Canada proposes major reforms to project approval regime

Building on the Carney government’s major projects streamlining efforts, the Government of Canada issued a Press Release on May 8 announcing a series of ambitious reforms to accelerate the federal approvals regime. The details, which are described at a high level in an embedded discussion paper entitled Getting Major Projects Built in Canada (the Discussion Paper), are the subject of a 30-day engagement period ending on June 7, after which “[t]he Government will be moving quickly to introduce legislation”. The Press Release also includes a shorter companion document entitled Strengthening One Canadian Economy Through Trade and Transportation, which will be covered in a future bulletin.

The proposed federal reforms build on the project review regime in the Impact Assessment Act and new fast-tracking regime adopted last year through the Building Canada Act. While the Major Projects Office was implemented to accelerate a short list of projects of national interest, most of the proposed reforms in the Discussion Paper would apply more broadly to all projects that are subject to federal review and approval.

What you need to know

• The reforms would facilitate the creation of Federal Economic Zones to cover (yet to be identified) areas like transportation corridors, telecommunications networks, energy production and transmission, and industrial regions. Under this proposal, Cabinet would have the authority to decide that certain development activities within specific zones are pre-approved, subject to conditions for the projects themselves. This concept would be “enabled” by the existing process for regional assessments under the Impact Assessment Act.
• Expedited approvals timeline would be operationalized for all federal project approvals: one year for the proponent to finalize studies and information, followed by a maximum of one additional year for all federal decision-making.
• A Crown Consultation Hub would be created within the Impact Assessment Agency of Canada (IAAC) to ensure that each Indigenous group affected by a major project goes through one coordinated consultation process for each project.
• The reforms would consolidate federal decision-making on major projects. Although project assessments and permit reviews will still occur across several departments and agencies, proposed changes would allow one federal decision document to be issued covering all federal decisions required for a project to move forward. Additionally, certain projects overseen by the Canada Energy Regulator and the Canadian Nuclear Safety Commission would no longer require a separate assessment under the Impact Assessment Act.

Federal Economic Zones

In what appears to be modeled on Ontario’s Special Economic Zones announced last year, the Government of Canada is proposing to introduce legislation allowing for the creation of “Federal Economic Zones”, which would be ‘enabled’ through regional assessment. Much like the Building Canada Act model, Cabinet would have the authority to “pre-approve” certain developments within these specific geographic areas, subject to conditions for the projects themselves. The zones would cover areas like transportation corridors, telecommunications networks, energy production and transmission, and industrial regions.

The concept appears to build on the existing and sparsely utilized process of regional assessments under the Impact Assessment Act, whereby the effects of past, existing, and/or future activities within a specific region are examined to create a broader understanding of cumulative effects within a region and provide early opportunities to engage with Indigenous Peoples, the public, industry and others. Given the recent history of regional assessments, if they are to serve as a pre-condition to the determination of an economic zone, designing a review process that is efficient, disciplined, and sufficiently consultative will be essential for effective implementation.

Given the mixed reception that Ontario’s economic zone variant has received thus far, it is also reasonable to anticipate court challenges to identified Federal Economic Zones or the regional assessments on which they depend, which could slow the relevant processes and generate uncertainty.

Operationalizing the approvals timeline

In response to longstanding criticisms that federal project reviews and permitting take too long, the reforms propose formalizing the accelerated timeline the Carney government introduced last year. In particular, the reforms stipulate that the proponent will have one year to finalize and file studies and information, followed by a maximum of one additional year for all federal decision-making. The one-year government review period would begin at the “Notice of Commencement” stage where an impact assessment is required, or at the “permit plan” stage if no impact assessment is required. A new Federal Review Coordinator at IAAC would ensure that impact assessments and permit applications are considered concurrently and stay on track to meet timelines.

The Discussion Paper notes that proponents will be granted more time if needed for a specific permit, without describing the mechanism(s) for extension. While that is a reasonable accommodation, clock-stopping ‘off-ramps’ have in the past become material sources of delay, and should be crafted with particular care. As with many of the other elements of the proposed reforms, the implementation details will be critical.

