Canada: Is Canada About To Overhaul Its Marine Environment Risk Management Regime?

On February 5, 2013, the Report of the Commissioner of the Environment and Sustainable Development, prepared on behalf of the Auditor General of Canada, was released to the public. While the report considered a number of topics, those of primary interest to the marine industry are: (1) The management of the environmental risks and impacts associated with offshore oil and gas activities in the Atlantic; (2) Financial assurances for environmental risks in the offshore oil and gas and marine transportation sectors; and (3) The establishment and management of marine protected areas.

The release of the report coincides with Transport Canada's announcement, made a day earlier, that it shall commission a comprehensive risk assessment study on the readiness to respond to oil and chemical spills from vessels and handling facilities in Canadian waters.

The government's reaction to the report and this Transport Canada announcement lead us to believe that Canada is about to accelerate the review of its global marine environment protection and indemnity regimes,1 and this could have an impact on the way business is conducted in the future.

Atlantic offshore oil and gas activities

Offshore oil and gas activities in the Atlantic are regulated by the Canada-Newfoundland and Labrador Offshore Petroleum Board and the Canada-Nova Scotia Offshore Petroleum Board (Boards), being joint federal-provincial boards. Although offshore operators are obliged to respond in the event of a pollution incident, if the operator cannot or will not respond, then the Boards may lead the response. This led the auditors to consider whether the Boards, along with other federal departments, are appropriately managing the environmental risks and impacts associated with offshore oil and gas activities.

The auditors expressed a concern that in light of the response plans and mechanisms for coordination currently in place, in the event of a major oil spill the federal entities that may contribute to a response effort are not adequately prepared. Consequently, a number of the report's recommendations focused on preparation for such an eventuality. The Boards, and the federal departments involved in the audit, agreed with the auditors' recommendations.  

Financial assurances for environmental risks

As matters currently stand, the report estimates that environmental financial assurances produced by owners, operators or licence holders, namely letters of credit, trust funds, guarantees and insurance provided by the operator or responsible entity, held by federal entities total approximately $11.6 billion. Integral to the notion of protecting the public finances, and which affects the scope of financial assurance, is the extent to which the liability of owners or operators is limited by law.

Offshore Oil and Gas Sector

The audit considered the current limits of liability,2 noting that the current limits have been in place for 24 years, and, when compared with other jurisdictions such as the United States, Norway and Greenland, are considered "low." The auditors further determined that Natural Resources Canada (NRC) is currently reviewing the liability regime applicable to Canada's offshore oil and gas activities, including the limits of absolute liability. In light of the foregoing, the report's recommendation is that NRC should complete its review and "recommend the revision of these limits, as necessary, to reflect the nature and significance of the potential risks." NRC agreed with the report's recommendation and undertook to complete its review as a matter of priority.

Maritime Transportation Sector

The auditors considered the current system whereby Canada manages its exposure to the financial impacts of marine spills and damage through a "four-tiered a maximum of $1.3 billion per incident" comprising a combination of shipowner insurance, a domestic fund, international conventions and protocols.3 The auditors noted that Transport Canada (TC) was active in monitoring and participating in the maritime liability and compensation system; however, with respect to spill response capacities there were no formal processes for ensuring the risks would be reassessed on an ongoing basis. The auditors were concerned that the projected volume of traffic and the increased tonnage of the vessels trading in Canadian waters represent a significant increase from the previous levels that were utilized to determine the current oil spill response capacity. Furthermore, in the course of the audit, TC acknowledged that there is a risk, in the event of a ship-source oil pollution incident, that current maritime liability limits and compensation regimes may not be sufficient.

As a result of the audit, the report recommends that TC should carry out a comprehensive review of the maritime transportation liability and compensation system, which should take into consideration the limited response capacities and the projected increase in vessel size. TC agreed with the recommendation, and will conduct a comprehensive review of the liability and compensation regime, including a risk assessment, to be completed by the fall of 2013.

To that end, TC announced on February 4, 2013, that, in collaboration with the Canadian Coast Guard and Environment Canada, it is commissioning a pan-Canadian risk assessment study on readiness to respond to marine pollution spills in Canadian waters. The study will analyze and evaluate the risk of oil or chemical spills occurring in Canadian waters as a result of incidents involving ships or oil handling facilities and will focus on different types of incidents including collisions, fire, explosions, structural failure and loading/off-loading operations.

