on which section 98 of the Jobs, Growth and Long-term Prosperity Act comes into force, but if they are registered after that day, they come into force on the day on which they are registered.
SCHEDULE 1
(Subsections 2(1) and (4) and subsection 3(1))
VIOLATIONS
PART 1
NATIONAL ENERGY BOARD ACT
| Item |
Column 1 |
Column 2 |
Column 3 |
|---|---|---|---|
1. |
29(1) |
Construction or operation of a pipeline by a person other than a company |
Type B |
2. |
30(1) |
Operation of a pipeline without a certificate and leave to open |
Type B |
3. |
31(a) |
Construction of a pipeline without a certificate |
Type B |
4. |
31(c) |
Construction of a pipeline without an approved plan, profile and book of reference |
Type B |
5. |
45(1) |
Failure to submit for approval a plan, profile and book of reference |
Type B |
6. |
47(1) |
Opening a pipeline or section of pipeline for transmission without leave |
Type B |
7. |
51 |
Failure to provide assistance |
Type B |
8. |
58.1 |
Construction or operation of an international power line without a permit or certificate |
Type B |
9. |
58.26(a) |
Construction of an international or interprovincial power line without approval of a plan, profile and book of reference |
Type B |
10. |
58.29(1) |
Construction or operation of an interprovincial or international power line without leave |
Type B |
11. |
58.31(1) |
Construction of a facility or excavation without leave |
Type B |
12. |
58.31(2) |
Failure to obtain required leave |
Type B |
13. |
58.34(1) |
Abandonment of a designated international power line or interprovincial power line without leave |
Type B |
14. |
74(1) |
Failure to obtain required leave |
Type B |
15. |
75 |
Failure to do as little damage as possible in exercising the powers granted and to compensate for damage |
Type B |
16. |
81(1) |
Failure to obtain required leave |
Type B |
17. |
108(1) |
Construction of a pipeline without certificate or order |
Type B |
18. |
109 |
Construction or operation of a pipeline without a certificate or order |
Type B |
19. |
112(1) |
Construction of a facility or excavation without leave |
Type B |
20. |
112(2) |
Failure to obtain required leave |
Type B |
PART 2
NATIONAL ENERGY BOARD ONSHORE PIPELINE REGULATIONS
| Item |
Column 1 |
Column 2 |
Column 3 |
|---|---|---|---|
1. |
4 |
Failure to ensure that a pipeline is designed, constructed, operated or abandoned as prescribed |
Type B |
2. |
5.1(1) |
Failure to submit prescribed documents for approval |
Type B |
3. |
6 |
Failure to design, construct, operate or abandon as prescribed |
Type B |
4. |
6.1 |
Failure to establish, implement and maintain a management system as prescribed |
Type B |
5. |
6.2(1) |
Failure to appoint an accountable officer and to ensure that the management system is established, implemented and maintained as prescribed |
Type B |
6. |
6.2(2) |
Failure to notify the Board as prescribed |
Type A |
7. |
6.2(3) |
Failure to ensure that the accountable officer has authority as prescribed |
Type B |
8. |
6.3(1) |
Failure to establish policies and goals as prescribed |
Type B |
9. |
6.3(2) |
Failure to base the management system on established policies and goals as prescribed |
Type B |
10. |
6.3(3) |
Failure of the accountable officer to prepare and communicate a policy statement as prescribed |
Type B |
11. |
6.4 |
Failure to have an organizational structure as prescribed |
Type B |
12. |
6.5 |
Failure to establish, develop, implement, maintain and document processes as prescribed |
Type B |
13. |
6.6 |
Failure to complete an annual report and submit a statement as prescribed |
Type B |
14. |
9 |
Failure to develop detailed designs of a pipeline, and to submit them when required |
Type B |
15. |
10(1) |
Failure to develop a documented risk assessment as prescribed |
Type B |
16. |
10(2) |
Failure to submit a documented risk assessment to the Board when required to do so |
Type A |
17. |
11 |
Failure to design and equip a station as prescribed |
Type B |
18. |
12 |
Failure to equip a compressor station or pump station with an alternate source of power as prescribed |
Type B |
19. |
13 |
