On June 10, 2024, the Senate received the Energy, the Environment and Natural Resources ("ENEV") Standing Committee's Report regarding the proposed amendments to the Impact Assessment Act (IAA). This post provides an overview of the proposed amendments to the IAA, summarizes Bill C-69's legislative progress to date, and highlights some key criticisms of the proposed amendments arising from the ENEV Standing Committee meetings.
By way of background, on April 16, 2024, the omnibus budget Bill C-69 (the "Bill"), was introduced in Parliament and contains proposed amendments to the IAA.1 Since its introduction, proponents of major projects, industry associations, environmental groups, and Canadian provincial governments have been waiting on bated breath as this Bill works its way through the legislative process.
While the proposed IAA amendments were not considered in any detail during the first and second readings in the House of Commons (the "House"), with the discussion focusing on the Bill's budgetary elements, the amendments have now undergone a detailed review by the Senate's ENEV Standing Committee.
If the debates in the ENEV Standing Committee meetings are any indication, we expect additional revisions to the proposed amendments before they are ultimately passed into law. We will provide updates to this blog accordingly.
IAA Proposed Amendments Stemming from the Decision in Reference re Impact Assessment Act
The proposed amendments to the IAA are designed to address the jurisdictional issues identified by Supreme Court of Canada ("SCC") in the Reference re Impact Assessment Act.2 (For a more detailed discussion of this case, please refer to our previous post here). This focus for the proposed amendments is expressly identified in their introduction:
"Division 28 of Part 4 amends the Impact Assessment Act, in response to the majority opinion of the Supreme Court of Canada on the constitutionality of that Act, to, among other things,
(a) align the preamble and purpose provision with the primary objective of that Act, which 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 physical activities;
(b) replace the definition "effects within federal jurisdiction" with "adverse effects within federal jurisdiction" and, in doing so,
(i) restrict the definition to non-negligible adverse changes,
(ii) limit transboundary changes to those involving the pollution of transboundary waters and the marine environment, and
(iii) include, in respect of federal works or undertakings and activities carried out on federal lands, non-negligible adverse changes to the environment or to health, social and economic conditions;
(c) ensure that the impact assessment process applies only to those physical activities that may cause adverse effects within federal jurisdiction or direct or incidental adverse effects;
(d) ensure that, in deciding if an impact assessment of a designated project is required, one factor that the Impact Assessment Agency of Canada must take into account is whether another means exists that would permit a jurisdiction to address those effects;
(e) amend the final decision-making provisions to provide for an initial determination as to whether the adverse effects within federal jurisdiction and the direct or incidental adverse effects are likely to be, to some extent, significant, and then, if so, provide for a determination as to whether those effects are justified in the public interest; and
(f) improve cooperation tools to better harmonize the impact assessment process with the processes for assessing effects that are followed by provincial and Indigenous jurisdictions."
Proposed IAA Amendments
The "surgical" proposed amendments (to use Minister Wilkinson turn of phrase in respect of what was required to address the SCC's decision) are designed to address the issues identified by the SCC without disturbing the IAA's overarching framework. With this approach, the main stages of the impact assessment process, as well as its elements and timelines, remain largely unchanged.
We have set out notable features of the proposed amendments below.
1. Focusing the IAA on Adverse Effects within Federal Jurisdiction
The proposed amendments replace the defined term "effects within federal jurisdiction" with "adverse effects within federal jurisdiction".3 Adverse effects within federal jurisdiction relate to "non-negligible adverse" changes to various aspects of the environment within federal jurisdiction.4
For the most part, the aspects of the environment targeted remain the same, including fish and fish habitat, aquatic species, migratory birds, federal lands, certain impacts on Indigenous peoples, and health, social or economic matters within the legislative authority of Parliament (as specified in Schedule 3 of the IAA).5 The proposed amendments now also target changes to the marine environment caused by pollution that occurs outside of Canada and changes to boundary waters, international waters, or interprovincial waters caused by pollution.6 This specific focus on boundary, international, and interprovincial waters is a departure from the current IAA approach that more broadly targets any changes on the environment that would occur (a) in a province other than the one where the applicable activity is being carried out; or (b) outside of Canada as "effects within federal jurisdiction".7
In addition, the defined term "direct or incidental effects"— now "direct or incidental adverse effects"— has been modified to only include "non-negligible adverse effects" that are directly linked or necessarily incidental to a federal authority's exercise of power that would permit the carrying out (in whole or in part) of a physical activity or designated project.8
The proposed replacement of the defined term "effects within federal jurisdiction" with "adverse effects within federal jurisdiction" would impact a number of provisions within the IAA.
