Managing oil spills by industry

In the marine sector, the Government of Canada has established a world-leading regime built on international and domestic cooperation and standards. In some cases, Canada exceeds the international conventions and standards in important aspects of marine transportation.

The national rules that govern how we respond to spills involving the transportation of oil by water are spread through multiple pieces of legislation. They set out the roles and responsibilities for environmental protection, different obligations and powers for many different agencies, on top of responsibilities for other levels of government and communities. These Acts include the:

• Canada Shipping Act, 2001,
• Arctic Waters Pollution Prevention Act,
• Marine Liability Act,
• Fisheries Act,
• Canadian Environmental Protection Act, 1999,
• Migratory Birds Convention Act, 1994, and
• Species at Risk Act

Through new legislation and major investments, such as the Oceans Protection Plan, the Government of Canada is strengthening this already robust regime.

Similar to the other systems in Canada, the ship-source oil spill response system is built on the Polluter Pays Principle. The government ensures that industry-funded compensation is available to cover eligible losses of those affected by ship-source spills, even when the vessel that caused the spill is unknown.

Explore more about marine tankers in Canadian waters

Canada has one of the most rigorous and effective pipeline safety systems in the world. While the primary aim is to prevent incidents, the Government of Canada has established a world-leading preparedness and response system as well as a comprehensive liability and compensation regime to ensure that Canadians are protected from costs and damages, and that the environment is protected in the event of a spill.

The Canada Energy Regulator regulates the complete lifecycle of a pipeline and holds companies it regulates accountable for the safe operation of federally regulated pipelines.

The national rules that govern how we respond to spills involving the transportation of oil by pipeline are spread through multiple pieces of legislation. They set out the roles and responsibilities for environmental protection, different obligations and powers for many different agencies, on top of responsibilities for other levels of government and communities. These Acts include the:

• Canadian Energy Regulator Act
• Energy Administration Act
• Northern Pipeline Act
• Fisheries Act,
• Canadian Environmental Protection Act, 1999,
• Migratory Birds Convention Act, 1994, and
• Species at Risk Act

Specifically, the Canadian Energy Regulator Act, Energy Administration Act and the Northern Pipeline Act enshrines the “polluter pays” principle in law so that polluters—not Canadian taxpayers—are financially responsible for the costs and damages.

Polluters are responsible for:

• all actual losses or damages incurred by any person;
• costs incurred by government (federal or provincial) or any Indigenous community;
• costs associated with the loss of public resources, such as a national park or ecosystem.

Railcars that transport oil, or tank cars, must meet enhanced standards to help protect the environment in the event of an incident. The TC-117 is the standard for updated tank cars and enhanced safety features include:

• A thermally protected jacket, or outer cover on the tank car, to keep insulation in place and provide additional strength;
• Protection on the top of the tank car, to cover and guard the top valves during an incident;
• Full head shields on the ends of the tank car, to protect them from being punctured

Transport Canada monitors railway companies for compliance with rules, regulations, and standards through audits and safety inspections.

 The national rules that govern how we respond to spills involving the transportation of oil by train are spread through multiple pieces of legislation. They set out the roles and responsibilities for environmental protection, different obligations and powers for many different agencies, on top of responsibilities for other levels of government and communities. These Acts include the:

• Railway Safety Act
• Canada Transportation Act
• Fisheries Act
• Canadian Environmental Protection Act, 1999
• Migratory Birds Convention Act, 1994
• Species at Risk Act

The Government of Canada has taken concrete steps to strengthen the rail safety regime in Canada through regulatory and legislative reform, including:

• increasing inspections;
• lowering speed limits on trains transporting dangerous goods through municipalities;
• introducing new rules to secure train equipment; and
• providing the Minister of Transport and inspectors new powers to order railway companies to take corrective measures when safety is found to be an issue.

