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Some 15,000 pieces of pipe for TransCanada Corp.’s Keystone XL pipeline lie in a field in North Dakota on April 23, 2013.

NATHAN VANDERKLIPPE/The Globe and Mail

Canada's energy regulator has determined TransCanada Corp. is out of compliance with federal rules in a number of areas, including hazard identification and risk assessment and control.

The National Energy Board conducted an audit of the pipeline company's so-called integrity management program between November 2012 and August 2013 after a whistleblower in May 2012 complained to the board about TransCanada's practices. The results of the audit were released Monday.

The board concluded TransCanada "to be non-complaint" in four sub-elements of the audit: hazard identification, risk assessment and control; operational control-upset or abnormal operating conditions; inspection, measurement and monitoring; and management review.

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The NEB is troubled, for example, by TransCanada's "over-reliance on lagging indicators; inadequate consideration of NEB safety advisories notifying where hazardous conditions existed and regulatory requirements were not being met; and ineffective implementation of internal practices to address the complainant's [whistleblower's] issues prior to board notification."

TransCanada, a major pipeline and power company, must submit a "corrective action plan" to the NEB for approval within 30 days. The plan must lay out how it will address the NEB's findings over non-compliance.

TransCanada was due for a review in the second quarter of 2013. The review was bumped up to November 2012 after Evan Vokes, a former TransCanada engineer, complained to the NEB about his company's faults. The company, he said, ignored his internal warnings over welding regulations.

TransCanada has developed and implemented a "program of actions with the goal of correcting and preventing similar occurrences," the NEB said in the audit's executive summary. However, TransCanada only took action once the whistleblower turned to the regulator.

"The board notes that a number of the allegations of regulatory non-compliance were identified and addressed by TransCanada only after the complainant's allegations were made and were not proactively identified by the company's management system," the NEB said. The regulator said TransCanada's practice and procedures to deal with reporting of employee concerns were not effectively implemented at the time of the audit.

The audit did say TransCanada is in compliance with respect to a number of rules.

The federal regulator believes the "processes presently used" by TransCanada have "identified the majority, and most significant, of its hazards and risks." It believes the company, which is lobbying to build the Keystone XL oil sands pipeline to the U.S. Gulf Coast, is compliant with rules governing organizational structure, roles and responsibilities; training, competence, and evaluation; operational control-normal operations, corrective and preventative actions; and internal audit.

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Shawn Howard, a spokesman for TransCanada, in a statement said: "We accept the National Energy Board's audit of TransCanada's integrity management system and are pleased that they have indicated that our current systems have identified the majority and most significant hazards and risks related to our business."

The company, he said, has already taken action in a number of areas. For example, it appointed an officer to be "accountable for the performance of the company's management system in meeting its regulatory obligations."

It will also "continue testing the commodities shipped in the Keystone pipeline for the presence of dissolved H2S [hydrogen sulfide] while continuing our work with the Canadian Standards Association and industry to improve these testing methodologies," Mr. Howard said.

The NEB is also investigating certain steel pipe and fittings installed on the existing Keystone pipeline with the potential to "exhibit lower than specified yield strength." The investigation is ongoing, the report said.

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