Administrative Monetary Penalty – Trans-Northern Pipelines Inc. – AMP-002-2022

Administrative Monetary Penalty – Trans-Northern Pipelines Inc. – AMP-002-2022 [PDF 234 KB]

Notice of Violation

REFERENCE NUMBER: AMP-002-2022

Information for Pipeline Company/Third Party/Individuals

Information for Pipeline Company/Third Party/Individuals
Name: Trans-Northern Pipelines Inc.
Contact: Jane Keast
Title: President and Chief Executive Officer
Address: 310 – 45 Vogell Road
City: Richmond Hill
Province / State: Ontario, L4B 3P6
Telephone: Information not available
E-mail: Information not available

TOTAL PENALTY AMOUNT:

$100,000

Date of Notice:

February 16, 2022

Regulatory Instrument #:

OC-3, AO-1-OC-3, AO-2-OC-3

On  May 18, 2021 (date violation was detected)

Trans-Northern Pipelines Inc.

Was observed to be in violation of a CER regulatory requirement. This violation is subject to an administrative monetary penalty, as outlined below.

Section One – Violation Details

X Single-day violation:

Date of Violation: May 18, 2021

   Multi-day Violation:

(from): [Date]

(to): [Date]

Total Number of Days: 1

Has compliance been achieved?

 X  Yes      No
If no, a subsequent NOV may be issued.

Location of Violation: Trans-Northern Pipelines Inc.’s Mirabel Metering Station, Mirabel QC

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

Act or Regulation/Section:

Canadian Energy Regulator Onshore Pipeline Regulations, section 45.1 “If a company proposes to decommission a pipeline or part of one, the company shall submit an application for the decommissioning to the Commission”. (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)

Not applicable

Section Two – Relevant Facts

Briefly describe reasonable grounds to believe a violation has occurred

Executive Summary:

Trans-Northern Pipelines Inc. (TNPI) is the certificate holder of Canada Energy Regulator (CER) authorization Certificate OC-3, as amended, to operate approximately 800 kilometers of pipeline which transports refined products between Montréal and Toronto. The original line was built in 1952.

There are references to the National Energy Board (NEB or Board) and CER throughout this document. The CER replaced the NEB, its predecessor organization, on 28 August 2019 when the Canadian Energy Regulator Act (CER Act) came into force.

TNPI’s Mirabel Metering Station (Mirabel Station) is a CER-regulated facility. Order M0-01-2005, a Board Order authorizing the deactivation of Mirabel Lateral and Mirabel Station, requires the station to be maintained in a deactivated state.

There are two violations which will be described in this Notice of Violation. The first is the primary violation (related to the allegation), that TNPI conducted decommissioning activities without having submitted an application for the decommissioning to the Commission of the Canada Energy Regulator (Commission) as required pursuant to section 45.1 of the Canadian Energy Regulator Onshore Pipeline Regulations (OPR). The second contributory violation relates to the first and demonstrates further evidence for the first violation, as TNPI was not maintaining the Mirabel Station as a deactivated facility as required pursuant to Board Order MO-01-2005.

Primary Violation: section 45.1 of the OPR: Failure to submit an application to decommission a pipeline to the Commission:

As observed by a CER Inspection Officer (IO) on 18 May 2021 (with details below), the Mirabel Station had permanently ceased operations as per the definition for “decommission” as set out in Section 1 of the OPRFootnote 1, without the approval of the Commission, as required pursuant to section 45.1 of the OPR, which states:

“If a company proposes to decommission a pipeline or part of one, the company shall submit an application for the decommissioning to the Commission”.

TNPI did not apply to the (then) Board to decommission the Mirabel Station as required pursuant to this section of the OPR.  As an alternative means to ensure compliance with Section 45.1 of the OPR and Board Order, MO-01-2005, TNPI could have utilized the process outlined in the Exemption Order for Decommissioning Projects under the Canadian Energy Regulator Onshore Pipeline Regulations and National Energy Board Processing Plant Regulations (Exemption Order XO/XG-100-2008) but did not do so.

CER compliance verification activities at the deactivated Mirabel Lateral Pipeline and the Mirabel Station identified that TNPI had performed some decommissioning activities at the Mirabel Station, such as the removal of buildings and a sump tank in 2008 and 2011.

