Effective August 28, 2019, the Impact Assessment Act IAA will set aside the past 40 years of federal environmental assessment in Canada. Impact assessment will replace environmental assessment. Similarly, federal decisions on whether or not to approve designated infrastructure, energy and mining projects will be made after assessing the overall "public interest" of the project, replacing the existing test of avoiding "significant adverse environmental effects".

Tomorrow's implementation of the IAA remains controversial. It follows more than 18 months of heated debate inside and outside Parliament and the Senate,

Stepping back from specific controversies, here are five things all project proponents (and other participants) need to know about the IAA as they address its new requirements and processes.

1. The IAA authorizes project assessments to consider both positive and negative effects

For the entirety of its more than 40-year history, federal environmental assessments has focused on avoiding what is "adverse" and "significant". The IAA departs from this tradition by seeking assessment of all project effects – positive and negative – throughout the assessment process and decision-making.

Contrasting the IAA with its immediate predecessor – the Canadian Environmental Assessment Act, 2012 ("CEAA/12") – the latter made provision to consider project benefits only where the project was considered likely to cause significant adverse environmental effects. CEAA/12 authorized cabinet to determine whether such effects were "justified." This allowed a proponent to discuss a project's positive impacts and the need for the project, but CEAA/12 did not make positive project impacts central to the environmental assessment.

By requiring proponents to assess project benefits, the IAA creates incentive to augment project benefits. This may not only assist proponents with gaining stakeholder support, but it may also improve the overall presentation and assessment of the project.

2. The IAA authorizes project assessments to consider all socio-economic effects, not just all biophysical effects

The change in title from an "environmental" assessment act to an "impact" assessment act highlights a fundamental change to federal assessment. Prior to the IAA, federal assessment was clearly "environmental": it evaluated all biophysical effects, but considered only a narrow range of socio-economic effects – limited to socio-economic effects that resulted from biophysical changes. The IAA assesses biophysical and socio-economic effects equally. It makes relevant all socio-economic effects, not just those resulting from environmental changes.

This change is significant. It expressly authorizes the assessment of project effects on employment, communities, and local or regional services. This changes the type of information that proponents should collect and will allow future assessments to provide all participants with a more complete understanding of project effects.

3. The IAA introduces a new "public interest" test for approval

To ensure that the two changes outlined above are accounted for when it comes to federal assessment decisions, the IAA introduces a new test for project approval.

Under CEAA/12, the ultimate decision to approve a project was based on whether there were any significant adverse environmental effects and, if so, whether the effects were justified in the circumstances. This provided only limited regard to a project's benefits and socio-economic effects.

To broaden the basis for making assessment decisions, the IAA introduces the test of assessing whether a project's effects are in the "public interest". Unlike other aspects of the IAA, however, the "public interest" decision-test is not clearly about assessing all relevant effects – biophysical and socio-economic, positive and negative. Instead, the IAA decision-test references only "adverse effects" and then references several factors that must be considered when determining whether the project is in the "public interest". These "public interest" factors are:

(a) the extent to which the project contributes to sustainability;

b) the implementation of the mitigation measures;

(c) the impact that the project may have on any Indigenous group and any adverse impact that the designated project may have on the rights of the Indigenous peoples; and

(d) the extent to which the effects of the project hinder or contribute to Canada's ability to meet its environmental obligations and its commitments in respect of climate change.

It is also not yet clear how proponents will reconcile this multi-faceted test for project approval with many factors listed by the IAA for inclusion in the submitted impact assessment. The factors that are not expressly part of the IAA decision test include:

(a) Project alternatives,

(b) Indigenous knowledge,

(c) Community knowledge,

(d) Public comments, and

(e) The intersection of sex and gender.

Overall, the IAA puts in issue a greater number of assessment factors and considerations than any previous federal assessment regime without clearly relating these issues to deciding what meets the test of being in the "public interest." This uncertainty will present serious challenges to proponents and will require novel strategies.

4. The IAA continues to apply to large projects as set out in Project List

How do you know if you are subject to the new Act? The way to find out is largely the same now as under CEAA/12. The IAA will clearly apply to the proponent of any project on the "Project List", a regulation to the IAA (SOR/2019-284). In addition, as before, the Minister may decide to make an order to designate a "physical activity" that is not on the Project List.

The IAA Project List Regulation applies to similar activities as the CEAA/12 regulation. Large mining, energy and infrastructure projects are still subject to assessments. Importantly, many entries on the IAA Project List have increased thresholds compared to the existing CEAA/12 list. For example, the IAA Project List now applies to only those mining projects generating more than 5,000 tonnes of ore per day as compared to the CEAA/12 threshold of 3,000 tonnes per day. Similarly, the threshold for new pipelines is now 75 km in a new right of way as compared to the CEAA/12 threshold of 40 km.

The IAA also includes new categories of projects not on the CEAA/12 list. A notable example of a new project category on the IAA Project List is in situ oil sands projects with a bitumen production capacity of 2,000 cubic metres per day.

5. What happens when your project is on the Project List?

Having a project on the Project List does not mean an assessment is required. It does mean, however, that the IAA applies to the project unless and until there is a federal decision to not trigger an assessment or the triggered assessment is completed.

Any proponent with a project on the Project List should take note of major changes to the process for determining whether an assessment is required. The screening process under CEAA/12 is replaced by a planning phase under the IAA. While CEAA/12 previously mandated that a "screening" could last up to 45 days, the new planning phase involves a 180-day statutory time limit for a federal decision on whether or not to require an assessment.

The principal purpose for additional time is for proponents to carry out in-depth stakeholder engagement. In particular, the IAA planning phase involves consultation with any jurisdiction that has powers, duties or functions related to an assessment, as well as with any Indigenous groups that would be affected by the project. There is also opportunity for more general public participation through written comments.

For many proponents, this aspect of the planning phase is nothing new. Many proponents have already carried out lengthy planning processes under CEAA/12. The IAA simply converts what was voluntary into a mandatory requirement in order to ensure that all proponents carry out serious consultation before any assessment.

It should also be noted that the IAA planning phase is not just procedural; it is substantive. It concludes with the requirement that the new IA Agency (replacing the CEA Agency) identify what it considers the relevant issues raised by the project. The proponent then has a chance to respond with how it proposes to address those issues. The aim is to have the planning phase result in a binding plan of what is to come in any required assessment.

In sum, the IAA presumes that allocating more time up front to planning will result in a more predictable and efficient assessment process overall.

Conclusions

In several respects, the IAA resembles federal environmental assessment under CEAA/12:

  • It applies nation-wide (though largely not in the territories);
  • It uses a project list to guide its application to large projects in the mining, energy and infrastructure sectors; and
  • It imposes legally-binding timelines to demand efficient assessments.

On the other hand, in other key ways, the IAA is novel:

  • It replaces the focus of federal assessment on avoiding what is "adverse" and "significant" with shared regard to project benefits and impacts;
  • It assesses biophysical and socio-economic effects equally;
  • It uses a "public interest" test; and
  • It requires that assessment commence with an in-depth planning process before locking down regulatory details.

It remains to be seen how the IAA will produce better assessments and decisions compared to its predecessors.

Have more questions? Look for the authors' upcoming Guide to Canada's Impact Assessment Act, to be released LexisNexis in the next few weeks.

Gowling WLG has more than 20 full-time environmental lawyers across Canada. Contact us for more details on how Gowling WLG can help you with environmental law for your business.