Impact Assessment Act Amendments Announced: Many Questions Still Left Unresolved

May 06, 2024

Written By Martin Ignasiak, David Bursey and Lisa Rodriguez

On April 30, 2024, the Government of Canada announced widely-anticipated amendments to the Impact Assessment Act (IAA or Act) as part of a 663 page omnibus budget bill. Canada announced the 2024 budget with the tagline "Fairness for Every Generation," claiming that the amendments to the IAA are both "constitutionally sound" and allow for a more efficient assessment process.

However, the proposed amendments offer minimal changes, and may leave the IAA once again ripe for constitutional challenges.

The most meaningful change comes from the decision to remove any reference to interprovincial effects, appearing to forfeit the federal government's contention that it could regulate projects based on greenhouse gas emissions. Otherwise, the amendments have done little to move away from the federal government regulating whole projects within provincial jurisdiction, which was a major criticism of the Supreme Court of Canada (SCC) in the IAA Reference decision.¹

You can read about the IAA Reference decisions at the SCC and Alberta Court of Appeal here and here.

In the IAA Reference, the SCC majority opined that "[f]ederal legislation that is insufficiently tailored—that is, whose pith and substance is to regulate the activity qua activity, rather than only its federal aspects—is ultra vires."² Despite this concern, the amended section 9 still allows the Minister to use his or her discretion to designate a physical activity not prescribed in the regulations, effectively bringing a project under federal regulation.

Canada further seems to have added terms such as "non-negligible adverse change" to narrow the problematic definition of "effects within federal jurisdiction" in the impugned Act. The term "non-negligible" has not been clearly defined or interpreted in Canadian courts but is generally understood to mean not insignificant, which is a low threshold that is open to interpretation and potential misuse. From a practical perspective, this change does little to ensure that the Act will not be administered in a manner that results in federal assessment of projects that are otherwise entirely within provincial jurisdiction.

The new amendments also purport to change what the SCC called "impermissibly broad prohibitions"³ in section 7. That section effectively halted all activity on a project after being designated. The new amendments specify that only activity with the potential to create an "adverse" effect "within federal jurisdiction" would be caught by the prohibition. More concerning, the problematic "may" is still in the section.⁴

The SCC's complaint that "the screening decision under section 16(2) is not driven by possible federal effects and therefore fails to focus the scheme on the federal aspects of designated projects"⁵ was addressed superficially by adding the following subsection:

16 (2.1) The Agency may decide that an impact assessment is required only if it is satisfied that the carrying out of the designated project may cause adverse effects within federal jurisdiction or direct or incidental adverse effects.

This amendment could result in the federal government assessing and thus regulating an entire project, even if the project is entirely located in one province, due to a concern of the mere possibility of adverse effects within federal jurisdiction.

It is not clear that Canada did anything to substantively address the SCC’s significant concerns about the "public interest" decision required to be made at the end of the impact assessment process (sections 60-63).⁶ The amendments now impose a materiality threshold of sorts, where a precondition to requiring a public interest decision is a finding that the adverse effects within federal jurisdiction or the direct or incidental adverse effects likely to be caused by the designated project are "to some extent, significant". 

Despite some amendments to the public interest criteria in section 63, the amendments leave open possibility that the decision-maker may still consider the adverse non-federal effects of the designated project (for example, through the "sustainability" factor) when determining whether the adverse effects within federal jurisdiction are justified in the public interest. The SCC majority explicitly identified this aspect of the IAA as constitutionally problematic.⁷ As was the case before the amendments, a negative public interest decision means the section 7 prohibition remains in effect indefinitely for the designated project, which effectively stops the entire project in its tracks regardless of whether Parliament has underlying jurisdiction to regulate the physical activity itself.   

Notwithstanding Canada's claim that the amendments improve the efficiency of assessment processes, the amendments allow the Agency to require the proponent of a designated project to resubmit an amended notice under section 15 if the Agency feels the initial description is insufficient to decide whether an impact assessment is required. This procedural step would occur before Canada even decides whether an impact assessment is required at all. Overall, it is difficult to see how any of the proposed amendments would improve the efficiency of the federal assessment process.

Canada did seem to address the SCC's concern⁸ regarding the stated purpose of the Act. Now, instead of encompassing 15 clauses about general themes such as "sustainability," the purpose of the IAA is cut short to merely:

The purpose of this Act is to prevent or mitigate significant adverse effects within federal jurisdiction—and significant direct or incidental adverse effects—that may be caused by the carrying out of designated projects, as well as significant adverse environmental effects…that may be caused by the carrying out of projects…by establishing processes to anticipate, identify and assess the potential effects of those projects in order to inform decision making under this or any other Act of Parliament in respect of those effects.

For the convenience of our clients and followers of Bennett Jones' blog postings, we've created a version of the existing IAA showing the amendments proposed in the omnibus budget bill, available here.

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