Failure to locate, service or design a storage facility as prescribed |
Type B |
20. |
14 |
Failure to develop prescribed specifications, and to submit them to the Board when required |
Type B |
21. |
15 |
Failure to develop a quality assurance program as prescribed |
Type B |
22. |
16 |
Failure to develop a joining program as prescribed, and to submit it to the Board when required |
Type B |
23. |
17 |
Failure to examine each joint as prescribed |
Type B |
24. |
18 |
Failure to contract for services as prescribed |
Type B |
25. |
19(a) |
Failure to ensure that the construction activities do not create a hazard to the public or the environment |
Type B |
26. |
19(b) |
Failure to inform persons of safety practices and procedures as prescribed |
Type B |
27. |
20(1) |
Failure to develop a construction safety manual and to submit it to the Board |
Type B |
28. |
20(1.1) |
Failure to set out responsibilities as prescribed |
Type B |
29. |
20(2) |
Failure to keep a copy of the construction safety manual or relevant parts of it as prescribed |
Type B |
30. |
21 |
Failure to restore the right-of-way and temporary work areas of a pipeline as prescribed |
Type B |
31. |
22 |
Failure to ensure that there is no undue interference with the use of a utility or private road during the construction of a pipeline |
Type B |
32. |
23 |
Failure to develop a pressure testing program as prescribed, and to submit it to the Board when required |
Type B |
33. |
24 |
Conducting a pressure test without required permits |
Type B |
34. |
25 |
Failure to perform pressure testing as prescribed |
Type B |
35. |
26 |
Failure to minimize the number of welds that are not pressure-tested as prescribed |
Type B |
36. |
27 |
Failure to develop, regularly review and update as required operation and maintenance manuals as prescribed and to submit them to the Board when required |
Type B |
37. |
28 |
Failure to inform persons of practices and procedures and to make available to them the relevant portion of operation and maintenance manuals as prescribed |
Type B |
38. |
29 |
Failure to contract for services as prescribed |
Type B |
39. |
30(a) |
Failure to take reasonable steps to ensure that maintenance activities do not create a hazard to the public or the environment |
Type B |
40. |
30(b) |
Failure to take reasonable steps to inform persons of safety and environmental protection practices and procedures as prescribed |
Type B |
41. |
31(1) |
Failure to develop a maintenance safety manual and to submit it to the Board when required |
Type B |
42. |
31(1.1) |
Failure to set out responsibilities as prescribed |
Type B |
43. |
31(2) |
Failure to keep a copy of the maintenance safety manual or the relevant parts of it as prescribed |
Type B |
44. |
32(1) |
Failure to develop, implement and maintain an emergency management program as prescribed |
Type B |
45. |
32(1.1) |
Failure to develop, regularly review and update an emergency procedures manual |
Type B |
46. |
32(2) |
Failure to submit to the Board the emergency procedures manual and any updates |
Type A |
47. |
33 |
Failure to establish and maintain liaison as prescribed, and failure to consult as prescribed |
Type B |
48. |
34 |
Failure to inform persons who may be associated with an emergency response activity as prescribed |
Type B |
49. |
35 |
Failure to develop a continuing education program as prescribed |
Type B |
50. |
36(a) |
Failure to maintain communication facilities as prescribed |
Type B |
51. |
36(b) |
Failure to periodically test instruments and equipment as prescribed |
Type B |
52. |
36(c) |
Failure to continually record as prescribed |
Type B |
53. |
36(d) |
Failure to clearly mark valves as prescribed |
Type B |
54. |
36(e) |
Failure to clearly mark valves as prescribed |
Type B |
55. |
36(f) |
Failure to post signage as prescribed |
Type B |
56. |
37 |
Failure to develop and implement a pipeline control system as prescribed |
Type B |
57. |
38(1) |
Performing welding on a liquid-filled pipeline other than as prescribed |
Type B |
58. |
38(2) |
