Canada: Transport Canada To Require Shippers Of Crude Oil To Keep New Records And Certify Crude Classification

The Government of Canada has proposed new Regulations Amending the Transportation of Dangerous Goods Regulations that will require consignors of crude oil being transported by rail or truck to (a) keep records of their classification of the oil and the sampling methods used to determine that classification and (b) provide a certification with the shipping documents that the oil has been properly classified.

These new provisions are expected to come into effect this spring.

Under the Transportation of Dangerous Goods Regulations a consignor of dangerous goods is responsible for determining the classification of the dangerous goods to ensure they are transported in proper containers or packages and are properly labelled or placarded. Dangerous goods classifications and packing groups warn railroad workers, truckers and others how dangerous the goods are and the dangers they may face in the event of a spill, collision, fire or derailment.

The most dangerous flammable liquids, based on their flash point and initial boiling point, are assigned to Packing Group I, while liquids posing only moderate and low danger are assigned to Packing Groups II and III, respectively. Gasoline, for example, vaporizes easily at a relatively low temperature to form a flammable mixture with air, so is normally assigned to Packing Group II. Crude petroleum, by contrast, is less flammable and seen as a lower-risk cargo, so it is often assigned to Packing Group III. Diesel is also usually placed in Packing Group III.

Properly classifying crude oil can be challenging

A challenge in classifying crude oil is that it is typically non-homogeneous, containing some percentage of sediment, water and volatile light ends. Petroleum crude oil is a mixture of chemicals for which the representatives of a given sample may vary greatly, based on many factors.

Crude oil's composition can also vary quite widely from one field to another, one well to another, and even over time from the same well. Some crude oil contains dissolved natural gas, which is highly volatile, and hydrogen sulphide, which is exceptionally toxic, flammable and corrosive. Further, natural gas, natural gas liquids and hydrogen sulphide can all come out of solution and vaporize in the empty space at the top of tank cars. If they ignite, they may produce enough heat to make the other components of the crude burn. Properly sampling and classifying some crude oil can be challenging.

Under the present Regulations there is a lack of information on the sampling methods used by consignors for the classification tests and the selection of proper containers.

New record-keeping obligations

The proposed regulatory amendments clarify that the classification must be based on actual samples of the dangerous goods. A material safety data sheet on its own will not be considered a valid proof of classification unless it is accompanied by a document that explains how the dangerous goods were classified. If the proposed amendments are brought into force, the consignor must keep for two years a record showing the sampling method and which includes the scope of the method, the sampling apparatus, the sampling procedure, the frequency and conditions of sampling and a description of the sampling quality control management system in place.

A consignor will also have to keep proof of the classification for at least two years. The proof of classification must be based on a test report or lab report or a document that explains how the dangerous goods were classified.

The proposed amendments requiring consignors to keep a record of how they sampled and classified the goods will address a gap in the information available to Transport Canada inspectors trying to validate the classification of the dangerous goods and confirm that the samples used for the assignment of the packing group are suitable and representative of the dangerous goods being transported.

The proposed amendments appear to be driven by some confusion among consignors that arose following Transport Canada issuing Protective Direction No. 31 on October 7, 2013, requiring consignors and importers of crude oil to test the classification of their crude shipments and provide the test results to Transport Canada upon request. The amendments also address a Canadian Transportation Safety Board recommendation in September 2013 to review classification procedures and processes for dangerous goods.

New certification obligations

A consignor of dangerous goods will also be required to provide a certificate with the shipping documents whereby they certify that the consignment's contents are fully and accurately described by the proper shipping name, and are properly classified, packaged and marked, labelled or placarded, and that the goods are in all respects in proper condition for transport according to applicable legislation.

The International Civil Aviation Organization's Technical Instructions for the Safe Transport of Dangerous Goods by Air, the International Maritime Dangerous Goods Code and the United States Code of Federal Regulations, Title 49 already require consignors to provide a similar certification. Hence, adopting this new certification requirement in Canada will create harmonization with international regulations.

It is proposed that strict compliance with the new provisions will not be required until six months after the amendments are brought into force.

Norton Rose Fulbright Canada LLP

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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.

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