In any event, the proposal represents a marked acceleration of the five-year target for federal impact assessments and permits for a project (two years for projects that do not require an impact assessment) that the previous government committed to in 2024¹.

At this stage of the proposal, it is not clear exactly which federal permits will be included in the new accelerated timeline. The Discussion Paper refers briefly to decisions to streamline individual permitting processes, such as narrowing the types of activities required for navigation permits, making fisheries permits more flexible, and creating exemptions in some cases from species-at-risk requirements.

New Crown Consultation Hub

While the one-year government review period does not change the constitutional duty to consult Indigenous communities or fulfill obligations under modern treaties, the Government of Canada is committing to engage in earlier and more coordinated consultation. For the past few years, the federal government has relied on the concept of assigning the role of ‘Crown Consultation Coordinator’ to one department or regulatory body to lead Indigenous consultations on behalf of the federal government as a whole, aiming to minimize the need for parallel consultations by other federal bodies, thereby reducing burdens on Indigenous groups, promoting efficiency, and fostering strong Indigenous partnerships on projects.

In what appears to be an evolution of that role, the government is proposing to establish a Crown Consultation Hub within IAAC, applicable only to major projects, to ensure that each Indigenous group affected by a major project goes through one clear and coordinated consultation process for each project. The Crown Consultation Hub will support federal departments and agencies and coordinate with provincial consultation efforts. For projects in the territories, Crown consultation will continue to be coordinated by the Canadian Northern Economic Development Agency.

The new Hub is an effort to address, in part, consultation-related concerns due to expedited project review processes, which are likely nevertheless to remain under intense scrutiny through this new engagement.

Consolidation of federal decision-making

In a further effort to streamline federal administrative processes and meet timing targets, the proposed reforms include several proposals to consolidate federal decision-making on major projects. The approach is intended to ensure a reduction in the number of decisions and the number of decision-makers, ideally to a single project authority in the regulatory organization with the most expertise.

For certain projects listed in the Physical Activities Regulations, the Minister of the Environment would issue a single document covering all federal decisions required for the project to move forward. Much like the model reflected in the Building Canada Act, although experts in different departments would continue to review the projects, make recommendations for conditions, and be responsible for enforcement, the Minister of the Environment would ultimately be responsible for decision-making for both impact assessment and applicable federal permits. If the Minister of the Environment determines that any negative federal effects of a project are significant, a joint decision would be made with another minister responsible for that sector (e.g., the Minister of Transport) or the two ministers could refer the determination to Cabinet.

For pipelines, transmission lines, and offshore energy projects², the Canada Energy Regulator (CER) would remain the responsible federal authority and separate impact assessments will no longer be required. For pipelines with lengthy routes, Cabinet would make the decision about whether the project is in the public interest and could render the decision before the CER’s review of conditions and routing details are complete. For smaller projects, the CER Commission would make the final decision, and timelines for those decisions would be reduced.

For nuclear and uranium projects, the Canadian Nuclear Safety Commission (CNSC) would be responsible for conducting the impact assessment and determining if the project would cause significant negative federal effects. If the effects are considered significant, the project would be referred to Cabinet to decide if it is in the public interest. For projects currently in the planning phase, the decision process will shift to the CSNC. For projects already in impact assessment or if the proponent prefers, it will undergo a review under IAAC. Recognizing that the Government of Canada committed in April to develop a new Nuclear Energy Strategy, the Discussion Paper also refers to a broader review of the framework for nuclear projects.

What happens next?

The Privy Council Office is leading engagement on the Discussion Paper proposals and invites stakeholders to submit their written feedback to engagement@pco-bcp.gc.ca by June 7. Indigenous Peoples and groups will have opportunities for written submissions, information sessions, and additional meetings for further discussion. The Government of Canada is then expected to introduce legislation.