Failure to treat weld as a temporary installation and replace that installation with a permanent one as soon as is practicable |
Type B |
59. |
38(3) |
Failure to submit specifications, procedures and results for approval as prescribed |
Type B |
60. |
39 |
Failure to develop a surveillance and monitoring program as prescribed |
Type B |
61. |
40 |
Failure to develop, implement and maintain an integrity management program as prescribed |
Type B |
62. |
41(1) |
Failure to document the particulars of a defect on a pipeline as prescribed |
Type B |
63. |
41(2) |
Failure to submit the documentation in 41(1) when required |
Type A |
64. |
42 |
Failure to submit a proposed plan as prescribed |
Type B |
65. |
43 |
Failure to submit an application for a change or increase as prescribed |
Type B |
66. |
44 |
Failure to submit an application for proposed deactivation as prescribed |
Type B |
67. |
45 |
Failure to submit an application for reactivation as prescribed |
Type B |
68. |
45.1 |
Failure to submit an application for decommissioning as prescribed |
Type B |
69. |
46 |
Failure to develop and implement a training program as prescribed |
Type B |
70. |
47 |
Failure to develop, implement and maintain a safety management program as prescribed |
Type B |
71. |
47.1 |
Failure to develop, implement and maintain a security management program as prescribed |
Type B |
72. |
48 |
Failure to develop, implement and maintain an environmental protection program as prescribed |
Type B |
73. |
51(a) |
Failure to notify as prescribed |
Type A |
74. |
51(b) |
Failure to submit to the Board on request a crossing report as prescribed |
Type A |
75. |
52(1) |
Failure to notify and submit a report to the Board as prescribed |
Type A |
76. |
53(1) |
Failure to conduct inspections and audits as prescribed |
Type B |
77. |
53(2) |
Failure to document the audit as prescribed |
Type B |
78. |
54(1) |
Failure to inspect the construction of a pipeline as prescribed |
Type B |
79. |
54(2) |
Performance of an inspection by a person who does not have sufficient expertise, knowledge and training to competently carry out the inspection |
Type B |
80. |
55 |
Failure to conduct and document audits as prescribed |
Type B |
81. |
56 |
Failure to retain records as prescribed |
Type A |
PART 3
NATIONAL ENERGY BOARD PROCESSING PLANT REGULATIONS
| Item |
Column 1 |
Column 2 |
Column 3 |
|---|---|---|---|
1. |
4(1) |
Failure to ensure that the company’s processing plant is designed, constructed, operated or abandoned as prescribed |
Type B |
2. |
5 |
Failure to ensure that the company’s processing plant is designed, constructed, operated or abandoned as prescribed |
Type B |
3. |
9 |
Failure to develop and submit to the Board the prescribed program |
Type B |
4. |
10 |
Failure to develop, implement and maintain quality control and quality assurance programs as prescribed |
Type B |
5. |
11 |
Failure to conduct a risk analysis as prescribed |
Type B |
6. |
12 |
Failure to ensure that employees have required knowledge and training |
Type B |
7. |
13 |
Failure to develop and implement a safety program as prescribed |
Type B |
8. |
14 |
Failure to develop and implement an environmental protection program as prescribed |
Type B |
9. |
15 |
Failure to contract for services as prescribed |
Type B |
10. |
16 |
Failure to develop, implement and maintain detailed designs of its processing plant |
Type B |
11. |
17 |
Failure to ensure that a processing plant is equipped with an emergency power source |
Type B |
12. |
18 |
Failure to ensure that each tank, bullet, sphere or other container is designed, constructed and maintained as prescribed |
Type B |
13. |
19 |
Failure to ensure that process equipment and flammable vapour sources are separated as prescribed |
Type B |
14. |
20 |
Failure to ensure that process vessels and equipment are vented as prescribed |
Type B |
15. |
21 |
Failure to equip all flare headers as prescribed |
Type B |
16. |
22 |
Failure to ensure reliable fire suppression systems as prescribed |
Type B |
17. |
23 |
Failure to equip a processing plant with systems as prescribed |
Type B |
18. |
24 |
