Federal Government Proposes Amendments To Impact Assessment Act To Comply With Supreme Court Reference



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On April 30, 2024, the federal government tabled amendments to the Impact Assessment Act (the "IAA") in the Notice of Ways and Means Motion to introduce the Budget Implementation Act, 2024...
Canada Energy and Natural Resources
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On April 30, 2024, the federal government tabled amendments to the Impact Assessment Act (the "IAA") in the Notice of Ways and Means Motion to introduce the Budget Implementation Act, 2024, No. 1 (the "IAA Amendments").

The IAA Amendments are the federal government's response to the Reference re Impact Assessment Act (the "IAA Reference"), in which the Supreme Court of Canada (the "SCC") held that the designated projects scheme in the IAA is unconstitutional because it goes beyond federal legislative jurisdiction. To learn more about the IAA Reference, see our October 2023 bulletin entitled "Supreme Court of Canada Finds that Federal Impact Assessment Legislation Oversteps Parliament's Jurisdiction".

The IAA Amendments were widely anticipated, as the federal government committed to acting quickly to make the necessary legislative changes immediately after the IAA Reference.

Overview of Proposed Amendments

The proposed changes clearly aim to limit the IAA's scope to federal jurisdiction in order to adhere to the IAA Reference decision. The main changes are as follows:

  • The long title, preamble and purpose of the IAA:
    • The SCC held that the IAA's preamble and purposes have significant breadth, and the IAA's listed purposes do little to confine the decision maker's discretion in whether an impact assessment is required for a particular project.
    • The IAA Amendments modify the long title, preamble and purpose of the IAA, so as to narrow in on the objective of preventing or mitigating negative effects falling within an area of federal jurisdiction.
  • "Adverse effects within federal jurisdiction":
    • The consideration of "effects within federal jurisdiction" is fundamental to most of the decision-making under the IAA. The SCC held that, as defined, the effects encompass aspects within provincial jurisdiction and result in impermissibly broad prohibitions.
    • In reply, Parliament redefined "effects within federal jurisdiction" to "adverse effects within federal jurisdiction" to limit the scope of activities subject to the IAA scheme.
    • Notably, Parliament added the language of "non-negligible adverse change", as well as removed a "change to the environment [...] in a province other than the one where the physical activity or the designated project is being carried out" from the definition.
  • Public interest determination:
    • Under the IAA, the public interest determination constitutes the final decision-making phase. The SCC held that certain factors in the public interest test are not within the federal government's jurisdiction, and relate to the assessment of the project as a whole rather than to the adverse "effects within federal jurisdiction."
    • The IAA Amendments modified the list of factors to address this concern by, for example, removing the requirement to consider "the extent to which the designated project contributes to sustainability."
    • The IAA Amendments also add an initial step to the determination: the Minister (or Governor in Council) must, after taking into account mitigation measures, determine whether the adverse effects are likely to be "significant" before determining whether they are in the public interest.
  • Substitution and cooperation:
    • The federal government envisions collaboration between jurisdictions on impact assessments, with the goal of "one project, one assessment". However, the IAA Reference held that the current IAA's substitution provisions "practically ensure that the 'one assessment' will be federal."1
    • The IAA Amendments address this by, for example, broadening opportunities for provincial substitution, and permitting the decision maker to consider whether a "means other than an impact assessment" could address the adverse effects within federal jurisdiction.

Effects on Projects During Transitional Stage

  • After the IAA Reference, the federal government released a statement on the interim application of the IAA that indicated the Impact Assessment Agency will continue to "review all designated projects currently in the planning or impact statement phases to provide its opinion on whether there is clear federal jurisdiction."
  • The IAA Amendments also contain transitional provisions, which aim to provide continuity for projects advanced during the period between the IAA Reference and the IAA Amendments coming into force. The transitional provisions provide that, for example, if there was a decision made that an impact assessment was not required before the IAA Amendments are in force, this decision will remain.

Conclusions and Next Steps

The IAA Amendments are the federal government's first step in making necessary modifications to bring the IAA within constitutional bounds. The IAA Amendments appear to make only "surgical" changes that keep the current impact assessment scheme relatively in tact.

Further amendments to the IAA scheme might be coming in the future. For example, Parliament may make additions to the currently empty Schedule 3, which lays out health, social or economic matters to add to the definition of "adverse effects within federal jurisdiction." We also expect that the Physical Activities Regulations (the "Regulations") will be amended in the coming months, in particular to revisit the list of designated projects, to ensure that the legal framework applicable to federal impact assessments is consistent with the IAA Reference.

Whether or not the amendments are the end of the legal uncertainty surrounding the IAA remains unclear. The Government of Alberta has already indicated, in its view, the amendments do not remedy the issues identified by the SCC and the IAA continues to be unconstitutional. Alberta has also stated that it will not recognize the amended IAA as valid law and it is considering another legal challenge.2

We are also of the view that the IAA, as amended, could again be challenged because of its vague connection with federal constitutional powers. The upcoming amendments to the Regulations will be key in determining whether this revised legal framework will survive.


1. IAA Reference, para. 107.

2. See Impact Assessment Act remains unconstitutional: Joint Statement, May 13, 2024, available here.

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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