On September 6, 2012, the Canadian National Energy Board (NEB) released a discussion paper identifying three areas in which they believe regulated companies must invest effort and resources to demonstrate improved safety and environmental outcomes. Referring to several recent high-profile environmental incidents that have occurred in the energy industry, including the spill from the BP Macondo well in the Gulf of Mexico and pipeline ruptures in Michigan, California and Alberta, the NEB suggests that there is a need for better corporate culture and leadership in order to promote safer operating practices. In addition to being of interest to companies in the energy field, as the primary federal energy regulator in Canada, the NEB’s discussion paper may also provide a useful perspective to other industry participants in an area that has captured significant recent public attention. The NEB’s discussion paper can be found on the NEB’s website:
In the discussion paper, the NEB announces a safety forum which it will host on June 5 and 6, 2013 for industry and regulators to share information and discuss best practices and issues raised in the NEB’s paper. The discussion paper also refers to the development of amendments to the Onshore Pipeline Regulations but provides no specific information in respect of the timing of the amendments.
Areas for Improvement
The NEB identified three areas in which regulated companies must improve:
- Corporate Leadership and Safety Culture;
- Effectiveness of Management Systems; and
- Performance Measurement and its Role in Hazard Identification and Risk Mitigation.
Corporate Leadership and Safety Culture
Based on its own review, as well as studies commissioned by the Organization for Economic Cooperation and Development (OECD), the NEB found that the leadership of senior management and their attitudes toward the promotion of safe practices in a company’s operations plays a direct role in the success of these outcomes. To address this finding, the NEB announced that it will amend the Onshore Pipeline Regulations to include provisions that require companies to appoint an officer accountable for the company’s compliance with safety and environmental regulations. In meeting these requirements, the NEB suggests that companies adopt the guidelines developed by the OECD for corporate governance for safety in high hazard industries.
Effectiveness of Management Systems
The NEB identified that management systems are only effective when they are consistently and effectively applied. To ensure the effectiveness of these systems, the NEB is planning to amend the Onshore Pipelines Regulations to ensure that companies have systems that are integrated across their operations and management and that these systems are consistently applied.
Performance Measurement and its Role in Hazard Identification and Risk Mitigation
The manner in which companies commonly measure the success of their safety procedures and overall safety of their operations is considered by the NEB as being too narrowly focused on the health and safety of individual workers. The NEB will now require corporate leaders to take a broader view of the effectiveness of the procedures in place to promote safe operations.
The NEB will now expect industry to set performance measures that capture a broader illustration of a company’s safety performance. This will include accountability for human factors, organizational deficiencies and the culture of safety within the company.