Failure to equip a processing plant with alarm devices as prescribed |
Type B |
19. |
25 |
Failure to ensure that all pressure-relief piping and systems are designed and constructed as prescribed |
Type B |
20. |
26(a) |
Failure to ensure construction does not create a detriment or hazard as prescribed |
Type B |
21. |
26(b) |
Failure to inform persons at the construction site as prescribed |
Type B |
22. |
26(c) |
Failure to inform persons on the work site as prescribed |
Type B |
23. |
27(1) |
Failure to develop, implement and submit a construction safety manual |
Type B |
24. |
27(2) |
Failure to keep a copy of the construction safety manual at the processing plant as prescribed. |
Type B |
25. |
28(1) |
Failure to ensure direct supervision of pressure tests as prescribed |
Type B |
26. |
28(2) |
Failure to ensure the independence of the test supervisor as prescribed |
Type B |
27. |
28(3) |
Failure to date and sign records |
Type B |
28. |
29 |
Failure of the company to develop and implement a non-destructive weld examination program as prescribed |
Type B |
29. |
30(1)(a) |
Failure to develop, implement, regularly review and update operations manuals as prescribed |
Type B |
30. |
30(1)(b) |
Failure to keep a copy of the operations manuals as prescribed |
Type B |
31. |
30(2) |
Failure to ensure that the operations manuals contain the prescribed procedures |
Type B |
32. |
31(2) |
Failure to develop and implement a safe-work permit system as prescribed |
Type B |
33. |
32 |
Failure to ensure that a processing plant is staffed as prescribed |
Type B |
34. |
33(a) |
Failure to ensure maintenance activities do not create a detriment or hazard as prescribed |
Type B |
35. |
33(b) |
Failure to inform persons at a maintenance site as prescribed |
Type B |
36. |
34 |
Operation of equipment with a hazard-detection alarm or shutdown device bypassed or rendered inoperable |
Type B |
37. |
35(a) |
Failure to develop, implement, regularly review and update an emergency procedures manual |
Type B |
38. |
35(b) |
Failure to submit the emergency procedures manual as prescribed |
Type A |
39. |
35(c) |
Failure to submit updates as prescribed |
Type A |
40. |
36 |
Failure to establish and maintain liaison as prescribed and failure to consult as prescribed |
Type B |
41. |
37 |
Failure to inform persons who may be associated with an emergency response activity as prescribed |
Type B |
42. |
38 |
Failure to develop and implement a continuing educational program as prescribed |
Type B |
43. |
39(a) |
Failure to maintain communication facilities as prescribed |
Type B |
44. |
39(b) |
Failure to retain incident data as prescribed |
Type B |
45. |
39(c) |
Failure to clearly mark valves as prescribed |
Type B |
46. |
39(d) |
Failure to post signage as prescribed |
Type B |
47. |
39(e) |
Failure to post signage as prescribed |
Type B |
48. |
40(a) |
Failure to test hazard-detection devices as prescribed |
Type B |
49. |
40(b) |
Failure to document and maintain prescribed records |
Type B |
50. |
41 |
Failure to develop and implement a processing plant integrity program as prescribed |
Type B |
51. |
42 |
Failure to notify of plant deactivation as prescribed |
Type A |
52. |
43.1 |
Failure to submit an application for decommissioning as prescribed |
Type B |
53. |
44 |
Failure to develop and implement a training program as prescribed |
Type B |
54. |
45 |
Failure to ensure visitors are made familiar with the safety program as prescribed |
Type B |
55. |
46 |
Failure to provide immediate notice of any incident and to submit prescribed reports |
Type B |
56. |
47(a) |
Failure to notify of any hazard as prescribed |
Type A |
57. |
47(b) |
Failure to provide a report as prescribed |
Type B |
58. |
48 |
Failure to report burning as prescribed |
Type A |
59. |
49(1.1) |
Failure to notify as prescribed |
Type A |
60. |
50 |
Failure to prepare and keep current a report as prescribed |
Type B |
61. |
51 |
Failure to regularly conduct balance analysis as prescribed |
Type B |
62. |
52(1) |
Failure to conduct audits and inspections as prescribed |
Type B |
63. |
52(2) |
