To support Canada's economy, several major projects are proposed for the coming years. However, these projects face public scrutiny, especially regarding environmental effects and impacts on local communities.
To balance development with environmental and social concerns, the government has enacted the Canadian Impact Assessment Act. In this article, we will explain the Canadian Impact Assessment Act and how it affects major project proponents across the country.
For further questions, consider speaking with an energy lawyer for electricity who practises in your jurisdiction.
What is the Canadian Impact Assessment Act (IAA)?
The Canadian Impact Assessment Act (IAA) is a federal law that requires federal impact assessments on certain major projects. A project is assessed to determine whether it may have adverse federal effects on the environment or affected communities, such as health or social impacts.
The Impact Assessment Agency of Canada (IAAC) is responsible for conducting federal impact assessments. The IAA sets out the process of conducting these assessments, which the IAAC must follow.
Watch this video as an overview of the federal impact assessments under the IAA:
Reach out to the best energy lawyers for electricity in Canada as ranked by Lexpert for more info about the IAA and federal impact assessments.
Purpose of the Canadian Impact Assessment Act
While impact assessments under the IAA can add steps to project approvals, they serve important purposes:
- examine the positive and negative impacts (such as environmental, economic, health, and social) of proposed projects through the required federal impact assessments
- identify ways to increase positive effects and reduce possible adverse federal effects
- impose mitigation measures – legally binding, enforceable conditions on the proponent – to reduce or prevent identified adverse effects
2024 amendments to the Canadian Impact Assessment Act
Through the case of Reference re Impact Assessment Act, 2023 SCC 23, the IAA was amended after the Supreme Court declared that certain provisions are unconstitutional. The decision, released last October 13, 2023, provided the following guidance:
- regarding "potential for adverse federal effects": the designation of projects must be based on this potential, which will dictate whether to proceed with a full impact assessment, considering all other factors
- final decision and public interest: the final decision, conditions, or permanent prohibition, must be based on significant adverse federal effects, and no other non-federal factors can be considered
- regarding "effects within federal jurisdiction": the effects must be clearly linked to federal matters, including transboundary effects where federal jurisdiction is established; also, thresholds must be established for the prohibitions
- cooperation of federal and provincial governments: each government may exercise their respective powers within their own jurisdiction, especially when it comes the substitution of assessments and when assessments are conducted by integrated panels
Here are the key amendments after this Supreme Court decision, which received Royal Assent and came into force on June 20, 2024:
- decision-making provisions
- definition of "effects within federal jurisdiction"
- opportunities and cooperation with the provinces and territories
How do assessments under the Canadian Impact Assessment Act work?
Whether you are a project proponent or part of an affected community, there are several key points about federal impact assessments under the IAA:
- only certain major projects defined by law must undergo a federal impact assessment
- impact assessments may be conducted by the IAAC, by provincial governments, or by both
- there is a specific process to be followed when conducting the assessment under the law
We will discuss these aspects below. To learn more about these assessments, you can also talk to an energy lawyer in the province where the project will be located.
What triggers an assessment under the Impact Assessment Act
A federal impact assessment is triggered if a project falls under any of the following:
- IAA designated projects: as described in IAA's Physical Activities Regulations (PAR), also called the Project List, which is reviewed every five years
- designated by the Minister: the Minister of Environment and Climate Change may designate a project that is not in the Project List, either on their own initiative or upon request, but based on the factors set in the IAA
- non-designated projects: those projects on federal lands and outside Canada that are assessed by the federal authorities
What is a "designated project"
An impact assessment is needed for certain major projects called "designated projects" as defined in the IAA and listed in IAA's PAR. An assessment under the IAA is triggered if a project falls under this definition, such as when it has a clear potential for significant adverse federal effects.
Examples of these designated projects include:
- power-generation facilities (e.g., renewable energy, oil and gas, major dams)
- transportation-related projects (e.g., marine terminals, inter-provincial bridges)
- mining projects, especially large-scale mines
- major projects related to hazardous wastes
- major projects on federal lands and protected areas
Learn more about which projects require a federal impact assessment in this video:
Check our Special Edition on Energy Law for more resources about Canada's environmental and energy laws, including a directory of the best energy lawyers in the country.
Impact assessments: Federal vs. Provincial
There are differences between a federal and a provincial impact assessment, also called environmental assessment in some provinces:
- projects required: while provincial assessments are only required if a project is in that province, the IAA and provincial environmental or impact assessment laws may refer to the same project, especially when the project's environmental effects reach several provinces or territories
- agency responsible: provincial ministries are involved in a provincial assessment, while the IAAC is responsible for federal impact assessments; however, these agencies may work together when both a provincial and federal assessment is done on the same project
Assessment process under the Canadian Impact Assessment Act
According to the IAAC, the federal impact assessment process for a major project involves the following steps:
1) Planning:
a) The project proponent submits an Initial Project Description to the IAAC. The project description is also posted with the Canadian Impact Assessment Registry (CIAR) for public comment.
b) The IAAC summarizes the issues submitted through these comments, and the project proponent responds to these issues.
c) The Tailored Impact Statement Guideline is given to the project proponent. This explains how the assessment will be conducted.
2) Phase 1 Impact Assessment:
a) After assessing the project and conducting consultations with Indigenous Peoples and the public, the project proponent submits an Impact Statement to the IAAC.
b) The IAAC and other stakeholders review the Statement, and IAAC also posts it with the CIAR for public comment.
3) Phase 2 Impact Assessment:
a) The IAAC drafts the Impact Assessment Report after fact-finding from multiple sources (e.g., project proponent, scientific experts, Indigenous Peoples, the public, provincial governments).
b) The IAAC also drafts the potential conditions on the project proponent, which are also publicly shared for comments.
c) A final report is submitted to the Minister.
4) Decision Statement:
a) A decision is made either by the Minister or by the Governor in Council when the Minister refers it to the Governor.
b) A legally binding Decision Statement is sent to the project proponent, which is also posted with the CIAR together with the final Impact Assessment Report.
c) If the project is allowed to proceed, the Statement also lists the conditions to be imposed on the project proponent.
5) Follow-up activities:
a) The IAAC conducts inspections to monitor if the proponent is complying with the conditions in the Statement.
b) Indigenous Peoples and the public can also participate in both monitoring and follow-up activities.
How can lawyers help with the Canadian Impact Assessment Act?
Lawyers play a central role in helping clients navigate the IAA. Here are some of ways that legal professionals can help proponents of major projects when it comes to the IAA:
- plan projects: as part of a project proponent's larger team, energy or environmental lawyers can help balance project objectives with legal compliance under the IAA and related laws
- representation: lawyers can represent clients at every stage of the impact assessment process, including environmental reviews before federal or provincial agencies, and in court proceedings where necessary
Canadian Impact Assessment Act: For sustainability and economy
The Canadian Impact Assessment Act seeks to balance economic development with environmental and social responsibilities. It gives proponents, communities, and other stakeholders formal roles in the assessment process. Whatever side you're on, understanding this law and how it works is a key first step. Energy lawyers can assist with that and advise on other legal options.
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