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Record-Breaking $196,000 Fine Against Trans Mountain Signals a New Era of CER Enforcement

  • Writer: Laura J. McPhee
    Laura J. McPhee
  • Jan 2
  • 4 min read

By: Laura J. McPhee


The Canadian energy sector is on notice. The Canada Energy Regulator (CER) has issued its largest cumulative administrative monetary penalty (AMP) to date, ordering Trans Mountain to pay $196,000 for significant environmental protection failures on its pipeline expansion project [1][2][3]. This landmark enforcement action serves as a critical reminder for all energy companies of the increasing regulatory scrutiny and the severe consequences of non-compliance.


For energy clients and businesses, this case is more than just a headline; it is a case study in regulatory risk, operational priorities, and the absolute necessity of robust environmental management systems.


The Violations: A Failure to Protect During Severe Weather

The penalties stem from a series of violations that occurred between January 28 and January 31, 2024, during a severe storm at the pipeline expansion project near Abbotsford [1]. According to the CER, Trans Mountain failed to implement required environmental protection measures, leading to four separate penalties [1].


The regulator's investigation uncovered several critical failures:

  • Inadequate Resource Allocation: The CER found that Trans Mountain failed to ensure enough environmental workers were available to manage the floodwater from the storm [2]. Compounding this issue, the company reportedly directed all its crews to a single location where weld repairs were underway and senior leadership was scheduled to visit, rather than addressing known environmental issues along the pipeline's B.C. segment [2].

  • Systemic Monitoring Gaps: Inspection officers identified "evidence of monitoring gaps in the maintenance, inspection, and functionality of drainage, erosion and sediment control measures"[1]. The regulator concluded that these observations demonstrated that Trans Mountain did not carry out the required environmental protection measures on an "ongoing and consistent basis" [1] .

  • Delayed Response: A specific incident in Chilliwack highlighted the operational deficiencies. Company officials were aware that a roadside ditch crossing had been breached early on January 28, yet extra pumps on-site were not activated until the following afternoon[1].


Following these findings, the CER ordered Trans Mountain to "immediately respond with all available resources to address environmental deficiencies and non-compliances" along the Fraser Valley route [1].


Understanding the Penalty Process

An Administrative Monetary Penalty (AMP) is a significant enforcement tool used by the CER to penalize companies or individuals for non-compliance with the CER Act, regulations, permits, or orders designed to protect the environment and public safety [3].


In this case, the process unfolded over several weeks:

  1. Initial Notice: On October 3, 2025, the CER issued four Notices of Violations (NOV) to Trans Mountain, with penalties totaling $292,000 [1] [3].

  2. Company Review: Trans Mountain requested corrections to the NOV on October 23, 2025 [3].

  3. Final Penalty: After considering the additional information provided by the company, the CER reduced the total penalty to the final amount of $196,000 [4][3].


While the penalty was reduced, it remains the largest cumulative AMP ever issued by the CER [1][3]. It is important to note that the maximum daily penalty for an AMP is $100,000 for a company, and for a recurring issue, there is no limit to the number of consecutive days a fine can be applied [3].


A Pattern of Non-Compliance

This significant fine does not exist in a vacuum. It follows previous enforcement actions against Trans Mountain, suggesting a pattern of compliance challenges. The company's recent history includes:


  • 2022: A $164,000 AMP in connection with a 2020 workplace death near Edmonton [1][2].

  • 2022: An initial penalty of $88,000 for disturbing bird nests, which was later reduced to $4,000 upon review [1] [2].


The CER's notice of violation explicitly states that the pipeline company "repeatedly failed to prioritize known issues along the pipeline’s B.C. segment as it tried to get the much-delayed project over the finish line" [2].


Key Takeaways for the Energy Industry

This enforcement action against Trans Mountain offers several crucial lessons for all energy sector participants:


  1. Environmental Compliance is Non-Negotiable: The record-setting fine underscores that the CER is taking its environmental protection mandate seriously. Companies cannot treat compliance as a secondary objective to construction deadlines or operational targets. The regulator has demonstrated its willingness to use significant financial penalties to enforce its regulations.

  2. Proactive Planning for Severe Weather is Essential: The violations were triggered by a failure to adequately prepare for and respond to a storm. As extreme weather events become more common, energy companies must have robust, tested, and consistently implemented environmental management plans that can withstand such pressures.

  3. Resource Management is Key: The misallocation of environmental crews to a site being visited by senior leadership is a stark warning [2]. Companies must ensure that resources are deployed based on risk and regulatory requirements, not internal priorities or optics.

  4. Meticulous Documentation is Your Best Defence: The CER's focus on "monitoring gaps" and "inspection records" highlights the importance of diligent record-keeping [1]. In a regulatory investigation, comprehensive and accurate documentation is critical to demonstrating due diligence and compliance.


The Trans Mountain case is a watershed moment. It signals heightened regulatory risk and reinforces that the financial and reputational costs of non-compliance are substantial and growing. Proactive legal counsel and a corporate culture dedicated to rigorous compliance are no longer just best practices—they are essential for survival and success in Canada's evolving energy landscape.



References



[2] The Canadian Press, News Release (December 12, 2025), "Trans Mountain pipeline pays $196K penalty for environmental lapses after 2024 storm", Online: https://canada.constructconnect.com/joc/news/resource/2025/12/trans-mountain-pipeline-pays-196k-penalty-for-environmental-lapses-after-2024-storm


[3] CNW Group, News Release (December 10, 2025), "Canada Energy Regulator issues four Administrative Monetary Penalties to Trans Mountain for environmental non-compliances", Online: https://sg.finance.yahoo.com/news/canada-energy-regulator-issues-four-222400964.html?guccounter=1


 

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