Under the Railway Safety Act, federally regulated railway companies are responsible for the safety of their rail line infrastructure, railway equipment, and operations. This includes ongoing inspections, testing, and maintenance programs in accordance with regulatory requirements.

After the tragic derailment at Lac-Mégantic, the government strengthened the federal liability and compensation regime in the Canada Transportation Act by establishing enhanced mandatory minimum insurance requirements for federally-regulated railways moving dangerous goods and the Fund for Railway Accidents Involving Designated Goods (FRAIDG), which came into effect in 2016.

The FRAIDG helps cover any costs beyond the insurance coverage held and paid out by the railways in the event of a severe railway accident involving crude oil. The Fund activates as soon as the railway has paid up to its mandatory insurance level.

Any Canadian citizen, business, community, or government body affected by a severe crude-by-rail accident can make a claim to the FRAIDG up to six years after the accident occurred. It provides victims with access to unlimited compensation, subject to any terms and conditions set by the Minister of Finance.

Transport Canada estimates that, in terms of tonnage, 70% of dangerous goods are transported by road. The most common dangerous goods commodities transported in Canada are crude petroleum oil, gasoline, and fuel oils—representing 77% of all dangerous goods transported by road.

Transport Canada is the major source of regulatory development, information, and guidance on the transportation of dangerous goods in Canada, and works closely with other federal, provincial, and territorial agencies to foster effective and responsive governance and promote safety and efficiency.

The national rules that govern how we respond to spills involving the transportation of oil and other dangerous goods by road are spread through multiple pieces of legislation. They set out the roles and responsibilities for environmental protection, different obligations and powers for many different agencies, on top of responsibilities for other levels of government and communities. These Acts include the:

• Motor Vehicle Transport Act
• Transportation of Dangerous Goods Act, 1992
• Fisheries Act
• Canadian Environmental Protection Act, 1999
• Migratory Birds Convention Act, 1994
• Species at Risk Act

The oil and gas industry in Canada has been involved in offshore exploration and development since 1959 when Mobil began exploration of Sable Island.

The Canada Energy Regulator is the regulator for all of Canada’s offshore areas except for the area adjacent to the provinces of Newfoundland and Laborador and Nova Scotia. In the Arctic, they share responsibility with Crown-Indigenous Relations and Northern Affairs. The Canada-Newfoundland and Labrador Offshore Petroleum Board, and the Canada-Nova Scotia Offshore Petroleum Board are the regulators for offshore areas adjacent to the provinces of Newfoundland and Labrador and Nova Scotia.

The national rules that govern how we respond to spills involving offshore oil annd gas production  are spread through multiple pieces of legislation. They set out the roles and responsibilities for environmental protection, different obligations and powers for many different agencies, on top of responsibilities for other levels of government and communities. These Acts include the:

• Canada Petroleum Resources Act
• Canada Oil and Gas Operations Act
• Canada-Newfoundland Atlantic Accord Implementation Act and the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act, otherwise known as the Accord Acts
• Fisheries Act
• Canadian Environmental Protection Act, 1999
• Migratory Birds Convention Act, 1994
• Species at Risk Act

Primary responsibility for offshore spill response in Canada rests with the operator. Operators are required to develop contingency plans to mitigate the effects of any reasonably foreseeable event that might compromise safety or environmental protection. The regulator assesses operators' contingency plans and preparedness activities, such as emergency response exercises, before authorizing offshore activity.

The offshore oil and gas regime includes compensation for damages to fisheries resulting from a spill. Operators are liable for all costs and damages in the event of an oil spill. Absolute liability is $1 billion without proof of fault or negligence, and unlimited when fault or negligence is proven. To receive authorization, operators must also provide financial proof that they can pay the $1 billion absolute liability limit, as well as demonstrate financial capacity to compensate affected parties. The Canada Energy Regulator, the Canada-Newfoundland and Labrador Offshore Petroleum Board, and the Canada-Nova Scotia Offshore Petroleum Board verify operators' ability to meet their liability and compensation obligations.