Second contributory violation: TNPI was not maintaining the Mirabel Station as a deactivated facility for which it was required pursuant to Board Order MO-01-2005.

CER IOs, on 3 November 2020 and 18 May 2021, observed that the status of the pipeline and related surface equipment, above ground pipelines, and pipeline related facilities at the Mirabel Station did not meet the operation and maintenance requirements of the CER for a deactivated facility as per Board Order MO-01-2005 and section 4(1)(d) of the OPR, necessitating compliance with the applicable clauses of CSA Z662. The IOs observed non-compliances to the requirements under CSA Z662 for the maintenance and management of deactivated facilities at the Mirabel Station, specifically in relation to: perimeter protection measures, intrusion and detection systems, external and internal corrosion controls for piping exposed to the atmosphere, inspection of such piping, maintenance of cathodic protection, vegetation control, and environmental effects (aesthetics, protection of vegetation and wildlife).

Relevant Facts:

On 16 December 2004, the Board received an application from TNPI pursuant to Section 44 of the OPR to deactivate the Mirabel Lateral Pipeline and the Mirabel Station (the Project).

On 12 January 2005, the Board issued Order MO-01-2005 approving the deactivation of the Mirabel Lateral and the Mirabel Station as part of the Project.

On 29 April 2005, pursuant to Condition 3 of the Board Order, TNPI filed a letter to the Board confirming all the activities associated with the deactivation of the Mirabel Lateral and Mirabel Station were completed in compliance with all applicable conditions.

Second Contributory Violation: TNPI was not maintaining the Mirabel Station as a deactivated facility for which it was required to do pursuant to Board Order MO-01-2005:

On 3 November 2020, CER IOs conducted inspection CV2021-270 of the Mirabel Station and identified multiple non-compliances related to environmental, safety and security hazards at the site. Overall, the Mirabel Station was unkept and was not adequately maintained by TNPI. Fencing was in disrepair and the gate was open, allowing people and/or wildlife to come in and out of the Station freely; creating potential safety and security risks. Mirabel Station signage was broken, faded and illegible. Overgrown vegetation and weeds were pervasive, and waste, including broken glass, was observed by CER IOs. The Mirabel Station pipeline coating was corroded, and caps/seals were missing from the aboveground piping at various places. Gas was observed (audibly) to be escaping from a broken nipple in the aboveground piping. A monitoring well was observed with its cap off and holes in the ground up to 1m deep were left open, uncovered and with no signage.

On 26 November 2020, CER IOs issued a Notice of Non-Compliance (NNC) pursuant to section 4(1)(d) of the OPR and CSA Z662, (which stipulates requirements for maintenance and management of deactivated facilities in Clauses 10.15.1.2, 10.2.4, and 10.2.5.). The main corrective action identified was for TNPI to submit a plan to come into compliance with the OPR and CSA Z662 requirements, namely to:

  1. manage potential hazards to people and wildlife in the area (CSA Z662, Clause 10.2.4); and
  2. manage the security of the Pipeline (CSA Z662, Clause 10.2.5).

On 15 December 2020, this non-compliance matter at the Mirabel Station was referred to CER Enforcement for further investigation.

On 14 December 2020 and 8 January 2021, TNPI provided responses to CER IOs which outlined corrective actions taken to address non-compliances in relation to CV2021-270. TNPI’s response met the specific corrective actions the CER IOs had stipulated in the NNC, which were to address the immediate potential hazards to people and the environment at the Mirabel Station. The NNC was subsequently closed by the CER IOs.

On 24 March 2021, CER Enforcement staff sent an Information Request (IR) to TNPI regarding the non-compliances identified in CV2021-270, requesting information regarding the inadequate maintenance observed at the Mirabel Station.

As part of TNPI’s 23 April 2021 response to this IR, the company provided the following information:

  • 2008 – Evidence of damage to the fence and security concerns were identified. Due to the security concerns, TNPI contacted ADMFootnote 2 and requested approval to demolish the buildings located on MB (Mirabel Station), which approval was obtained.  The buildings were demolished and the fence repaired.
  • 2011 – The sump tank located on MB was removed.
  • TNPI applied to ADM and Transport Canada to remove the 2 buildings in question in 2008.

