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Amendments to the Canada Shipping Act, 2001 and Marine Liability Act

by Joanna Dawson, McMillan LLP

On December 13, 2018, Bill C-86, A second Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures, otherwise known as the Budget Implementation Act was given royal assent.  This Bill, which was first introduced on October 29, 2018, predominantly pertains to amendments of budget-related legislation, but also proposes significant amendments to both the Canada Shipping Act, 2001(“CSA”) and the Marine Liability Act (“MLA”). The amendments to the CSA were introduced to allow the federal government to regulate for environmental reasons and specifically “to deliver on commitments made under the Oceans Protection Plan to enable the Government to respond to marine pollution incidents faster and more effectively, and to better protect marine ecosystems and habitats”. The amendments provide significant new powers and authority that potentially change the marine safety and environmental protection framework in Canada.

Canada Shipping Act, 2001

With a focus on marine environmental protection, environmental response, enhanced enforcement and support for marine research, the amendments to the CSA include the following:

  • The amended Section 10(1)(c) sets out that the Minister of Transport or the Minister of Fisheries and Oceans may enter into agreements or arrangements respecting the administration or enforcement of any provision of this Act or the regulations and authorize any person or organization – including a provincial government, local authority, council or other entity authorized to act on behalf of an Indigenous group – with whom or which an agreement or arrangement is entered into to exercise the powers or perform the duties and functions under this Act that are specified in the agreement or arrangement.
  • The new Section 10(2.1) provides that the Minister of Transport may exempt any person or vessel or class of persons or vessels from any provisions of the CSA or the regulations if the exemption would allow the undertaking of research and development to enhance marine safety or environmental protection.
  • The new Section 10.1 provides that the Minister of Transport may make an interim order if he or she believes that immediate action is required to deal with a direct or indirect risk to marine safety or to the marine environment. Such interim order has effect from the time that it is made and remains in effect for a period one year, or any shorter period that may be specified in the interim order.  However, the interim order may be extended by the Governor in Council for a period of no more than two years after the end of the applicable period.
  • The new Section 35.1 provides that the Governor in Council may, on the recommendation of the Minister of Transport, make regulations respecting the protection of the marine environment from the impacts of navigation and shipping activities, including regulations with respect to, among other things:
    • design, construction, manufacture and maintenance of vessels or classes of vessels and inspections and testing thereof;
    • specifying the machinery, equipment and supplies that are required or prohibited on board vessels or classes of vessels;
    • design, construction, manufacture, maintenance, storage, inspection, testing, approval, arrangement and use of the machinery, equipment and supplies of vessels or classes of vessels;
    • regulating or prohibiting the operation, navigation, anchoring, mooring or berthing of vessels or classes of vessels; and
    • regulating or prohibiting the loading or unloading of a vessel or a class of vessels.
  • New penalties for non-compliance by the amendment in Section 40.1 which provides for a fine of not more than $1,000,000 or to imprisonment for a term of not more than 18 months, or both.
  • The amendments to Sections 168.3, 175(2) and 180(1) allow the Minister or the Minister of Fisheries and Oceans who believes on reasonable grounds that a vessel or an oil handling facility has discharged, is discharging or may discharge a pollutant, to take measures that he or she considers necessary to repair, remedy, minimize or prevent pollution damage from the vessel or oil handling facility.

Marine Liability Act

With a focus on “modernizing Canada’s Ship-Source Oil Pollution Fund”, the amendments to the MLA include the following:

  • The amended Section 101(1.1) provides that the Ship-source Oil Pollution Fund is liable for the costs and expenses incurred by the Minister of Fisheries and Oceans or any other person in respect of measures taken under subsection 180(1) of the Canada Shipping Act, 2001 with respect to oil, or for loss or damage caused by those measures, for which neither the owner of a ship, the International Fund nor the Supplementary Fund is liable by reason of the fact that the occurrence or series of occurrences for which those costs and expenses were incurred did not create a grave and imminent threat of causing oil pollution damage.
  • The addition of Section 114.1 imposes levies on receivers and exporters of oil to be used to replenish the Ship-source Oil Pollution fund when depleted.
  • New penalties for non-compliance by the addition of Section 130.01 which provides for a fine of $50,000 per individual and, in the case of any other person, $250,000.

Going Forward

While these amendments are intended to improve maritime safety and environmental protection, it is not yet clear as to the impact these provisions will have upon the current Canadian marine and environmental framework.  It seems that some of the provisions are ambiguous or will be challenging to apply. Without further guidance on how these new measures will be implemented, and clarity on who has the regulatory authority to enforce or take action provided thereunder, the uncertainty will ultimately lead to litigation with the courts left to determine the appropriate outcome.  It will be interesting to see how the amendments to the CSA and the MLA will affect and bring about change to the maritime industry.


A cautionary note: The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

This article is republished with the permission of the author. It was first posted on the McMillan LLP website.