Failure to document an audit as prescribed |
Type B |
64. |
53 |
Failure to inspect as prescribed |
Type B |
65. |
54 |
Failure to annually audit the competency of all employees as prescribed |
Type B |
66. |
55 |
Failure to develop, implement and maintain a record retention and handling program |
Type A |
PART 4
NATIONAL ENERGY BOARD PIPELINE CROSSING REGULATIONS, PART 1
| Item |
Column 1 |
Column 2 |
Column 3 |
|---|---|---|---|
1. |
4 |
Failure to construct or install a facility as prescribed or to obtain leave |
Type B |
2. |
5 |
Failure to install an overhead line across a pipeline as prescribed or to obtain leave |
Type B |
3. |
6 |
Failure to excavate as prescribed or to obtain leave |
Type B |
4. |
7 |
Failure to meet the circumstances and conditions as prescribed or to obtain leave |
Type B |
PART 5
NATIONAL ENERGY BOARD PIPELINE CROSSING REGULATIONS, PART II
| Item |
Column 1 |
Column 2 |
Column 3 |
|---|---|---|---|
1. |
4(1) |
Failure to establish a public awareness program as prescribed. |
Type B |
2. |
4(2) |
Failure to assess the effectiveness of a public awareness program as prescribed and to maintain a record of the assessment |
Type B |
3. |
5(1) |
Failure to develop guidelines as prescribed, and to make them public |
Type B |
4. |
5(2) |
Failure to submit guidelines for approval as prescribed |
Type B |
5. |
6(1) |
Failure to inform as prescribed |
Type A |
6. |
7 |
Failure to provide information and assistance as prescribed |
Type B |
7. |
8 |
Failure to send comments to the Board as prescribed |
Type A |
8. |
9(1)(a) |
Failure to inform the facility owner or excavator as prescribed |
Type B |
9. |
9(1)(b) |
Failure to mark the location of pipes as prescribed |
Type B |
10. |
9(1)(c) |
Failure to explain the significance of stakes as prescribed |
Type B |
11. |
10(a) |
Failure to carry out inspections as prescribed |
Type B |
12. |
10(b) |
Failure to inspect all exposed pipe prior to backfilling |
Type B |
13. |
10(c) |
Failure to maintain a record of all inspection findings and observations |
Type A |
14. |
10(d) |
Failure to include the prescribed information in the inspection record |
Type A |
15. |
11 |
Failure to maintain records as prescribed |
Type A |
16. |
12 |
Failure to provide a list as prescribed |
Type A |
17. |
13 |
Failure to report as prescribed |
Type A |
18. |
14(2) |
Failure to notify the Board as prescribed |
Type A |
19. |
15(1) |
Failure to inspect and to inform as prescribed |
Type B |
20. |
15(2) |
Failure to inform the Board as prescribed |
Type A |
21. |
16 |
Failure to make records and other materials available to the prescribed persons and to assist as prescribed |
Type B |
PART 6
POWER LINE CROSSING REGULATIONS
| Item |
Column 1 |
Column 2 |
Column 3 |
|---|---|---|---|
1. |
3 |
Failure to construct a facility or excavate as prescribed or failure to obtain leave |
Type B |
2. |
4 |
Failure to construct a power line as prescribed or failure to obtain leave |
Type B |
SCHEDULE 2
(Subsection 4(1))
PENALTIES
| Item |
Column 1 |
Column 2 |
Column 3 |
||
|---|---|---|---|---|---|
| Gravity Level |
Type A Violation |
Type B Violation |
|||
| Individual |
Any Other Person |
Individual |
Any Other Person |
||
1. |
–3 or less |
$250 |
$1,000 |
$1,000 |
$4,000 |
2. |
–2 |
$595 |
$2,375 |
$4,000 |
$16,000 |
3. |
–1 |
$990 |
$3,750 |
$7,000 |
$28,000 |
4. |
0 |
$1,365 |
$5,025 |
$10,000 |
$40,000 |
5. |
1 |
$1,740 |
$6,300 |
$13,000 |
$52,000 |
6. |
2 |
$2,115 |
$7,575 |
$16,000 |
$64,000 |
7. |
3 |
$2,490 |
$8,850 |
$19,000 |
$76,000 |
8. |
4 |
$2,865 |
$10,125 |
$22,000 |
$88,000 |
9. |
5 or more |
$3,000 |
$12,000 |
$25,000 |
$100,000 |
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Background
The Jobs, Growth and Long-term Prosperity Act, portions of which came into force on July 6, 2012, included changes to a number of pieces of legislation, including the National Energy Board Act (Act). As part of these changes, new provisions were added to the Act (sections 134 to 154) that established a system of administrative monetary penalties (AMPs) to promote compliance with the Act.
