Transportation of Dangerous Goods – oversight program description and delivery

Fiscal Year 2018 to 2019

Executive summary

For 2018 to 2019, the Transportation of Dangerous Goods (TDG) program spent $31,120,426 on priorities in the Departmental Plan. Total oversight spending was $17,674,453.

The key areas of focus for the TDG Program were:

emergency shut-off systems
recurring non-compliances in marine transport
crude oil transloading activities from highway tanks to rail tank cars
lithium batteries transported by air
major TDG hubs

Over the last few years, the biggest internal change in the oversight program has been more resources for inspections. As of April 1, 2018, the TDG Program had over 90 inspectors, a 142% increase from 2013 to 2014.

We expected the activities in TDG's National Oversight Plan for 2018 to 2019 to offset the known strategic and operational risks. If a large-scale safety incident occurred and it was required, we could redirect resources from activities in the National Oversight Plan.

Introduction

The TDG Program's goal is to improve safety in transporting dangerous goods in Canada, as required by the Transportation of Dangerous Goods Act. The program:

develops safety regulations and standards
provides oversight and expert advice (like through the Canadian Transport Emergency Centre (CANUTEC))
identifies threats to public safety
enforces the TDG Act and its regulations
gives advice to emergency responders
reduces the impact of incidents that involve transporting dangerous goods
carries out strategic risk assessments and scientific research

The National Oversight Plan describes all oversight activities by the TDG Program. These include:

planned inspections
reactive activities
regulatory authorizations
quality control activities
enforcement actions and investigations
education, outreach and awareness activities

Planned inspections

Each region creates an inspection plan based on TDG's Inspection Prioritization Framework and policies. This plan is then approved by TDG's Program Business Committee. TDG headquarters offers support by planning, tracking and reporting on the oversight activities.

The plans identify TDG sites and means of containment (MOC) facilities for one of these types of inspection:

general compliance inspections
MOC facility inspections
compliance estimation program inspections
major hub inspections
lithium battery targeted inspection campaign inspections

Reactive activities

Reactive activities are an important part of an inspector's work. These activities help the program adjust to issues that emerge during the year or are demand-driven. The TDG Program does not know where or how many reactive inspections will be done each year. The types of reactive inspection are:

follow-up inspections
unplanned MOC facility inspections
triggered inspections
opportunity inspections
consignment inspections

Regulatory authorizations

TDG analysts process regulatory authorizations. These occur when a regulated party asks Transport Canada for permission to do a regulated activity or to get special permission to be exempt. Transport Canada may give permission via a permit, license or certification.

The TDG Program does not know how many regulatory authorizations it will process each year. The types of regulatory authorizations are:

equivalency and temporary certificates
registration certificates for designs, facilities or persons
emergency response assistance plan approvals
civil aviation document reviews

Quality control activities

The TDG Program does quality control to make sure that the data in its inspection information system (used for planning and reporting) is correct. These activities are also a way to train managers and inspectors. The types of quality control activities are:

reviewing inspection reports
confirming compliance
cleaning data in the inspection information system

Enforcement actions and investigations

The goal of enforcement is to make sure that people and companies working with dangerous goods follow the applicable rules. Our enforcement policy makes sure that these rules are enforced consistently across Canada.

The types of enforcement actions are:

notice of infraction
detention notice
notice of direction to remedy non-compliance
notice of direction not to import or to return to place of origin
section 19 intervention / direction
tickets
prosecution
revoking a registration certificate assigned to a means of containment manufacturer or re-qualifier
directing the activation of Emergency Response Assistance Plans
revoking the approval of an Emergency Response Assistance Plan
recall or notice of defective construction, repair or testing of means of containment
protective directions

Education, outreach and awareness activities

The TDG Outreach and Awareness Program improves safety by:

encouraging industry to follow regulations
reducing the risk of specific safety issues
promoting TDG safety programs and services

Our education, outreach and awareness activities include:

training inspectors
responding to inquiries
presenting and distributing awareness materials
conducting community awareness sessions
using inspections to increase safety awareness
educating provincial and territorial inspectors during the annual TDG Blitz Inspection Campaign

Operating context

Over the last few years, TDG's oversight program saw a large increase in resources. As of April 2018, we now have over 90 inspectors. This helped us complete 142% more inspections in 2018 to 2019 than 2013 to 2014.

Introduced in 2017 to 2018, we continue to use risk-based inspection cycles for TDG sites and MOC facilities. As a result, every known site and facility is inspected within a set period, with high risk facilities given top priority.

