New measures announced in Budget 2024 to improve federal regulatory and permitting processes

The 2024 federal budget released yesterday includes an emphasis on “getting major projects done” with the announcement of several new measures intended to improve federal regulatory and permitting processes. These measures range from legislative changes and project review targets to interdepartmental coordination and new federal funding. Taken together, these new federal measures reflect the work of the Ministerial Working Group on Regulatory Efficiency for Clean Growth Projects and are intended to help advance major projects such as clean electricity and critical minerals projects. While these measures signal a desire for expedited reviews and process certainty for project proponents, their success will be determined by how quickly and effectively they can be implemented.

What you need to know

• Amendments are coming to the Impact Assessment Act. Budget 2024’s legislative annex includes that the federal government proposes to amend the Impact Assessment Act to bring it into conformity with the Supreme Court of Canada’s decisions in the Reference re Impact Assessment Act and “make targeted efficiency improvements”. The proposed amendments are intended to ensure that the Act is constitutionally sound and that it facilitates efficient project reviews while advancing Canada’s clean growth and protecting the environment. According to the Budget, these amendments would include increased flexibility in the substitution of assessments to allow for collaboration between the federal and provincial governments to avoid interjurisdictional duplication. The amendments would also clarify when joint federal-provincial review panels are possible and allow for earlier Impact Assessment Agency of Canada screening decisions.
• New project review targets are being set. Budget 2024 includes some non-binding “target” timelines for the completion of specified federal regulatory processes. Budget 2024 announced a target of 1) five years or less to complete federal impact assessment and permitting processes for federally designated projects, 2) two years or less for permitting non-federally designated projects, and 3) three years for nuclear projects through closer collaboration between the Impact Assessment Agency of Canada and the Canadian Nuclear Safety Commission. These targets will be reflected in a new Cabinet Directive, are intended to be aspirational and do not modify existing legislative and regulatory project timelines.
• New funding to bolster the federal Clean Growth Office. Budget 2024 proposes to provide $9 million in new funding for the Privy Council Office’s Clean Growth Office, which will improve interdepartmental coordination as well as include a new Federal Permitting Coordinator and Crown Consultation Coordinator. The federal government will also build a Federal Permitting Dashboard that reports on the status of large projects that require permits to improve transparency for project proponents.

Why focus on improving federal coordination?

Impact assessment processes often happen sequentially to other permitting processes, rather than concurrently. Multiple departments ask project proponents for the same or similar information and take too long to tell proponents that the information they have provided is inadequate.

Facing similar challenges, the United States government launched the Biden-Harris Permitting Action Plan and, in recent years, has made a concerted effort to improve coordination across federal permitting departments. This includes establishing a federal Permitting Council that requires relevant departments to meet regularly and streamline their systems.

The Government of Canada is taking a similar approach with the $9 million in funding proposed in Budget 2024 for the Privy Council Office’s Clean Growth Office. The Clean Growth Office will assist in the coordination of more than ten federal departments and agencies, seek to uphold timelines and drive a whole-of-government approach to advancing good projects within the Clean Growth Office’s purview.

Advancing Indigenous participation in major projects

The meaningful engagement of and participation by Indigenous people in major projects is essential to permitting, constructing, and operating infrastructure projects in Canada.

Equity participation can be a key part of such engagement and participation. The number of major energy and natural resources projects with potential for Indigenous equity participation is anticipated to grow significantly, with the First Nations Major Projects Coalition’s research expecting this potential to reach $525 billion in capital investments over the next ten years. Budget 2024 proposes to provide $5 billion in loan guarantees to unlock access to capital for Indigenous communities. Applicant eligibility would recognize Indigenous governments, and their wholly owned and controlled entities. The program would be sector-agnostic for natural resource and energy projects and support a range of project types from across the country. The loans would be provided by financial institutions or other lenders and guaranteed by the Government of Canada.

An additional new measure relating to Indigenous participation is the establishment of a federal Crown Consultation Coordinator to help ensure efficient and meaningful Crown consultation with Indigenous peoples on the issuance of federal regulatory permits to projects that do not undergo federal impact assessments. The federal government will consult First Nations, Inuit, Métis, and Modern Treaty and Self-Governing Indigenous partners on the design of the Crown Consultation Coordinator.

Benefits to project proponents

The creation of a new Federal Permitting Dashboard will provide much-needed transparency for major projects in the process of acquiring federal permits and provide the added benefit of improving federal coordination.

Additionally, for the first time, the federal government is establishing non-binding targets of 1) five years or less to complete federal impact assessment and permitting processes for federally designated projects, 2) two years or less for permitting non-federally designated projects, and 3) three years for nuclear projects. These targets are intended to be aspirational. They will not modify existing legislative and regulatory project timelines or prevent federal departments from stopping the clock on assessment and permitting reviews when it is warranted to do so.

What’s next?

Typically, a few weeks after the federal budget is introduced, a Budget Implementation Bill will be introduced in the House of Commons. That’s where we expect to see the amendments to the Impact Assessment Act as listed in Budget 2024’s legislative annex. Meanwhile, the Clean Growth Office will begin gearing up to carry out its new mandate, and the Cabinet Directive referenced above will be drafted for cabinet’s approval. Over time, provided the above measures are implemented swiftly and effectively, the benefits of a more efficient and effective federal regulatory and permitting regime should be seen in more efficient and effective development and execution of major projects in Canada.