The IR response also contained photos showing the pre- and post-removal of two buildings on the site, which demonstrates decommissioning activities were conducted.

On 18 May 2021, a CER IO conducted follow-up Inspection CV2122-164 at the Mirabel Station. Field observations at the Mirabel Station identified several non-compliances which had not been rectified by the corrective actions associated with CV2021-270 NNC #1. Notably, the CER IO observed that Mirabel Station was not being maintained in accordance with CSA Z662 Clause 10 requirements for deactivated pipelines.

The CER IO concluded that the Mirabel Station was out of compliance with the requirements to be maintained in a deactivated state as per as per Board Order MO-01-2005 and section 4(1)(d) of the OPR requiring compliance with the applicable clauses of CSA Z662. Deactivated facilities are required to be maintained at the same standard as operating facilities as per CSA Z662, and this facility did not meet that standard for the following: perimeter protection measures, intrusion and detection systems, external and internal corrosion controls for piping exposed to the atmosphere, inspection of such piping, maintenance of cathodic protection, vegetation control, environmental effects (aesthetics, protection of vegetation and wildlife).

Primary Violation: section 45.1 of the OPR: Failure to submit an application to decommission a pipeline to the Commission:

As observed by a CER IO on 18 May 2021, the Mirabel Station had permanently ceased operations pursuant to the definition for “decommission” as set out in Section 1 of the OPR, without the approval of the Commission, as required pursuant to section 45.1 of the OPR, which states:

“If a company proposes to decommission a pipeline or part of one, the company shall submit an application for the decommissioning to the Commission.”

TNPI did not apply to the Board to decommission the Mirabel Station as required pursuant to section 45.1 of the OPR.

As an alternative means to ensure compliance with Section 45.1 of the OPR and Board Order, MO-01-2005, TNPI could have utilized the process outlined in the Exemption Order for Decommissioning Projects under the Canadian Energy Regulator Onshore Pipeline Regulations and National Energy Board Processing Plant Regulations (Exemption Order XO/XG-100-2008Footnote 3) but did not do so.

On 25 May 2021, TNPI verbally indicated to a CER IO that the company was working towards a decommissioning project and was still in the planning stages. On 1 June 2021, TNPI committed in an email to “have the above ground equipment removed using the site decommissioning exemption by December 31, 2021...For clarity, all equipment or structures with an above-to-below ground interface will remain and will be removed as part of the remediation project, this includes all concrete bases and all underground infrastructure.” TNPI committed to come into compliance with the terms of Board Order MO-01-2005 by 31 December 2021.

Inspection Officer Order (IOO) LMR-001-2021 was issued by the CER to TNPI on 8 June 2021 to formalize this commitment. As part of IOO LMR-001-2021, TNPI was ordered to:

  • No later than 31 August 2021,
  • A. Provide notice to the undersigned CER Inspection Officer including the Decommissioning Project description and scope of work TNPI will be using to determine if they are eligible to proceed pursuant to Exemption Order XO/XG-100-2008 (Decommissioning Streamlining Order).
  • OR
  • B. File with the Commission an application pursuant to section 45.1 of the OPR for the Decommissioning Project.
  • If (a), then:
  • i. Fourteen (14) days prior to the commencement of the Decommissioning Project, provide the Construction Schedule, the Site-Specific Environmental Protection Plan, as well as the Site-Specific Safety Plan for the Decommissioning ProjectFootnote 4; and
  • ii. Complete the Decommissioning Project and associated activities in accordance with the Decommissioning Streamlining Order in the fourth quarter of the 2021 calendar year and no later than 31 December 2021.

Conclusion:

The facts as outlined above demonstrate that:

Trans-Northern Pipelines Inc. is in violation of Section 45.1 of the OPR. My reasonable grounds for belief can be summarized as follows:

  1. 1. Board Order MO-01-2005 required TNPI to maintain the Mirabel Station as a deactivated facility;
  2. 2. On 23 April 2021, the Mirabel Station was observed by CER IO to have permanently ceased operations, pursuant to the definition of “decommission” as set out in Section 1 of the OPR, without the approval of the Commission, as required pursuant to section 45.1 of the OPR. TNPI did not apply to the Board to decommission Mirabel Station as required pursuant to Section 45.1 of the OPR nor did TNPI utilize Exemption Order XO/XG-100-2008.