We are always improving our Integrated Risk Management Framework. This includes updating our risk register, a tool we use to track and manage all known risks related to the TDG Program.

The Program also implemented an interim risk treatment method to address high priority major hubs.

Industry overview: number of TDG sites and MOC facilities

We know of 22,364 commercial sites in Canada that handle, offer for transport, transport, or import dangerous goods. There are 2,291 registered MOC facilities in Canada and abroad. There are many TDG sites that are unknown to us.

The totals above do not include the TDG sites or MOC facilities inspected by the Government of Alberta on behalf of the federal government. In Alberta, provincial inspectors check TDG sites that transport via road or provincially-regulated railway. They also inspect highway tank facilities.

Industry overview: risk levels

The TDG Program classifies all known TDG sites and MOC facilities based on how likely, and how severe, a release of dangerous goods would be from the facility.

For 2018 to 2019, the breakdown of the risk levels of TDG sites was:

very high risk: 1%
high: 7%
medium: 22%
low: 39%
unknown: 25% (the TDG Program does not have enough information on 5,691 TDG sites to properly categorize them)

For 2017 to 2018, the breakdown of the risk levels of MOC facilities was:

very high risk: 1%
high: 8%
medium: 31%
low: 59%

The breakdown into risk categories varies greatly by region.

Industry overview: inspection history

We regularly inspect very high and high risk TDG sites and MOC facilities. Overall, the TDG industry has not been heavily inspected. We improved this situation by putting inspection cycles in place in 2017 to 2018.

Industry overview: safety trends

The number of reportable incidents is trending downwards. When we factor-in the level of dangerous goods exposure (as measured by proxy using real Canadian GDP) this trend is much less pronounced, but it's still present in the data. This indicates a lower overall level of reportable incidents, despite the increased exposure.

While the total number of incidents is decreasing, the severity, and number of incidents with one or more fatalities, is increasing. In other words, incidents are happening less often, but they're making a bigger impact.

Risks and planning assumptions

The TDG Integrated Risk Management Framework outlines how we identify, evaluate, treat and monitor all risks. This includes strategic level risks, operational risks (national and regional risk/priorities) and site or MOC facility-related risks.

The framework applies our risk management processes to inspections. We based our National Oversight Plan on these risk management solutions.

Strategic risks

Our Planning Environment Document for 2018 to 2019 identified eight risks that threaten the Program's goals. The document also identified the conditions we need to meet to overcome each risk.

Risk of lithium batteries being transported by air. There's a possibility that this risk isn't properly factored into TDG's inspection prioritization. Unsafe practices involving these dangerous goods may go undetected and result in incidents.
- Mitigation measures:
  - broaden inspection campaign of lithium battery sites
  - enhance and validate risk score calculator for TDG sites
  - re-establish a lithium batteries working group to encourage better collaboration within the department and better integrate responses to the issue
  - collaborate with the National Research Council on additional research into lithium battery movements and handling
  - participate in the United Nations Working Group on Lithium Batteries to create and improve standards governing their transportation
Risk of industry misclassifying dangerous goods. Dangerous goods can be transported using the wrong means of containment.
- Mitigation measures:
  - work with partners to address outstanding classification issues
  - provide recommendations to the Minister of Transport to keep the Canadian public safe and address industry concerns
Risk of industry not following the TDG Regulations. Our work to reduce the frequency and severity of incidents could be threatened.
- Mitigation measures:
  - keep using the annual Compliance Estimation Program to get a clear picture of where non-compliance is happening
  - conduct risk-based inspections to find non-compliances
  - conduct follow-up activities to fix non-compliances
  - conduct follow-up inspections where there's a high number and severity of non-compliance
  - carry out enforcement to make sure immediate compliance in cases where it's needed, and to promote future compliance in all cases
  - conduct education, outreach and awareness activities to make sure that the industry knows its legal and regulatory responsibilities
  - form a committee that will develop, scope, and create a plan to modernize TDG's oversight program
Risk of not having a system to integrate TDG's data systems. We would be unable to access and use information for decision-making.
- Mitigation measures:
  - hold regular meetings at the working and management levels to improve co-operation
  - work with partners to reprioritize TDG's IT requirements
Risk of not capturing data on TDG movements by road. Our ability to identify and manage risks would be reduced.
- Mitigation measures:
  - conduct research on dangerous goods movements and analyze trends. Information sharing agreements are improving TDG's ability to collect data
  - share and use this data within Transport Canada
Risk of continuing to lack knowledge of dangerous goods sites. This impacts our ability to accurately prioritize risk-based inspections.
- Mitigation measure:
  - develop Client Identification Database, which will collect key data on all dangerous goods sites in Canada
Risk of receiving reduced funding for 2019 to 2020. We may not be able to meet key deliverables. This could result in increased safety or security issues in the Canadian transportation system.
- Mitigation measure:
  - prepare a Treasury Board submission for ongoing funding
Risk of not having the resources to provide enough oversight and response in remote communities. The frequency and severity of incidents may increase.
- Mitigation measures:
  - develop Client Identification Database, which will collect key data on all dangerous goods sites in Canada
  - run a rigorous risk analysis to develop an interim action plan to treat risks. This will be in place until all remote sites are identified and prioritized on the site risk score calculator