Marine protected areas

As a signatory to the United Nations Convention on Biological Diversity, Canada agreed to an international target of conserving 10 percent of marine areas by 2020 through networks of marine protected areas (MPAs) and other conservation measures. Fisheries and Oceans Canada, Parks Canada and Environment Canada are the three federal authorities with specific, complementary mandates to establish and manage MPAs in Canada's oceans and Great Lakes.

The MPAs created by Parks Canada do not allow for extraction of or exploration for non-renewable resources, such as oil and gas. MPAs established by Fisheries and Oceans Canada, on the other hand, can allow for both non-renewable and renewable resource extraction.

The report notes that little progress has been made towards establishing a national network of MPAs, which, to date, cover an estimated 1 percent of Canada's marine environment,4 and considers this an issue that will need to be addressed. The report also acknowledges the complexity of the issue and the importance of consulting with all stakeholders. While Fisheries and Oceans Canada and Parks Canada appear committed to accelerating the pace of establishing a network of MPAs, it remains to be seen how they will do so.

Reaction from government

In the House of Commons, the prime minister confirmed the government's intention to enhance environmental protection measures to cope with the growth in resource development that the country is experiencing, while the minister of environment in a statement confirmed that the process to develop regulatory and legislative actions to provide the necessary protections, including addressing the financial assurances required of industry to ensure availability of sufficient funds in case of an environmental catastrophe, had already begun.

How quickly, however, the government proceeds remains to be seen, as the issues are complex, particularly on questions of preparedness and response. It is worth noting that already several federal agencies or departments have initiated or are about to initiate a series of reviews of the overall response capability and preparedness in respect of marine pollution arising from activities falling in their respective jurisdiction. Industry should take note and seize the opportunity of participating in these reviews to offer its experience and solutions.


1 In May 2010, the National Energy Board initiated its Arctic Offshore Drilling Review of the safety and environmental requirements for offshore drilling in Canada's Arctic environment. A report was released on December 15, 2011.

2 For the Arctic offshore area the limit is $40 million. Atlantic offshore operations are subject to a $30 million limit. Liability up to these limits is absolute, meaning fault is not required. In the event that a party responsible for a discharge is at fault, then that party's liability is unlimited.

3 The Civil Liability Convention, 1992, the International Oil Spill Compensation Fund Convention, 1992, the 1996 Protocol to Amend the International Oil Spill Compensation Fund Convention and Part VI of the Marine Liability Convention. Canada is also a party to the Bunkers Convention.

4 Australia has reported that it has protected about 10 percent of its marine environment and is proposing to expand its MPAs to cover 38 percent of its waters.

Norton Rose Group

Norton Rose Group is a leading international legal practice. We offer a full business law service to many of the world's pre-eminent financial institutions and corporations from offices in Europe, Asia, Australia, Canada, Africa, the Middle East, Latin America and Central Asia.

Knowing how our clients' businesses work and understanding what drives their industries is fundamental to us. Our lawyers share industry knowledge and sector expertise across borders, enabling us to support our clients anywhere in the world. We are strong in financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and pharmaceuticals and life sciences.

We have more than 2900 lawyers operating from 43 offices in Abu Dhabi, Almaty, Amsterdam, Athens, Bahrain, Bangkok, Beijing, Bogotá, Brisbane, Brussels, Calgary, Canberra, Cape Town, Caracas, Casablanca, Dubai, Durban, Frankfurt, Hamburg, Hong Kong, Johannesburg, London, Melbourne, Milan, Montréal, Moscow, Munich, Ottawa, Paris, Perth, Piraeus, Prague, Québec, Rome, Shanghai, Singapore, Sydney, Tokyo, Toronto and Warsaw; and from associate offices in Dar es Salaam, Ho Chi Minh City and Jakarta.

Norton Rose Group comprises Norton Rose LLP, Norton Rose Australia, Norton Rose Canada LLP, Norton Rose South Africa (incorporated as Deneys Reitz Inc), and their respective affiliates.

On January 1, 2012, Macleod Dixon joined Norton Rose Group adding strength and depth in Canada, Latin America and around the world. For more information please visit

Norton Rose will join forces with Fulbright & Jaworski L.L.P on June 1, 2013, creating Norton Rose Fulbright a global legal practice with significant depth of expertise across the USA, Europe, Asia, Australia, Canada, Africa, the Middle East, Latin America and Central Asia.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions