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Vol. 141, No. 45 — November 10, 2007 Regulations Amending the National Energy Board Processing Plant RegulationsStatutory authority National Energy Board Act Sponsoring agency National Energy Board REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Description This amendment to the Processing Plant Regulations (PPR) is proposed to correct a regulatory gap identified by the National Energy Board. Currently, there are regulatory processes in place which address the issue of abandoning a processing plant or part of one where there is a discontinuance of service and which address the issue of temporary removal of a processing plant or part of one from service. First, paragraph 74(1)(d) of the National Energy Board Act (the Act) sets out the regulatory process where a company seeks to abandon its pipeline or part of one (which, by definition in the Act, includes a processing plant). (see footnote 1) Second, section 42 of the PPR permits a regulated company, on notice to the Board, to deactivate a processing plant where there is a temporary removal from service. This leaves a gap where a company is permanently removing a processing plant or part of one from operation, but where the removal does not result in a discontinuance of service. Some companies have sought Board approval under section 58 of the Act for this work. However, section 58 (see footnote 2) relates to orders exempting pipelines, including processing plants, from any or all of the provisions of sections 29 to 33 and 47 of the Act, the effect of which is to allow the construction and operation of a processing plant and does not adequately accommodate applications for permanent cessation of operations of a processing plant or part of one where there is no discontinuance of service. Given that work of this nature is not being captured under current regulatory processes, companies may remove a processing plant, or part of one, from operation without applying to or notifying the Board. As a result, the Board is not given the chance to consider possible ramifications associated with the work, including engineering, environmental effects, effect on service and safety (both for the work being done and the continued safe operation of the processing plant). Regulatory proposal designed to deal with the problem The Board is proposing to add a new provision to the PPR which would require companies to apply to the Board for approval whenever those companies undertake work which would result in the permanent cessation of the operation of a processing plant, or part of one, but where there would be no resulting discontinuance of service. The Board is also proposing similar amendments under the Onshore Pipeline Regulations, 1999 with respect to pipelines. In addition to the definition of "decommission" and the provision requiring application to the Board, there would be minor consequential amendments to both of these regulations. Alternatives The Board considered defining "decommission" in the PPR and requiring an application under section 58 of the Act. The Board also considered defining "decommission" in a Board letter to all companies under its jurisdiction and requiring an application under section 58 of the Act. However, a requirement to apply to decommission a processing plant or part of one would not properly fit within section 58 of the Act, as that provision is intended for applications which are exempt from certain requirements of the Act. The Board could have also decided not to change the regulatory scheme, but rather to deal with such applications only when they are filed, and consider them under whichever section of the Act or regulations companies chose to file them. However, companies would be able to remove a processing plant, or part of one, from operation without applying to or notifying the Board, which would then not be given the chance to consider possible ramifications associated with the work, including engineering, environmental effects, effect on service and safety. Benefits and costs The cost associated with the proposed Regulations arises from the requirement for pipeline companies to make an application to the Board prior to decommissioning a processing plant or part of one. No significant financial impacts are anticipated as a result of the proposed amendments. The benefits are regulatory certainty, eliminating the need for companies to have to decide how to proceed when a processing plant, or part of one, is being permanently removed from operation where there is no resulting discontinuance of service as a result and the Board is able to consider possible ramifications associated with the work. Potential environmental effects related to decommissioning are assessed for new pipelines which are subject to either the Canadian Environmental Assessment Act or the Mackenzie Valley Resource Management Act. This assessment is also conducted pursuant to the Act. Depending on the planned lifespan of a processing plant, the assessment can occur well in advance of decommissioning. By including a requirement in the PPR for a company to apply to decommission a processing plant or part of one, the Board would be able to provide appropriate and timely regulatory oversight. This oversight allows the Board to consider environment, safety and public interest issues based on current conditions and standards. The manner by which these issues would be considered ranges from exemption orders to hearings in order to address public interest issues. Consultation On February 5, 2003, the Board issued a letter to all pipeline companies regarding the proposed amendment to the Regulations. The Board, in its letter, invited comments from companies and associations. Some groups who responded suggested changing the definition of "decommission" so as to explicitly limit the decommissioning provision and thereby to avoid including work of a minor nature. In order to ensure that only the appropriate circumstances are caught under the proposed provision, the Board is considering issuing an exemption order which will grant a blanket exemption from this provision for projects meeting certain criteria, so long as certain terms and conditions are met. The proposed exemption order would apply where there are no engineering, environmental or public interest issues and would be intended to exempt companies where the work performed is routine and of a minor nature. The Board is continuing to consult with interested groups and associations on the issue of the exemption order. Compliance and enforcement In order for a company to decommission a processing plant or part of one which is under the Board's jurisdiction, an applicant must prepare and submit for Board approval an application pursuant to the Regulations. The Board intends to monitor compliance with the Regulations by reviewing specifications and procedures to be used by the regulated companies, by auditing their records and activities to determine their adequacy and effectiveness, and by performing inspections of processing plants during their operating life.
