Indigenous Nations have a vested interest in the recent developments surrounding the Impact Assessment Act (IAA) in Canada. The IAA, established in 2019, aims to evaluate the potential environmental, economic, health, and social impacts of major projects. However, a recent Supreme Court of Canada opinion has declared certain aspects of the IAA unconstitutional, prompting considerations for its revision.  Read our blog post for a summary of the opinion and its implications for Indigenous Nations' Rights and interests. 

The Impact Assessment Act, 2019 (“IAA”) is a piece of federal legislation that lays out a process for assessing
potential environmental, economic, health and social impacts of major projects in Canada.

Shortly after the IAA came into force, the Government of Alberta filed a challenge with the Alberta Court of 
Appeal arguing that the IAA and its Physical Activities Regulation (the list of designated activities that would 
trigger the application of the IAA) is unconstitutional. The Government of Alberta argued that IAA’s project 
designation scheme overreached federal jurisdiction by attempting to regulate matters of provincial 
jurisdiction, rather than solely focusing on federal effects.

In May 2022, the Alberta Court of Appeal agreed with the Government of Alberta and the Government of 
Canada quickly appealed the decision, asking for the Supreme Court of Canada to weigh in on the matter. On October 23, 2023, the Supreme Court of Canada released its opinion, citing that the IAA’s designated activities approach exceeds the bounds of federal jurisdiction and is therefore unconstitutional. 

The purpose of this blog post is to provide the key reasons for the Supreme Court of Canada’s opinion, outline 
potential implications the opinion may have on new and existing IAA projects and potential considerations for 
revision of the IAA. 

KEY REASONS FOR THE SUPREME COURT OF CANADA'S OPINION

The Supreme Court of Canada’s opinion focused on the approach the Government of Canada uses to designate projects requiring a federal impact assessment. The Supreme Court of Canada confirmed that federal effects are a key consideration under the IAA, but in practice other effects that are outside of federal jurisdiction are also considered by the Government of Canada. With this broad scope in mind, the IAA grants the Government of Canada significant power to assess projects and their activities on matters that fall in part, or entirely outside of federal jurisdiction. This dynamic results in a direct overlap with provincial jurisdiction, and it's this overlap that violates the Constitution Act, 1982.

IMPLICATION OF THE SUPREME COURT OF CANADA'S OPINION

The Supreme Court of Canada’s decision does not eliminate federal authority to regulate issues within federal 
jurisdiction, such as greenhouse gas emissions, environmental impacts on migratory birds, species at risk, fisheries, marine mammals, and the management of conservation areas and national parks. The Government of Canada is also required to continue upholding its fiduciary responsibility to Indigenous Peoples. This means that the Government of Canada will continue to consult with Indigenous peoples on the potential impacts - likely scoped to areas of federal jurisdiction - project activities may have on Treaty and /or Aboriginal rights. 

What we’re seeing in the media headlines is a focus on how the opinion is supportive of the 
Government of Alberta’s perspective. However, the opinion also emphasizes and confirms several critical 
elements of IAA:

• The federal government does have an ability to apply broad authority to conduct Impact Assessment, 
based on the potential for federal effects. This means that the federal government can consider
potential effects from a wide range of activities (the discharge of harmful pollutants, disruption of 
habitat, diversion of waterways, deposition of waste, for example) if they have resulting impacts on matters of federal jurisdiction.

• The project list approach is a valid approach to identify a standardized list of project scope and scales 
requiring impact assessment. There is latitude for this list to be expanded on in the future to 
include new types of activities such as small modular reactors, silica and peat mining, and deep 
geological storage of radioactive material.

• The federal government can consider broad scope of federal factors to trigger Impact Assessment.
This means the federal government has the discretion to determine what can trigger an Impact 
Assessment, so long as those triggers are within federal jurisdiction.

• The federal government can say no to adverse effects on areas of federal jurisdiction and prevent a 
project from proceeding on this basis.

IMPLICATIONS FOR THE ASSESSMENT OF CURRENT AND FUTURE PROJECTS 

Currently, there are 32 projects which are being assessed under the IAA. On October 26, 2023, the 
Government of Canada released its Interim Guidance on the IAA (click here for access) to the Impact Assessment Agency (“the Agency”). The interim guidance will apply to current and future projects while the Government of Canada works to amend the IAA to align with the opinion of the Supreme Court of Canada. This guidance includes the following:

• Assessment of Current Projects: The Agency will assess all projects currently undergoing assessment 
to determine whether they have potential impacts on areas of federal jurisdiction.

• Regional and Strategic Assessments: Existing regional and strategic assessments under Sections 92-
95 of the IAA will continue because these assessments seek to understand impacts and do not require 
decision-making on specific projects.

• Discretionary Authorities: The Minister of Environment and Climate Change, who holds authorities 
under the IAA, will pause their powers to designate projects based on Ministerial Discretion and will 
not resume that power until the IAA is amended.

• Advancing Existing Assessments: Proponents are invited to continue information sharing, and 
consultation will continue Indigenous peoples on matters within federal jurisdiction. 

In many cases, we expect the projects currently undergoing assessment will continue in the interim with a focus on areas of federal authority. A handful of projects which do not have a strong potential for federal effects may be delisted and allowed to proceed through provincial assessment processes only.

CONSIDERATIONS FOR AMENDMENTS TO THE IAA

The simplest approach that Canada may take in revising the IAA would be to address the specific sections 
identified by the Supreme Court of Canada’s opinion. For the most part, this would require that the description of federal effects be adjusted, and that federal effects be made a priority in the designation of projects under IAA. Where amendments may become more challenging is in determining whether a project is in the public 
interest. This is because determining whether a project is in the public interest must be made on the basis of 
federal effects only. As a result, the IAA process would be forced to ignore “non-federal effects.” This may 
make the IAA process less effective because a wholistic assessment of both federal and non-federal impacts 
combined would be important to determining whether a project is or is not in the public interest.
Beyond directly addressing the Supreme Court of Canada’s opinion, amendments may result in more 
intergovernmental cooperation on project assessment. As stated in the Supreme Court of Canada’s opinion:

"The environment, by its very nature, is complex and diffuse. It is not a subject matter assigned to 
either Parliament or the Provinces under the Constitution Act, 1867, but instead cuts across many 
areas of constitutional responsibility, some federal, some provincial, and all levels of government 
bear an all‑important duty to use their powers to protect it. … Shared federal and provincial 
responsibility for environmental impact assessment is neither unusual nor unworkable; rather, it is 
a central feature of environmental decision-making in Canada."

Legislative amendments can take a significant amount of time to develop and adopt. As a result, amendments may take 12 to 18 months before they are implemented.

NEXT STEPS

The Regulatory & Negotiations Team here at Shared Value Solutions is keeping an eye to how other provincial 
and territorial jurisdictions are responding to the Supreme Court of Canada’s opinion and how that may impact Crown and proponent approaches to varying degrees.

If you have any questions about existing IAA projects you are participating in, and strategies to ensure Treaty and/or Aboriginal rights and interests are protected, please contact us. We’d be happy to support.