About the Author

Joanna is a senior associate in the Business Law Group and the Transportation Group in the firm’s Vancouver office.  She practices in the areas of corporate, commercial and maritime law. Joanna routinely advises companies in the marine industry and a wide range of other industries on general corporate and commercial matters, including mergers and acquisitions, sales and purchases of businesses and marine assets, business structuring and organization, corporate restructuring and reorganization, and preparation and negotiation of agreements and contracts.

Joanna’s clients turn to her for day-to-day advice on their company operations and appreciate her practical and business-minded legal advice. She brings to her practice a depth of knowledge in the marine and transportation sectors acquired through her experience in working with ferry operators, shippers, ship owners and charter parties, and ship builders, locally and internationally.

Exxon Valdez Oil Spill – Lessons learned 30 years after the event

As reported in the Fairbanks Daily News-Miner, there are still lessons to be learned from the Exxon Valdez oil spill that occurred on March 24th, 1989.

A recent report issued by the United States Government Accountability Office (U.S. GAO) found that some organizations involved in environmental cleanup, restoration and research weren’t talking to each other during the Exxon Valdez Oil Spill or the Deepwater Horizon oil spill that occurred in 2010. In fact, some agencies weren’t even aware that the other existed.

The U.S. Congress, reacting to the Exxon Valdez spill, created the Interagency Coordinating Committee on Oil Pollution Research as part of the Oil Pollution Act of 1990. The committee’s purpose is to “coordinate oil pollution research among federal agencies and with relevant external entities,” according to the GAO. The committee, which has representatives from 15 agencies, is expected to coordinate with federal-state trustee councils created to manage restoration funds obtained through legal settlements.

GAO investigators found, however, that “the committee does not coordinate with the trustee councils and some were not aware that the interagency committee existed.”

Although three decades have passed since oil soiled the surface of Prince William Sound and rolled onto its shores, evidence of the spill remains. GAO staff visited the spill site in May of last year “and observed the excavation of three pits that revealed lingering oil roughly 6 inches below the surface of the beach …” Restoration is largely complete in Prince William Sound, but some work continues and research will continue for decades, the GAO report notes.

Background: Exxon Valdez Spill and Clean-up

As reported in History.com, The Exxon Valdez oil spill was a man-made disaster that occurred when Exxon Valdez, an oil tanker owned by the Exxon Shipping Company, spilled 41 million litres of crude oil into Alaska’s Prince William Sound on March 24, 1989. It was the worst oil spill in U.S. history until the Deepwater Horizon oil spill in 2010. The Exxon Valdez oil slick covered 2,000 kilometres of coastline and killed hundreds of thousands of seabirds, otters, seals and whales.

Exxon payed about $2 billion in cleanup costs and $1.8 billion for habitat restoration and personal damages related to the spill.

Cleanup workers skimmed oil from the water’s surface, sprayed oil dispersant chemicals in the water and on shore, washed oiled beaches with hot water and rescued and cleaned animals trapped in oil.

Environmental officials purposefully left some areas of shoreline untreated so they could study the effect of cleanup measures, some of which were unproven at the time. They later found that aggressive washing with high-pressure, hot water hoses was effective in removing oil, but did even more ecological damage by killing the remaining plants and animals in the process. Nearly 30 years later, pockets of crude oil remain in some locations.

Lessons Learned

A 2001 study found oil contamination remaining at more than half of the 91 beach sites tested in Prince William Sound.

The spill had killed an estimated 40 percent of all sea otters living in the Sound. The sea otter population didn’t recover to its pre-spill levels until 2014, twenty-five years after the spill.

Stocks of herring, once a lucrative source of income for Prince William Sound fisherman, have never fully rebounded.

In the wake of the Exxon Valdez oil spill, the U.S. Congress passed the Oil Pollution Act of 1990. The Oil Pollution Act of 1990 increased penalties for companies responsible for oil spills and required that all oil tankers in United States waters have a double hull. The Oil Pollution Act of 1990 (OPA), which was enacted after the Exxon Valdez spill in 1989, established the Interagency Coordinating Committee on Oil Pollution Research (interagency committee) to coordinate oil pollution research among federal agencies and with relevant external entities, among other things.

The U.S. GAO recommends, among other things, that the interagency committee coordinate with the trustee councils to support their work and research needs. 

Innovations in Pipeline Design: Leak-proof technology

By Dema Mamon, M.Sc.Pl, BES and John Nicholson, M.Sc., P.Eng.

In Canada, getting approval to construct an oil pipeline has become increasingly difficult. Despite the fact that new, advanced software has led to more sophisticated caesar piping, in Canada every oil pipeline incident that involves a leak and subsequent clean-up is widely covered in the media, providing fuel for pipeline opponents that call an end to the construction of new pipelines.