Various initiatives across the TDG Program also address these risks, not just the oversight component.

Operational risks

Our Program Business Committee reviewed and approved five operational oversight risks that were identified in consultations with both the regions and headquarters. The Risk Register tracks these risks and their treatment, as required by the TDG Integrated Risk Management Framework.

We gave a higher risk score to all TDG sites affected by any of the following risks. This is because these risks increased the likelihood that the sites would be inspected in 2018 to 2019 (see more on the risk scoring of TDG sites below).

Not being able to check that emergency shut-off systems are working because daily or monthly testing and procedures have not been followed. Operators may not have the information they need to use this safety feature. Failures can lead to release of liquefied petroleum gas or anhydrous ammonia.
Recurring non-compliances with TDG regulations for marine transport.
Crude oil transloading activities from highway tanks to rail tank cars done in violation of regulations and standards.

Additionally, one risk will be managed by requiring a selection of sites be inspected (and additional data be collected) as part of a targeted lithium battery inspection campaign.
Risk that lithium batteries transported by air are not properly factored into TDG's inspection priorities. Unsafe practices involving these dangerous goods may go undetected and result in incidents.

Lastly, one risk will be managed via a plan to inspect all major hubs at least once (and up to four times) in 2018 to 2019:
Risk that dangerous goods hubs are not prioritized enough for inspection. The frequency and severity of incidents may increase.

Inspection planning process

There are seven key steps we take before choosing sites and facilities for inspection:

Decide how many inspections to do.

TDG Inspectors are separated into two groups, based on their level of experience. The average number of planned inspections that can be done by inspectors with 1+ years of experience varies by region.

Based on our experience, the distribution of reactive activities is also different for each region and activity type.

For 2018 to 2019, 82% of all inspection activities were planned. The rest were unplanned (reactive) inspections. For these, we used a proportional breakdown to estimate the number of expected inspections. The breakdown was:
- opportunity inspections: 8%
- follow-up inspections: 3%
- triggered inspections: 3%
- consignment inspections: 2.5%
- unplanned inspections of MOC facilities: 1.5%
Decide how to divide inspections between TDG sites and MOC facilities.

For the most part, TDG inspectors check TDG sites, but they also inspect many types of MOC facilities. A team of engineers at TDG's Regulatory Affairs Branch are designated as TDG inspectors. These inspectors only inspect MOC facilities, and focus on inspections that need specialized engineering knowledge.

For 2018 to 2019, the Program Business Committee assigned 95% of inspections to TDG sites and 5% to MOC facilities.
Assign a risk score to all TDG sites and MOC facilities.

For TDG sites, we calculate the risk score for individual sites by assessing their operational and site-level risk factors. For MOC facilities, we assess risks at the facility-level only. Then we classify TDG sites and MOC facilities as “very high”, “high”, “medium” or “low risk”. At minimum, these risk scores are updated every year.
Assign inspection cycles for all TDG sites and MOC facilities.

Based on the risk level, we assign TDG sites and MOC facilities to one of the following inspection cycles:
- Inspection cycle for TDG sites:
  - very high risk: 1 year
  - high risk: 2 years
  - medium risk: 5 years
  - low risk: 8 years
- Inspection cycle for MOC facilities:
  - very high risk: 1 year
  - high risk: 3 years
  - medium risk: 8 years
  - low risk: 10 years
Identify all mandatory inspections. For 2018 to 2019, this included:
- planned inspections for all sites and facilities in the “very high-risk” category
  - the program introduced the risk tolerance concept in 2016 to 2017
  - this concept identifies cut-off points for unacceptable risks – these risks are reduced by annual inspections
- planned inspections for all sites identified for the Compliance Estimation Program
- planned inspections for all sites targeted in the Lithium Battery Inspection Campaign
Choose the sites for inspection by each region.