Dana Cornea
Notice is hereby given that the National Energy Board, pursuant to subsection 48(2) (see footnote a) of the National Energy Board Act, proposes to make the annexed Regulations Amending the National Energy Board Processing Plant Regulations. Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Ms. Dana Cornea, Regulations and Policy Specialist, National Energy Board, 444 Seventh Avenue SW, Calgary, Alberta T2P 0X8 (e-mail: dcornea@neb-one.gc.ca). Ottawa, October 25, 2007
MARY PICHETTE
REGULATIONS AMENDING THE NATIONAL ENERGY BOARD PROCESSING PLANT REGULATIONS AMENDMENTS 1. (1) The definitions "exploiter" and "mettre hors service" in section 1 of the French version of the National Energy Board Processing Plant Regulations (see footnote 3) are repealed. (2) The definition "abandon" in section 1 of the Regulations is replaced by the following: "abandon" means to permanently cease operation such that the cessation results in the discontinuance of service. (cessation d'exploitation) (3) The definition "operate" in section 1 of the English version of the Regulations is replaced by the following: "operate" includes repair, maintain, deactivate, reactivate and decommission. (exploitation) (4) The expression "(mettre hors service)" at the end of the definition "deactivate" in section 1 of the English version of the Regulations is replaced by the expression "(désactivation)". (5) Section 1 of the Regulations is amended by adding the following in alphabetical order: "decommission" means to permanently cease operation such that the cessation does not result in the discontinuance of service. (désaffectation) (6) Section 1 of the French version of the Regulations is amended by adding the following in alphabetical order: « désactivation » Mise hors service temporaire. (deactivate) « exploitation » S'entend notamment de la réparation, de l'entretien, de la désactivation, de la réactivation et de la désaffectation. (operate) 2. Sections 42 and 43 of the Regulations are replaced by the following: 42. (1) If a company proposes to deactivate a processing plant or part of one for 12 months or more, has maintained a processing plant or part of one in a deactivated mode for 12 months or more or has not operated a processing plant or part of one for 12 months or more, the company shall notify the Board of that fact. (2) The company shall set out in the notification the reasons, and the procedures that were or are to be used, for the activity that is the subject of the notification. 43. (1) If a company proposes to reactivate a processing plant or part of one that has been deactivated for 12 months or more, the company shall notify the Board of that fact before the reactivation. (2) The company shall set out in the notification the reasons, and the procedures that are to be used, for the reactivation. 43.1 (1) If a company proposes to decommission a processing plant or part of one, the company shall submit an application for the decommissioning to the Board. (2) The company shall include in the application the reasons, and the procedures that are to be used, for the decommissioning. COMING INTO FORCE 3. These Regulations come into force on the day on which they are registered. [45-1-o] The Board has interpreted this provision regarding abandonment of a pipeline to apply only to situations where there is a discontinuance of service. To interpret it more broadly would mean that companies would have to apply under section 74 of the Act for the many maintenance and routine repair projects they undertake. Furthermore, section 24 of the Act requires a public hearing before leave to abandon may be granted. This requirement is very onerous for routine “abandonments.” Section 58 of the Act empowers the Board to issue orders exempting pipelines less than 40 km in length from the requirements to obtain a certificate under section 52 of the Act, to file a plan, profile and book of reference, and to obtain a leave to open order. S.C. 2004, c. 15, s. 84(2) SOR/2003-39 |
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