Abacus Data Inc., an Ottawa-based research firm, has been tracking public opinion on the construction of new pipeline capacity and has found some interesting trends. Since 2014, polling has shown that the negative view of building new oil pipelines has remained steady at 21 to 22% range. However, there was a drop in the positive attitude amongst Canadians toward building new pipelines – from 58% in 2014 to 44% in 2017. Over that three year span, a good proportion of Canadians who once viewed building new pipeline capacity with a positive attitude have shifted to a neutral view, which will have a pipe heater around the majority of them to reduce heating. The neutral view on oil pipelines has grown from 20% in 2014 to 36% in 2017.

There can be many theories to explain the three year shift in public opinion on new oil pipelines. One plausible theory is that oil spills from pipelines typically make headline news, thus leaving an impression in the minds of Canadians the perhaps pipelines are not as safe as the industry states. Oil leaks from pipelines damage the environment, are costly to clean-up, and fuel public opinion that pipelines are not safe. To prevent future spillages and oil theft, the use of something like bunded fuel tanks would be a good place to start, especially since they are environmentally friendly. Anything worth saving the planet and preventing damage is worth doing for sure.

One way to eliminate the perception that building new oil pipelines is bad for the environment and shift public opinion in favour of such projects is to build pipelines that don’t leak. However, is it even possible to build leak-proof pipelines?

Are Double-Walled Pipelines the Answer?

One logical idea for building leak-proof pipelines is for them to be double-walled. The outer wall would serve as protection from external damage. The technology does exist to construct double-walled pipelines and they are used in certain circumstances such as when there is a large temperature difference between the liquid in the pipe and the surrounding environment.

Double-walled pipelines are not considered the cure-all by some in the industry. Those resistant to the use of double-walled pipelines note that in some instances, it may be more cost effective to protect pipelines from the potential of external damage by burying them or placing slabs over them in higher risk areas. Furthermore, it can be more difficult to monitor a double-walled pipeline and an outer pipe interferes with the maintenance of the inner pipe.

At the University of Calgary, researchers believe their two-walled pipeline design and monitoring system is the solution to preventing spills. Although double-walled pipelines have been around since the 1980’s, Thiago Valentin de Oliveira, an electrical and computer-engineering master’s student, and Martin Mintchev, an engineering professor, say that their design is superior.

The U of Calgary researchers designed and constructed their prototype to consist of a typical steel inner layer with either a steel or plastic outer layer. There is an air gap between inner and outer pipeline contains the oil that leaks from the inner pipeline leak. The real innovation developed by the U of Calgary is the segmentation of the inter-pipe space and the inclusion of a linear wireless network linking the segments. With the segmentation, a leak of oil from the inner pipe enters the air gap between the two pipes and is contained in a section of pipe. Wireless pressure sensors between the two walled layers detect the pressure build up and send an alert to the pipeline control staff.

If commercially implemented, the U of Calgary system would allow pipeline operators with the means of quickly shutting down the pipeline when a leak was detected into the outer pipeline and crews could be dispatched to make repairs. The oil that leaked from the inner pipe would be contained in the air gap between the two pipes and be confined to one section of the pipeline.

The U of Calgary researchers estimate that their design would result in an additional 25% in the capital cost of building pipelines. They believe this cost could be reduced if the outer pipeline material was composite materials or plastic.

Is Advanced Monitoring the Solution?

Also in Alberta, a Calgary-based firm, HiFi Engineering, recently announced that it has developed an innovative pipeline leak detection system. Dubbed High-Fidelity Dynamic Sensing (HDS™), the monitoring system can spot the exact location of a leak in a pipeline within seconds of it occurring. The system continuously monitors temperature, sonic and ultrasonic acoustics, and vibration and strain. Any anomaly in the measurements results in an alert being sent to the pipeline company control room.

Hifi Engineering’s High Fidelity Dynamic Sensing (HDS) technology is being called the ‘ears of pipeline monitoring.’

The system works utilizing fiber optic cables that run the length of the pipeline. A laser beam is sent down the length of the optic cable and sends signals back that provide a multitude of information to the pipeline control room.

TransCanada Pipelines Corporation has already installed the HiFi HDS™ monitoring system in sections of the Keystone XL oil pipeline that runs from Canada to the U.S. Also, Enbridge employs the technology in its new northern Alberta pipeline.

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About the Authors

Dema is a graduate of York University’s Bachelor in Environmental Studies program (2008) and the University of Toronto’s Masters of Science in Planning Programme (2010). She is currently pursuing her Canada Green Building Council’s Leadership in Energy and Environmental Design’s Green Associate certification. Her research interests include environmental conservation, green infrastructure, and sustainability. She can be reached at dema.mamon@gmail.com.

John Nicholson is the editor of Hazmat Management Magazine. He has over 25 years of experience in the environmental and cleantech sectors. He is a registered professional engineer in the Province of Ontario and has a M.Sc. in environmental engineering. His professional experience includes time at a large engineering consulting firm, a major Canadian law firm, and the Ontario Ministry of the Environment and Climate Change.