First, under the current (unconstitutional) version of the IAA, the Minister of Environment and Climate Change ("Minister") has a residual power to "designate" physical activities that have "effects within federal jurisdiction" and are not otherwise designated under the Physical Activities Regulations, making such activities subject to the IAA, its processes and its prohibitions.9 The SCC found that this designation power was unconstitutional as it lacked a clear threshold and link to the federal heads of power.10 The proposed amendments therefore seek to focus the designation power on "non-negligible" adverse changes on environmental components which are clearly linked to matters under federal purview.11
Second, when determining whether a designated project requires an impact assessment, the proposed amendments replace the Impact Assessment Agency's ("Agency") requirement to take into account broader "effects within federal jurisdiction" with the new and narrower "adverse effects within federal jurisdiction".12 Further, an impact assessment may only be required if the Agency is satisfied that the carrying out of the designated project may cause adverse effects within federal jurisdiction or direct or incidental adverse effects.13
Lastly, the prohibition on doing "any act or thing in connection with the carrying out of the designated project, in whole or in part" now only applies to such acts or things that may cause "adverse effects within federal jurisdiction".14 While proponents can in theory carry out activities related to a designated activity that will not cause "adverse effects within federal jurisdiction", there is a lack of clarity on the ambit of "non-negligible changes" within the definition of "adverse effects within federal jurisdiction". This ambiguity has been discussed at the ENEV Standing Committee meetings, and is outlined further below in this blog.
2. Factors to Consider in Designating Projects
While the basis for the Minister to designate a physical activity under the discretionary power is narrower under the proposed amendments, such amendments have also introduced new factors that the Minister may take into account when making a designation assessment.15 Namely, the Minister may consider whether there are means other than an impact assessment to address the adverse effects within federal jurisdiction and direct or incidental adverse effects from the relevant physical activity.16 The Minister has also been afforded broad discretion to consider "any other factor the Minister considers relevant for designation".17 While "public concern" has been removed as a basis for designating a physical activity, it is now a factor the Minister may take into account when making a designation decision.18 Importantly, the proposed amendments clarify, the Minister may only take into account public concerns that relate to "adverse effects within federal jurisdiction".19
3. Limitation of Requests for Detailed Project Descriptions
The Agency may only require a proponent of a designated project to submit a detailed project description ("DPD") in its notice to the Agency in respect of the project if the Agency is unable to decide whether an impact assessment is required without the information provided through a DPD.20
4. Facilitation of Substitution Mechanism
The proposed IAA amendments attempt to reduce overlap with provincial assessment processes by facilitating substitution and cooperation with other decision-makers. Under the proposed amendments, at the request of a provincial body that has responsibilities relating to the evaluation of the effects of a designated project, the Minister may substitute the provincial process for the IAA process if the Minister is of the opinion that the process for assessing the effects of designated projects followed by the requesting jurisdiction is an appropriate substitute (either on its own, or together with the activities undertaken under an agreement between the Government of Canada (the "Government") and the requesting jurisdiction ("Cooperation Agreements").21 Previously, the activities under Cooperation Agreements were not taken into account in the substitution decision under the IAA.22
To approve a substituted process, the Minister must satisfy itself that the substituted process meets a variety of requirements. These requirements, including that the substituted process take into account certain factors (as set out in Section 22(1)) and in respect of consultation with Indigenous groups remain largely the same, but now may be achieved through the substituting jurisdiction's regular processes as well as through Cooperation Agreements.23
The new substitution regime maintains the requirement that a report will be submitted to the Minister at the end of the substituted assessment process.24 Under the proposed amendments, the Minister must be satisfied that such a report will indicate those effects that are adverse effects within federal jurisdiction and direct or incidental adverse effects, and will specify from among such effects, which are likely to be, to some extent, significant, as well as the extent to which they are significant.25 The report is also still required to set out how Indigenous knowledge was taken into account and used in determining the effects of the applicable project.26
5. Significant Effects in Final Decision Making
Under the current IAA, final decision-making to approve a designated project is subject to a public interest determination by the Minister or Governor in Council—meaning the decision-maker must consider whether adverse effects within federal jurisdiction, and adverse direct or incidental effects, are in the public interest.27 In making this determination, the decision-maker is required to consider various factors, including the implementation of mitigation measures and the significance of the adverse effects from the proposed project.28
The proposed amendments will replace this approach with a two-part decision-making framework.29 First, the decision-maker, after considering available mitigating measures, must determine whether the adverse effects within federal jurisdiction and direct or indirect adverse effects described in the impact assessment report are likely to be, to some extent, "significant", and the extent to which they are significant.30 Second, if significant effects are identified, the decision maker must determine whether the public interest justifies these effects (based on factors set out in Section 63 of the IAA).31
To support this new two-stage approach, the documentation requirements prior to this final decision making stage have been revised to identify whether, after taking mitigation measures into account, adverse effects within federal jurisdiction and direct or indirect adverse effects from the designated project are likely to be, to some extent, significant and the extent to which they are significant.32 "Significant" is not otherwise defined in the proposed amendments.
The Bill's Current Progress Towards Enactment
To be enacted, the Bill must go through three readings in both the House and the Senate. As of the date of this post, first and second readings as well as consideration in committee of the Bill are complete in the House.33 In the Senate, the Bill has completed its pre-study as of June 13, 2024 and is now set to move on to first reading after it passes over from the House.34
The IAA amendments did not receive any particular consideration in the first and second readings or in committee in the House. The discussions focused on the Bill's budgetary elements. However, the ENEV Standing Committee conducted a detailed review of the proposed amendments and posted its report on June 10, 2024. The Minister and his officials did not appear before the ENEV Standing Committee to explain the Government's proposed amendments and how they comply with the SCC's majority opinion, which the ENEV Standing Committee expressly noted in its report.35 In addition, the ENEV Standing Committee made the following notable observations36:
- Some witnesses suggested that the amendments, which serve to constrain the application of the IAA more narrowly to federal jurisdiction, could correct the jurisdictional problems identified in the majority opinion of the SCC's Reference re Impact Assessment Act
- The Alberta Minister of Justice and the Saskatchewan Minister of Justice both expressed serious concerns related to the constitutionality of the amendments which could lead to another court challenge.
- The Government failed to provide "assurance" that the contemplated amendments to paragraph 33(1)(d) of the IAA (e., to the substitution of federal and provincial assessment processes in respect of consultations with Indigenous groups that may be affected by a designated project) do not contravene Section 35 of the Constitution Act, 1982 and the United Nations Declaration on the Rights of Indigenous Peoples Act.
- There is a need for the proposed amendments to allow for the federal assessment process to consider transboundary air pollution.37
Consideration of the report will follow at the Senate's next sitting.
Criticisms of IAA Amendments in the ENEV Standing Committee Meetings
The ENEV Standing Committee meetings on the proposed IAA amendments occurred on May 28 and 30, and June 4, 2024, where several witnesses were invited to share their views on the amendments. Below is a summary of the themes arising from the criticisms of the proposed amendments.
