Canada: Updates In Oil Tank Litigation

Will We Be Out of a Job?

Will oil tank leak litigation be a thing of the past? Not likely, but it is interesting that in 2013 TSSA mandated that all new tanks installed must be double-walled to help prevent fuel oil leaks.

This is not to say single-walled tanks are not still in use and in fact comprise the majority of installations in residences throughout Ontario and Canada. Unless specifically required by changes to the Fuel Oil Code, pre-existing conditions which met requirements of previous versions of the Code do not need to be retrofitted. They are grandfathered in and the equivalent of a legal non-conforming use.

The Fuel Oil Code (CSA B139) is not exactly a joy to read for the lawyer, let alone a home owner and yet, places obligations on home owners, not just on parties in the industry who are frequently sued such as fuel distributors, tank installers and tank manufacturers.

Because litigation which arises now frequently deals with installations from years ago, it is often relevant to look at the various Fuel Oil Code changes over time and the manner in which they have evolved in terms of their requirements.

The common element in most cases involving tank leaks due to internal corrosion is water leading to what is called MIC (microbial induced corrosion). The issue is whether tanks were designed properly, installed properly and tested properly for water. What you do if you encounter water is another issue in terms of practicality, but there is much blame to be laid about who should have tested for water and when.

Just going back as far as 2001, at that time the Fuel Oil Code made no mention of testing tanks for water. As of 2002 there was no specific tank age at which point the Code mandated that a tank should be replaced. In 2004 manufacturers of oil tanks began to indicate that tanks should be inspected for water. By 2006 the Code required only side discharge tanks to be tested for water. In 2007 metallic end outlet tanks installed outdoors were to be tested for water and where water is found the Code required that it be removed. How that was to be done was not specified. The new version of the CSA Standard was issued in 2009 but that was not adopted by TSSA.

The next significant development was the directive issued by TSSA in 2013 indicating that all new tanks need to be double-walled to help prevent leaks.

That leaves ample scope for litigation with respect to existing tanks. Industry experience shows an increasing number of tank failures with respect to tanks of 10 years of age or less. Most insurers now require that an oil tank be replaced every 10 years. Even with that, it appears likely that for years yet to come there will be leaks from tanks resulting in environmental contamination and subrogated claims from insurers against the variety of usual defendants.

We are not out of a job yet.

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