Issues and objectives
The National Energy Board (NEB) considers safety and environmental protection at the forefront of its responsibilities and is committed to continual improvement of the safety performance of its regulated companies. The NEB has a compliance verification and enforcement toolkit that it uses to regulate safe performance of NEB-regulated facilities. When safety concerns are identified, the NEB can issue advisories, request corrective action, issue orders to restrict operations, or pursue court-based proceedings. With the introduction of AMPs, the NEB will have an enforcement toolkit that spans the entire spectrum of consequences possible to respond to non-compliance.
The new provisions of the Act provide many of the details of the AMPs system such as maximum penalties, rules about violations, the process for requesting a review, and the recovery of penalties. For AMPs to be implemented, however, the Administrative Monetary Penalties Regulations (Regulations) must specify the following elements:
- designating violations that could be subject to a monetary penalty;
- the method for determining the amount payable as the penalty; and
- the method of serving documents.
The Regulations will not create new regulatory requirements. Rather, they will provide the NEB with an additional enforcement tool to promote compliance with existing requirements under the Act and its regulations. The ability to issue monetary penalties will help the Board promote compliance so that NEB-regulated facilities are safe and do not harm the environment.
Description
Designating violations
The Regulations include a schedule (Schedule 1) that lists each section of the Act and its regulations that is designated as a violation subject to an AMP if contravened. Contravention of an order or decision made under the Act, as well as failure to comply with a term or condition of a certificate, licence, permit, leave or exemption granted under the Act, is also designated as a violation subject to an AMP.
Calculating the penalty
The Regulations will start with a baseline penalty that can be increased or decreased using a number of adjustment factors that are listed in the Regulations. Section 4 lists nine adjustment factors that can be applied if the situation warrants, and each factor is accompanied by a number of gravity levels. The sum of all gravity levels determines how much the penalty can be increased or decreased from the baseline. Schedule 2 in the Regulations shows all the potential gravity levels and the corresponding penalty amounts. Note that the baseline penalty starts with a gravity level of zero, so if no adjustment factors are applied, the final gravity level will continue to be zero and the final penalty amount will correspond to that gravity level.
The adjustment factors are designed to promote certain behaviours such as prompt voluntary reporting, undertaking mitigation activities quickly, and taking steps to prevent recurrence of a violation. By contrast, the factors are also intended to deter behaviours such as negligence, repeat violations, and financial gain from a violation.
It is important to note that a penalty cannot be increased beyond the maximum penalties set out in subsection 134(2) of the Act of $25,000 for individuals and $100,000 for any other person (e.g. companies).
Serving notice
An individual or company who has committed a violation may be issued a notice of violation that describes the facts surrounding the violation, the amount and manner of paying the penalty, and the person’s right to request a review. The Regulations will require that notices of violation and any other documents be served in person, through registered mail, courier, fax or other electronic means.