1. Ambiguity in the Language of the Amendments
Common criticisms of the proposed amendments during the ENEV Standing Committee discussions were related to drafting imprecision–in particular, the lack of clarity behind the meaning and impact of the undefined term "non-negligible", which now qualifies the adverse changes in federal matters that are to be the focus of the discretionary designation process.38 Witnesses also criticized the addition of the Minister's discretion to consider "any other factors [they consider] relevant" in the designation process, which introduces additional uncertainty into what information proponents may be expected to provide through the designation process, and potentially opens the door for the Minister to consider matters wholly unrelated to federal jurisdiction in their decision-making.39 Witnesses opined that imprecision adds additional uncertainty to the federal environmental assessment process, and negatively impacts investment into major Canadian projects.40
Several witnesses submitted proposed revisions to the IAA amendments for the ENEV Standing Committee to consider to address these ambiguities.41
2. Mixed Reviews on Constitutionality
Witnesses were divided with respect to whether the proposed IAA amendments fell short of, met, or exceeded the SCC's directions on constitutionality.42 Some posited that the new "non-negligible" language related to designation decisions is not a high enough threshold to meet constitutional requirements.43 Some found that it did meet the requirements, but was simply too imprecise.44 Others stated that, by reducing jurisdiction over transboundary pollution, the proposed IAA amendments had unduly reduced federal oversight in respect of a federal matter.45
3. Insufficient Amendments to Accelerate Project Assessments
Given the long timelines for assessment under the IAA, a number of witnesses raised concerns that the proposed amendments failed to seize the opportunity to ameliorate this long-standing issue – particularly in light of Canada's clean energy and climate change goals.46 Witnesses also recognized that the manner in which the IAA has been implemented has led to delays, and commented as follows:
Budget 2024 outlines ambitious timelines for federally designated projects and federal permits outside of the impact assessment process. That is, five years for federally designated projects, three years for nuclear projects and two years for federal permits for non-designated projects. Unless implementation of the IAA is appropriately scoped and executed, achieving the five-year timeline for designated projects will not be feasible for most projects.47
4. Conflicting Views on the Amended Substitution Process
While certain witnesses viewed the amendments as providing too narrow an opportunity for substituting provincial assessment processes for the federal process, other witnesses critiqued the amendments for potentially providing less rigorous provincial assessment processes an opportunity to replace the more detailed federal assessments.48 As many projects are currently subject to duplicate assessments, streamlining this process was a key concern for project proponents seeking to avoid the time and expense of dual regulatory assessments.49
Next Steps for the Bill's Enactment
Following the Standing Committee on Finance's report being presented in the House, a third reading must occur before the Bill is passed to the Senate. Upon the Bill passing to the Senate, a first, second, and third reading in the Senate will be required before the Bill can be passed into law. However, completion of the Senate's pre-study (which is not a mandatory feature of the legislative process) typically shortens the timeline required to complete the readings in the Senate.
While there are no concrete timelines for enactment of the Bill, the simultaneous review of the Bill in the House alongside pre-study in the Senate may indicate an intention to accelerate the passing of the legislation.
Generally, based upon the critiques of the proposed IAA amendments, it is reasonable to expect that the proposed amendments will be further revised prior to their enactment alongside the rest of the Bill. If the amendments are not revised prior to enactment, comments in the ENEV Standing Committee meetings suggest that a constitutional challenge may not be far behind. Indeed, during an ENEV Standing Committee meeting, the Minister of Justice in Saskatchewan stated:
It is Saskatchewan's position that there is basis for a future challenge to the new act if it is passed as is and without significant changes. As a province, we will be having those conversations.50
While it is certainly unrealistic to suggest that all of the various criticisms of the IAA will be fully addressed prior to the enactment of the Bill, the ENEV Standing Committee's consideration of the proposed amendments provided a unique opportunity for industry and provincial governments to highlight key issues with the operation of the IAA to date, that fall outside the SCC's decision. The criticisms that are ultimately addressed in the amended legislation, and the manner in which they are addressed, remains to be seen.
Further, the five-year review of the Physical Activities Regulations is set to take place later this year51, and under the new IAA, projects designated thereunder may only be included if they may cause adverse effects within federal jurisdiction or direct or incidental adverse effects. Upon completion of this review, substantive changes to the Physical Activities Regulations may follow.
We will continue to provide periodic updates on the progress of this important legislation and its regulations. If you have any questions, please contact our team, who would be happy to assist.