Inspectors follow the overall inspection cycle, but the order may be affected by factors like travel distance, budget, and distance to other priority sites.
Finish the inspection work plan.
- inspection work plans are reviewed and validated before they are finalized
- process in place to take care of issues that come up

Regulatory authorizations planning process

We regularly reply to requests for regulatory authorizations from the TDG industry. Most of these activities are reactive. However, some proactive planning is done to address Emergency Response Assistance Plan (ERAP) approvals.

For 2018 to 2019, we estimated the number of ERAP approvals based on 3 elements. All ERAPS are given risk scores and are ranked according to that score. The 3 elements were:

expected number of new ERAPs
expected number of ERAPs that needed to be changed
reducing backlog (to finish ERAPs that were already approved without expiry dates)

Considerations

A pilot project in the St. Lawrence Seaway is planned for 2018 to 2019. The project will involve:
- Transport Canada (TDG and Marine Safety and Security)
- the US Pipeline and Hazardous Materials Safety Administration
- the US Coast Guard
This project will allow us to collect data that will help the program better measure risk and find ways to decrease risk. This will include developing compliance strategies.
We identified the risks of dangerous goods hubs as an emerging issue.
- hubs, like marine ports or rail/intermodal yards, can experience quick changes in the volume and make-up of dangerous goods
- the current inspection prioritization tool for sites may not take these quick changes into account
- a risk assessment was done in September 2017
- when we developed the 2018 to 2019 inspection work plan, we made an interim decision to decrease the risks associated with the highest priority hubs. They will each be inspected 1-4 times in 2018 to 2019

Initiatives to strengthen oversight

Over the next three years, our vision is to implement a modern TDG oversight program that focusses on the reasons why people do not follow the rules. This will include an emphasis on things that directly affect safety.

In 2018 to 2019, we will form a committee to make our oversight program more modern. Elements that the committee will work on include:

analyzing repeated non-compliance by industry
gap-analyzing our awareness program
reviewing existing standard operating procedures
evaluating other ways to monitor compliance

Oversight delivery 2018 to 2019

The Canadian Center on Transportation Data (CCTD), following the requirements of the Oversight Transparency Integration Plan, will report on the program's planned inspections, reactive inspections and regulatory authorizations.

Organizational contact information

We're interested in hearing your comments on this report. Please send feedback to: TDGNationalOversightPlan-PlanNationaldeSurveillanceTMD@tc.gc.ca

Annex A: Definitions

Required Field	Description
Oversight	How we promote, monitor or enforce compliance with our safety and security requirements.
Regulatory authorizations	A regulatory authorization is given when a regulated party (like a railway company or vehicle manufacturer) applies for permission to do a regulated activity, or be exempt from it. We can give permission in different ways including a permit, licence or certification. We do not control the number of regulatory authorizations for each planning cycle.
Inspection	A documented, formal examination of industry compliance with Canadian transportation safety and security rules, regulations and requirements. Authorized Transport Canada officials record the results of each inspection. For the purposes of this document, audits are a type of inspection. An inspection includes pre-site, onsite, and post-site inspection and oversight activities. The inspection is finished when the inspector submits an approved inspection or oversight activities report. An inspection does not include follow-up action, quality control checks or outreach activities.
Planned, risk-based inspections	All inspections that we initially commit to doing in a given planning cycle. The SO3 Management Board may authorize updates as needed. These include inspections that are announced (and expected), and those that are unannounced. These do not include: estimations of demand-driven activities, like regulatory authorizations “reactive” or “opportunity” inspections that happen because of a change in oversight
Follow-up activities	These arise from findings of an initial inspection. Could include an on-site inspection, requests for more information, or enhanced monitoring. Follow-up activities don't include enforcement.
Other activities	Oversight activities that we did not initially commit to in a planning cycle, and are not a follow-up to an inspection or audit.
Enforcement	Ways that we can enforce requirements and compel compliance. For example: letters of non-compliance directions or orders ticketing notices of violation administrative monetary penalties prosecutions suspensions or cancellations of certificates or authorizations
Education, outreach and awareness	How we educate the public, and encourage people and companies to follow the law (for example: industry conferences, air shows, training, web portal)
Quality control	How we make sure inspectors follow policies and procedures, and complete the required documentation. Applies to an entire oversight activity, from inspection, to follow-up, to resolving non-compliance.Supervisors and managers are responsible for quality control. Each program must have a: a documented, nationally consistent way of doing quality control a procedure or set of procedures to ensure inspections follow approved standard operating procedures

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