Consultation
Consultations on a proposed approach to AMPs were conducted from July 5, 2012, to September 28, 2012, beginning with the release of a discussion paper entitled “Administrative Monetary Penalties under the National Energy Board Act.” A letter was distributed to stakeholders informing them of the release of the discussion paper and inviting comments on the AMPs proposal. The letter was posted on the NEB Web site and sent to over 600 organizations and individuals including NEB-regulated companies, Aboriginal groups, general interested parties, associations and provincial governments, as well as past participants in damage prevention workshops organized by the NEB.
During the public comment period, the NEB met with several groups to discuss the AMPs proposal, answer questions and solicit feedback. These groups included industry associations, regulated companies, organizations representing farmers and landowners, as well as other federal government departments and agencies. A webinar was held on September 6, 2012, with numerous organizations and individuals from across the country participating through webcasting and teleconference.
A total of 15 written submissions were received during the comment period. Many of the comments and questions submitted were regarding the implementation of AMPs, including the place of AMPs within the NEB’s broader enforcement toolkit; how AMPs will be used in the context of the NEB’s damage prevention program; how daily penalties will be applied; and the application of AMPs to the electricity sector. In response, the NEB issued interim policy guidance regarding the criteria guiding the use of AMPs within the NEB’s enforcement framework, and regarding the applicability of AMPs to the electricity sector. Concurrent with the issuance of this interim guidance, the Regulations were prepublished in the Canada Gazette, Part I, on February 16, 2013, followed by a 30-day public comment period. A total of 7 written submissions were received during the comment period, addressing the topics below.
Implementation
Many of the submissions were similar to those received during consultations on the discussion paper, in that they were comments and queries related to how AMPs will be implemented in practice, particularly in relation to other enforcement measures.
In addition to the interim policy guidance previously issued by the NEB, further details regarding the AMPs process and the integration of AMPs into the NEB’s existing enforcement framework will be provided through guidance materials.
Compliance agreements and daily penalties
Parties commented that compliance agreements and action plans are an effective measure for resolving non-compliance and should be included in the Regulations or incorporated into the Board’s enforcement policy and procedures. Parties further commented that when a compliance agreement or an action plan to address non-compliance is in place and a company is making demonstrable progress toward resolving a violation, the accumulation of daily penalties should be paused.
The NEB recognizes that agreements and action plans by companies can be effective in addressing cases of non-compliance. Concurrent with prepublication of the proposed Regulations on February 16, 2013, the Board released interim policy direction describing the NEB’s approach to enforcement and the use of AMPs. Part of this policy direction was a clear statement that AMPs will be used selectively and the Board will continue to use existing enforcement tools where effective.
Application of penalties to exempted requirements
Parties commented that certain requirements of the NEB Act that are designated as violations in Schedule 1 of the proposed Regulations (and therefore subject to AMPs) may be subject to exemptions under the Act. They suggested that a footnote should be added to the Regulations to indicate that failure to comply with these requirements would not be a violation subject to an AMP if the company has obtained an exemption.
A company cannot contravene a requirement if it has been exempted from its application. An AMP would therefore not be issued in such a circumstance.
Scope of Regulations
Parties commented that the application of AMPs to violations of Board orders and decisions and non-compliance with terms and conditions of authorizations is not consistent with the Board’s stated intent of focusing AMPs on safety and environmental protection. It was suggested that either the Regulations be amended or policy be developed to clarify that AMPs only apply to those orders, decisions, terms and conditions that pertain to safety and environmental protection.
The NEB has clearly stated that the application of AMPs will be focused on requirements related to safety and environmental protection. This approach was articulated in the AMPs discussion paper, as well as in the interim policy guidance that was issued in conjunction with the prepublication of the proposed Regulations. The NEB will develop additional guidance regarding the application of AMPs, and will further reinforce the Board’s position that AMPs will be focused on requirements pertaining to safety and environmental protection, including orders, decisions, terms and conditions.
Parties commented that the Board’s General Order on Mandatory Electricity Reliability Standards should fall outside the scope of the Regulations because electricity reliability standards are not germane to safety or environmental protection concerns.