Footnotes
1. Bill C-69, An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024, First Session, 44th Parl, 2024 (Bill C-69).
2. Reference re Impact Assessment Act, 2023 SCC 23.
3. Bill C-69, cl 271(3).
4. Bill C-69, cl 271(3).
5. Bill C-69, cl 271(3); IAA, Schedule 3.
6. Bill C-69, cl 271(3).
7. IAA, s. 2.
8. Bill C-69, cl 271(3).
9. Bill C-69, cl 275; Physical Activities Regulations, SOR/2019-285.
10. Reference re Impact Assessment Act, 2023 SCC 23 at para 179.
11. Bill C-69, cl 275.
12. Bill C-69, cl 277(3).
13. Bill C-69, cl 277(3).
14. Bill C-69, cl 273(1).
15. Bill C-69, cl 275.
16. Bill C-69, cl 275.
17. Bill C-69, cl 275.
18. Bill C-69, cl 275.
19. Bill C-69, cl 275.
20. Bill C-69, cl 276.
21. Bill C-69, cls 280-282, IAA, s. 114(1)(f).
22. IAA, ss. 31-35.
23. Bill C-69, cls 280-281; IAA, s. 22(1).
24. Bill C-69, cl 281(4).
25. Bill C-69, cl 281(4).
26. Bill C-69, cl 281(4).
27. IAA, ss. 60-63.
28. Bill C-69, cl 289(1).
29. Bill C-69, cl 289-291.
30. Bill C-69, cl 289-291.
31. Bill C-69, cl 290.
32. Bill C-69, cl 289.
33. Bill C-69 Progress.
34. Bill C-69 Progress.
35. ENEV, Report of the Committee from June 10 2024.
36. ENEV, Report of the Committee from June 10 2024.
37. ENEV – Standing Committee – Energy, the Environment and Natural Resources, "Report of the Committee" (10 June 2024), online: https://sencanada.ca/en/committees/ENEV/Report/131204/44-1.
38. ENEV Unrevised Meeting Transcripts from May 28, 30, and June 4.
39. ENEV Unrevised Meeting Transcripts from May 28, 30 and June 4.
40. ENEV Unrevised Meeting Transcripts from May 30 and June 4.
41. Not all reports have been published on the ENEV website to date. The two available reports are as follows:
- Canadian Association of Petroleum Producers ("CAPP"), "Re: Amendments to the Impact Assessment Act" (31 May 2024), online: https://sencanada.ca/Content/Sen/Committee/441/ENEV/briefs/2024-05-31_ENEV_SM-C-69_Brief_CAPP_e.pdf. The CAPP report requests further changes be made to the IAA to avoid constitutional challenges, streamline the approval process for major projects, make substitution of provincial assessments the default position, reduce discretion in decision-making under the IAA to enhance certainty and impartiality, clarify and reduce timelines and further define the consultation requirements under the IAA in respect of Indigenous peoples.
- Mining Association of Canada ("MAC"), "Division 28 of Part 4 of Bill C-69: An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024" (28 May 2024), online: https://sencanada.ca/Content/Sen/Committee/441/ENEV/briefs/MiningAssociationofCanada_e.pdf. The MAC report notes that "Canada's numerous complex processes that a project must navigate before receiving approval to proceed means these projects will not be built in time to meet our shared climate change, energy and supply chain security goals", and that there is "broad consensus that the timelines for the planning and approval process for new projects must be shortened without losing the requirements for good planning, environmental protections and Indigenous consultation" (p 1). The MAC takes the position that the proposed amendments are insufficient to increase the predictability and timeliness of the processes under the IAA. The MAC indicates that to attract new mining investment: (a) the federal government needs to actively pursue agreements with other levels of government to reduce duplication in assessments; (b) the Physical Activities Regulations must be adjusted to better reflect areas of federal jurisdiction; (c) assessments need to be tailored to focus on unique potential impacts of new projects; (d) the federal government should implement standard mitigation measures for mining projects to reduce time, costs, and duplication associated with studies and data collection; and (e) the new terminology (including "non-negligible" and "to some extent significant" must be clarified.
Note: one report was submitted to the Senate Standing Committee on National Finance in respect of the proposed IAA amendments from the Quebec Business Council on the Environment ("QBE") (29 May 2024), online: https://sencanada.ca/Content/Sen/Committee/441/NFFN/briefs/NFFN_SM-C-69_Brief_CPEQ_e.pdf. The QBE asked for several improvements on the amendments including clarifying the practical effects of refocusing the IAA on "adverse effects within federal jurisdiction" and "non-negligible" and "significant" effects (as well as providing definitions of the latter); explicitly excluding predominantly provincial projects from the list of projects subject to the IAA; using sustained efforts to enter into agreements with provinces that provide for complete substitution of environmental assessment processes; and defining the notion of "sustainability" to include only effects within federal jurisdiction.
42. ENEV Unrevised Meeting Transcripts from May 28, 30, and June 4.
43. ENEV Unrevised Meeting Transcript from May 28.
44. ENEV Unrevised Meeting Transcripts from May 28 and 30.
45. ENEV Unrevised Meeting Transcript from May 30.
46. ENEV Unrevised Meeting Transcript from June 4.
47. MAC report at pp 2-3.
48. ENEV Unrevised Meeting Transcripts from May 28, 30 and June 4.
49. MAC report at pp 1-3.
50. ENEV Unrevised Meeting Transcript from June 4.
51 Physical Activities Regulations, s. 3.
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