Balancing Jurisdictions: Proposed Changes to Canada's Impact Assessment Act

The Government of Canada has proposed amendments to the federal Impact Assessment Act (IAA) it says are intended to ensure the IAA is constitutionally sound while balancing environmental protection and development goals.

The proposed amendments are set out in the Budget Implementation Act, 2024, No. 1, which seeks to implement the government’s key commitments in the 2024 federal budget. They aim to address a recent advisory opinion by the Supreme Court of Canada (SCC) that opined that portions of the IAA related to major project review are unconstitutional because they encroach on matters within provincial jurisdiction. See our October 2023 Blakes Bulletin: SCC Rules Federal Impact Assessment Act’s “Designated Projects” Component is Unconstitutional to learn more. 

PROPOSED CHANGES

The IAA outlines the process for assessing the impacts of major projects, as well as projects carried out on federal lands or outside of Canada. 

Following the SCC opinion that aspects of the IAA are overbroad and extend beyond the range of conduct that Parliament can validly regulate, the government has proposed amendments to re-focus the major projects portion of the IAA on matters within federal jurisdiction to ensure that the legislation is constitutionally valid. Moreover, because provinces also have environmental impact assessment legislation in place, the amendments attempt to address the need for the federal and provincial governments to work together on impact assessment in the spirit of cooperative federalism. To that end, the federal government has reiterated its commitment to a “one project, one assessment” approach to major project review. 

Effects Within Federal Jurisdiction

In response to the SCC’s conclusion that the current definition of “effects within federal jurisdiction” is overly broad in that it includes any change to components of the environment, including any transboundary change to the environment, and any change to the conditions of Indigenous Peoples, the proposed amendments narrow the scope to effects that are linked clearly to federal matters under the Constitution. As a result, a new definition of “adverse effects within federal jurisdiction” is introduced that limits the scope of effects to be considered to “non-negligible adverse changes” that fall within the legislative authority of Parliament. The new definition seeks to avoid cases where trivial effects or positive changes are used as a basis for a federal impact assessment. 

The specified adverse effects falling within federal jurisdiction include non-negligible adverse changes to fish and fish habitat, aquatic species, migratory birds, adverse changes to the environment occurring on federal lands, and changes to the environment that directly impact Indigenous Peoples. In response to the SCC’s opinion, the broad references found in the IAA to interprovincial and international transboundary effects have been removed, and the focus is now only on transboundary effects related to matters where federal jurisdiction has been established. As a result, the new definition focuses on transboundary effects on the marine environment caused by pollution occurring outside Canada and on boundary or international waters. It does not explicitly reference transboundary air pollution.

Project Designation and Screening Decision

Currently, projects are subject to the IAA if they are included on the Project List set out in the Physical Activities Regulations or if the Minister exercises discretion to designate a project if there are potential adverse federal effects or if there are public concerns about those effects.

The government has indicated that the Project List will remain a basis for designation and that public consultation to review and amend the Project List will occur once the legislative amendments are in force. 

Concerning discretionary power, the amendments clarify that the Minister cannot designate a project unless there is potential for adverse federal effects that are non-negligible. In making that determination, the Minister can continue to consider public concerns, regional or strategic assessment and impacts on Indigenous rights. However, the amendments will also allow the Minister to consider whether other existing federal or provincial processes could address the federal effects.

Similarly, with respect to screening decisions by the Impact Assessment Agency, the amendments provide that the Agency cannot require an assessment unless it is satisfied that the carrying out of the designated project may cause non-negligible adverse federal effects. If so, other factors can be considered to determine whether an assessment is warranted, including an additional factor of whether other existing federal or provincial processes could address the potential adverse federal effects.

Public Interest Test

The proposed amendments introduce a reformulation and narrowing of the public interest test. Decision-making under the current IAA requires consideration of numerous equally weighted factors, some of which are outside federal jurisdiction. The SCC guidance requires decisions to be based on significant adverse federal effects without recourse to other non-federal factors. As such, the proposed changes require decision-making to clearly focus on preventing adverse effects within federal jurisdiction. As a result, the amendments require an initial determination as to whether significant adverse federal effects are likely. Subsequently, there is determination of whether the effects are justified and only at that point can consideration be given to listed factors that include the impact the effects may have on Indigenous Peoples, the extent to which the effects contribute to the Government of Canada’s ability to meet its environmental obligations and climate change commitments, and the extent to which the effects contribute to broader sustainability efforts. 

Inter-Jurisdictional Cooperation

The proposed amendments seek to promote cooperation among jurisdictions, including provincial and Indigenous governing bodies, in administering the IAA. 

In its opinion, the SCC encouraged coordination among jurisdictions and the adoption of a “one project, one assessment” approach to avoid duplication. In response, the amendments emphasize the importance of implementing the impact assessment process in a manner that supports harmonized action among jurisdictions in relation to assessing the effects of designated projects. The proposed amendments provide additional flexibility to permit the substitution of a provincial assessment instead of a federal assessment for designated projects to avoid inter-jurisdictional duplication. The Minister will be able to substitute a process, in whole or in part, to another jurisdiction when it is determined that the requirements of the IAA would be met between the jurisdictions. The objective is to allow for the best-placed jurisdiction to undertake aspects of the assessment. Final decision-making will remain with each jurisdiction. 

Protecting Indigenous Rights

Although not explicitly responding to concerns raised in the SCC’s opinion, the proposed amendments to the IAA introduce various provisions to further align the IAA with the United Nations Declaration on the Rights of Indigenous Peoples Act (UNDRIP). The IAA’s preamble has been amended to recognize the importance of implementing the impact assessment process to integrate Indigenous knowledge and foster a reconciliatory and working partnership with Indigenous Peoples. 

The IAA’s mandate has been amended to state that in administering the IAA, the Government of Canada, Minister, Agency, and federal authorities must exercise their powers in a manner that fosters sustainability and respects the rights of the Indigenous Peoples of Canada, as recognized and affirmed by section 35 of the Constitution Act, 1982.

It is expected that the government will seek to prioritize the swift passage of the Budget Implementation Act, 2024, No. 1, in the House of Commons and Senate to advance several key priorities and legislative amendments outlined in the 2024 federal budget. Our Environmental group will provide updates on significant developments. 

or any other member of our Environmental group.