Reliability standards are designed primarily to ensure reliable operation of the power system. However, if a system becomes unreliable due to violation of those standards, it can result in public safety issues, such as extended loss of power to critical public services. Because reliability of the power system and public safety are linked, it is appropriate for the General Order of Mandatory Electricity Reliability Standards to be within the scope of the Regulations.
Penalty amounts
Parties commented that the maximum penalty limits in the Act are set too low and bear no resemblance to damages that may occur as a result of a violation. It was stated that the Regulations would not increase compliance because it is economically advantageous for industry to avoid compliance costs. Parties suggested that penalties should reflect costs such as fatalities, long-term medical issues, employment loss, real estate value loss, water pollution and economic damages resulting from a spill.
The maximum penalties are set in the Act and cannot be changed through the Regulations. The Act does provide for a new penalty to be issued for every day that a violation continues, which can add up to a significant amount. The Act also states that the purpose of AMPs is to promote compliance. AMPs are not designed to compensate for damages. Public safety and environmental protection are of utmost importance to the Board, and the Board will take all necessary actions to protect the public and the environment. This may include AMPs as well as other enforcement tools as they are not mutually exclusive and multiple enforcement measures can be used concurrently.
“One-for-One” Rule
The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.
Small business lens
The small business lens does not apply to this proposal, as there are no costs to small business.
Rationale
The Regulations will achieve the objectives outlined above by providing the details that are required to implement the AMPs system set out in the Act. Namely, the Regulations clearly describe what contraventions and non-compliance are designated as violations that could be subject to an AMP, the method for calculating the amount payable for each violation, and the method by which documents must be served.
The NEB conducted a benchmarking study that examined how AMPs are designed and applied by regulators in other sectors, provinces and countries. By adapting best practices from other jurisdictions and consulting with stakeholders, the NEB is of the view that the Regulations represent a fair, balanced and effective approach to promoting compliance with the Act and its regulations.
Regulatory and non-regulatory options considered
The Act requires that regulations be developed to provide the details necessary for AMPs to be implemented. Non-regulatory options would not fulfill this requirement and were therefore not considered.
Expected costs and benefits
There are no expected costs associated with the Regulations as they do not create any new regulatory requirements, nor do they impose additional administrative or compliance costs on NEB-regulated companies, businesses or the Canadian public.
It is expected that the Regulations will result in net benefits to Canadians through increased compliance with the requirements of the Act and its regulations that are meant to promote the safety of workers and the public and the protection of the environment. Industry may also benefit as more comprehensive enforcement of regulatory requirements may increase public trust that Canadian energy infrastructure will be constructed and operated in a manner that is safe, secure and protective of the environment.
Implementation, enforcement and service standards
AMPs will be implemented within the NEB’s enforcement toolkit when the Regulations come into force. The NEB has a number of compliance verification and enforcement measures that it uses to promote compliance with the Act and its regulations. While AMPs will be an additional enforcement tool, existing enforcement measures have been effective in obtaining compliance in most cases, so they will continue to be used. For further clarity, the following criteria will be considered in guiding the use of AMPs:
- When compliance is not obtained using either facilitated or directed compliance tools;
- When harm is caused because of the non-compliance;
- When harm would likely occur because of the non-compliance; or
- Any other situation where an AMP is the best way to obtain compliance or deter future non-compliance.
It should also be noted that enforcement tools are not mutually exclusive and more than a single measure may be employed to obtain compliance or deter future non-compliance. The NEB will provide additional details on how AMPs are integrated into the existing enforcement framework through guidance material.
Contact
Suchaet Bhardwaj
Regulatory Approaches
Strategy and Analysis
National Energy Board
444 Seventh Avenue SW
Calgary, Alberta
T2P 0X8
Telephone: 403-299-2746
Fax: 403-299-3664
Email: Suchaet.Bhardwaj@neb-one.gc.ca
- Footnote a
S.C. 2012, c. 19, s. 98 - Footnote b
R.S., c. N-7 - Footnote c
S.C. 2012, c. 19, s. 98 - Footnote d
R.S., c. N-7