Further reasonable and supporting grounds for this belief are as follows:

  1. 3. As of the dates of inspection CV2021-270 on 3 November 2020 and CV2122-164 on 18 May 2021, the status of the pipeline and related surface equipment, above ground pipelines, and pipeline related facilities at the Mirabel Station did not meet the operation and maintenance requirements of the CER (pursuant to section 4(1)(d) of the OPR and CSA Z662) for a deactivated facility, which is what TNPI was authorized to be operating and maintaining pursuant to Board Order MO-01-2005.
  2. 4. The two separate CER inspections on 3 November 2020 and on 18 May 2021, demonstrated a lack of maintenance of the level required for deactivated facilities (as compared to a lesser level required for a decommissioned facility) which led to unmanaged and unmitigated environmental, safety and security hazards at the site.
  3. 5. TNPI provided the CER with the information that they had demolished buildings in 2008 and removed a sump tank in 2011, both of which are decommissioning activities and are not consistent with the requirement for the Mirabel Station to remain in a deactivated state.

Section 45.1 of the OPR is listed in the Administrative Monetary Penalty Regulations (National Energy Board), Schedule 1, and is therefore subject to an AMP for failure to submit an application for decommissioning as prescribed, a Type B violation.

While the CER investigation notes multiple individual non-compliances of the various decommissioning and deactivated facility maintenance requirements in the OPR, as the AMP Officer designated by the CER’s Chief Executive Officer to issue notices of violation, I have discretion about if and when to issue such notices. I am mindful, in exercising this discretion, of the purpose of the CER Act’s administrative monetary penalty scheme, which is to promote compliance, and not to punish. As a result, I am only issuing this specific Notice of Violation.

I believe that Trans-Northern Pipelines Inc. was in violation of Section 45.1 of the OPR and hereby issue this Notice of Violation.

Section Three – Penalty Calculation

A) Baseline Penalty (Gravity Level = 0)

Refer to AMP Regulations, Subsection 4(1)

A) Baseline Penalty (Gravity Level = 0)
Category Individual Any Other Person
Type A      $1,365      $5,025
Type B      $10,000  X  $40,000

B) Applicable Gravity Value

Refer to AMP Regulations, Subsection 4(2)

B) Applicable Gravity Value
Gravity Level
Mitigating Aggravating
-2 -1 0 +1 +2 +3
 X 

Other violations in previous seven (7) years

-- --            X  --
  1. AMP-001-2021 Failure to have an adequate Environmental Protection Program, particularly related to contaminated sites, as required by section 48 of the Canadian Energy Regulator Onshore Pipeline Regulations
  2. AMP-001-2020 Failure to contract for services as prescribed pursuant to s. 29 Canadian Energy Regulator Onshore Pipeline Regulations
  3. AMP-001-2018 Contravention of a Board Order re: Overpressure of the Montreal Feeder System
     Any competitive or economic benefit from violation -- --       X       --
TNPI was not maintaining the Mirabel Station as a deactivated facility for which it was required to do pursuant to Board Order MO-01-2005. In 2018, a broken gate and perimeter fence was identified as part of a routine patrol. Repairs were deferred due to (i) planned future remediation work and (ii) TNPI asserted that the facility was located within a secure ADM facility. There is a quantifiable economic benefit to not incurring costs to conduct maintenance activities; for example, creating and maintaining perimeter security, and in deferring decommissioning costs.
 X  Reasonable efforts to mitigate/reverse violation’s effect/reverse violation’s effect                 X       --
In November 2020, Inspection CV2021-270 revealed a lack of adequate maintenance as required for a deactivated facility pursuant to Board Order MO-O1-2005. This lack of maintenance to the level required for deactivated facilities led to unmanaged and unmitigated environmental, safety and security hazards at the site. Although a Notice of Non-Compliance was issued, follow-up CER Inspection CV2122-164 in May 2021 identified several non-compliances which had not been rectified by the corrective actions associated with the previous inspection. Notably, the CER IO observed that the Mirabel Station was not being maintained in accordance with CSA Z662 Clause 10 requirements for deactivated pipelines. It was not until after the second inspection on 18 May 2021 that TNPI verbally indicated to the CER IO that the company had begun working towards a decommissioning project.
 X  Negligence on part of person who committed violation -- --       X       --
TNPI applied to ADM and Transport Canada to conduct the partial decommissioning activities in 2008, so the company was aware that some level of authorization was needed prior to being able to remove their infrastructure from the Mirabel Station. They did not apply to the NEB as required pursuant to Board Order MO-01-2005 or utilize Exemption Order XG-XO-100-2008. Also, the lengthy time period between when the decommissioning activities commenced (2008), and an application or notification to the NEB should have been made, and when it ultimately was (May 2021), some 12+ years later, exacerbates this failure. TNPI also failed to demonstrate due diligence with respect to performing maintenance to the level required for deactivated facilities which led to unmanaged and unmitigated environmental, safety and security hazards at the site.
 X  Reasonable assistance to the Board with respect to violation            X            --
TNPI met its regulatory expectations as required by the Inspection Officers.
     Promptly reported violation to the Board                          --
Not applicable
 X    Steps taken to prevent reoccurrence of violation       X                 --
The CER recognizes that TNPI has done some work on improving their Environmental Protection Program (EPP) / contaminated sites program, of which the Mirabel Station is a part. Some changes have been made to the company’s EPP to address gaps. Changes include the hiring of staff, improvements to TNPI’s documents, processes and internal oversight. However, many of these improvements were not initiated by the company, rather they were a result of the insistence of the CER staff and of the CER IOO, and made over an unreasonably lengthy timeline.
     Violation was primarily reporting/record-keeping failure                     -- --
Not applicable
 X  Any aggravating factors in relation to risk of harm to people or environment -- --       X           

The CER requires companies to conduct activities in accordance with regulatory requirements, in part to ensure that the CER is able to provide regulatory oversight over the activities themselves. By not applying to the Commission to decommission this facility pursuant to section 45.1 of the OPR, this hinders the CER’s ability to oversee the decommissioning activities and ensure they are conducted in a safe and environmentally sound manner.

TNPI was not maintaining the Mirabel Station as a deactivated facility for which it was required to do pursuant to Board Order MO-01-2005. On 3 November 2020, CER IOs observed that the Mirabel Station sign was broken, faded and illegible. Overgrown vegetation and weeds were pervasive within the station. Waste including broken glass was observed. The pipeline coating was corroded, and caps/seals were missing from the aboveground piping at various places. A monitoring well was observed with its cap off. Holes in the ground up to 1 m deep were left open, uncovered and with no signage. Overall, this station was unkept and did not appear to be maintained in any way by TNPI.

Although TNPI stated in its 23 April 2021 IR response that the station is not accessible to the public, this is inconsistent with the experiences of the CER IOs in both November 2020 and May 2021, as access to the ADM lands were not secured on either occasion. Also, in its 23 April 2021 IR response, TNPI stated that they chose to remove buildings at the Mirabel Station as a means to address ongoing security concerns, including evidence of break-ins on two separate occasions.

All of these aforementioned issues and events demonstrate the creation of risk of harm to people or the environment by TNPI.

C) Total Gravity Value
(adjustments made for gravity values in B) based on mitigating or aggravating factors applied)

5

D) Daily Penalty
(baseline penalty adjusted for the final gravity level)

$100,000

E) Number of Days of Violation
(If more than one day, justification must be provided)
Not applicable

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

Not applicable

Section Four – Total Penalty Amount

Note:

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

Total Penalty Amount
$100,000

Section Five – Due Date

(30 days from receipt of Notice of Violation)

Due Date

March 18, 2022

_____________________________________________________________
Keith Landra (Information not available)

Designated Officer pursuant to ss. 116(2) of the CER Act
Administrative Monetary Penalties

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 CER website:

  1. a) 30 days from the date this Notice of Violation was received; or
  2. b) 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: 403-919-4743 / 800 899-1265
    Fax: 403-292-5503 / 877-288-8803

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

  • Canada Energy Regulator
    Attention: Finance
    210-517 10 Ave SW
    Calgary AB T2R 0A8

Your completed Payment form should be enclosed with your payment.

Date modified: