Amendments To The Physical Activities Regulations Consolidate Major Projects Review Process Under The Canada Energy Regulator

On September 3, 2026, amendments to the Physical Activities Regulations (the “Regulations”) came into force. The Regulations list the types and sizes of major projects that are designated for the purposes of the federal Impact Assessment Act (the “IAA”) and must undergo a federal impact assessment. In practice, certain projects designated under the Regulations, including international and interprovincial pipelines and electrical transmission lines, were also regulated by the Canada Energy Regulator (the “CER”) under the Canadian Energy Regulator Act (the “CERA”), resulting in overlapping federal review processes.

The amendments address this duplication by removing several project categories from the Regulations, such that those projects will no longer be subject to the IAA and will instead be assessed solely by the CER under the CERA. The amendments are part of the federal government’s broader aim to accelerate major natural resource and infrastructure projects and increase the efficiency, predictability and transparency in the framework regulating such projects.

This bulletin summarizes the key changes, the engagement process that preceded them, and the practical implications for project proponents.

Background: Major Projects Review Prior to the Amendments

Before the amendments, certain major projects were subject to overlapping federal review processes under the IAA and CERA.

Under the IAA, designated projects that may cause adverse effects within federal jurisdiction and require an impact assessment are prohibited unless and until the project proponent complies with conditions imposed following an impact assessment.¹ The Regulations list the types and sizes of major projects that are “designated projects” for the purposes of the IAA and must undergo a federal impact assessment based on their potential to cause adverse effects within federal jurisdiction.²

Similarly, under the CERA, proponents of international and interprovincial pipelines, electrical transmission lines, and certain offshore renewable projects are required to obtain a certificate, permit or authorization from CER prior to operating such a project.³

Projects designated under the IAA that were also regulated under the CERA were required to undergo assessment by an integrated review panel intended to satisfy the requirements of both statutes in a single proceeding. However, no such integrated review panel assessment was ever conducted. In practice, the CERA requires the CER to consider substantially the same assessment factors as those under the IAA, including environmental effects, cumulative effects, health, social and economic effects, and effects on the rights of Indigenous Peoples.

In 2024, the IAA was amended following the Reference re Impact Assessment Act, 2023 SCC 23 (the “Re IAA”), which found that parts of the IAA exceeded federal constitutional authority. Among other changes, the amendments narrowed the scope of the IAA by introducing a revised definition of “adverse effects within federal jurisdiction” that is limited to “non-negligible” adverse changes to specifically enumerated components of the environment within federal jurisdiction, including fish and fish habitat, migratory birds, federal lands, marine environments, and environments of significance to Indigenous Peoples. The revised definition no longer encompasses transboundary air pollution or greenhouse gas emissions such that a project cannot have conditions imposed or be rejected under the IAA solely on that basis. The amendments also increased reliance on provincial processes and cooperation in federal assessments. See our previous bulletin on Re IAA for further details.

Against this backdrop, the federal government published a discussion paper entitled “Getting Major Projects Built in Canada” on May 8, 2026, which proposed, among other things, assigning responsibility for the assessment of all projects regulated under the CERA to the CER rather than to an integrated review panel under the IAA, in order to ensure a simpler review process by a single regulator. A nationwide engagement process was conducted from May 8 to July 22, 2026, during which the Major Projects Office received over 26,000 submissions, including over 400 written submissions from Indigenous Peoples and stakeholders.

Industry stakeholders expressed strong support for the proposal to have pipeline projects reviewed exclusively by the CER, viewing it as a key step toward improving regulatory certainty, reducing duplication and streamlining approvals. Indigenous Peoples raised concerns regarding reduced transparency, fairness and meaningful participation in decision-making processes, and members of the public expressed concerns regarding compressed timelines and reduced opportunities for public participation.

Key Amendments to the Regulations

Facilities Regulated by the Canada Energy Regulator

The amendments remove the following project categories, each of which is regulated by the CER under the CERA, from the Regulations and therefore the IAA:

• International and interprovincial pipelines;
• International and interprovincial electrical transmission lines;
• Offshore renewable energy projects regulated under the CERA;
• Oil and gas pipelines and facilities in national parks and protected areas regulated under the CERA; and
• Oil and gas facilities that are functionally integrated into a federal work or undertaking regulated under the CERA.

As a result of the amendments, projects that were previously subject to overlapping review under both the IAA and the CERA will now be assessed solely by the CER under the CERA, or under the Building Canada Act if designated as a project of national interest. The amended Regulations clarify that projects listed in the Schedule are designated for IAA purposes only if they are not already regulated under the CERA.⁴

Intraprovincial Energy Projects

The amendments also remove the following intraprovincial energy project categories from the Regulations:

• In situ oil sands extraction facilities with a bitumen production capacity of 2,000 m³/day or more, in a province without provincial legislation to limit greenhouse gas emissions from oil sands; and
• Fossil fuel-fired power generating facilities.

The removal of in situ oil sands extraction facilities and fossil fuel-fired power generating facilities is intended to align the Regulations with the 2024 amendments to the IAA. As noted above, the revised definition of “adverse effects within federal jurisdiction” no longer encompasses greenhouse gas emissions, which the federal government had identified as the primary basis for the original designation of in situ oil sands facilities under the Regulations. According to the Regulatory Impact Analysis Statement (the “Impact Statement”) that accompanied the amendments, the federal government does not anticipate any in situ oil sands projects that would be captured by the Regulations in the next 10 years.

Similarly, with respect to fossil fuel-fired power generating facilities, the removal has immediate practical implications for the power sector across Canada. As set out in the Impact Statement, fossil fuel-fired power generating facilities, which accounted for approximately 20% of initial project descriptions received under the IAA, have consistently not required a comprehensive impact assessment following the planning phase because of their limited potential to cause adverse effects within federal jurisdiction under the amended definition or because existing federal and provincial regimes are sufficient for those projects.

Proponents should note, however, that the removal of these project categories from the Regulations does not eliminate all federal regulatory touchpoints. In particular, fossil fuel-fired power generating facilities remain subject to federal emissions regulations, including the Clean Electricity Regulations and the Output-Based Pricing System under the Greenhouse Gas Pollution Pricing Act. Projects previously subject to overlapping IAA and CERA review will continue to be assessed by the CER under the CERA, and in situ oil sands extraction facilities will remain subject to applicable provincial assessment processes. The practical effect of the amended Regulations is therefore to remove the automatic application of the IAA assessment layer, while leaving other federal environmental and emissions requirements in place.

Looking Ahead

The amendments form part of the federal government’s broader policy objective to enhance the efficiency of federal and provincial regulatory and permitting processes for major projects, and to provide certainty to proponents, Indigenous partners, investors and stakeholders. They are connected to the federal government’s commitment to render “one project decision” on major projects, with the federal review and decision-making timeline taking no more than one year, and to recent federal-provincial collaboration to avoid duplication in regulatory approval processes. The federal government estimates that under the amended Regulations, seven to eight designated projects per year will enter the IAA process, representing a reduction of two to three projects per year compared to the previous regime.⁵

These efficiency gains notwithstanding, several key issues remain outstanding with respect to the IAA framework. The Government of Alberta continues to advance its constitutional challenge of the IAA (as amended in 2024) before the Alberta Court of Appeal, with argument having occurred in February 2026. The outcome of that proceeding, which remains pending, may have significant implications for the stability and scope of the federal impact assessment framework.

Industry proponents have generally welcomed the consolidation of pipeline review under the CER, and the amendments are broadly consistent with recommendations that industry groups had been advancing prior to the regulatory changes. For example, in its August 2025 pre-budget submission, the Canadian Association of Petroleum Producers (“CAPP”) recommended that the IAA be amended to limit assessments to significant adverse effects within federal jurisdiction and that the Regulations be streamlined to remove project types including in situ oil sands facilities, fossil fuel-fired power generation, refineries, upgraders, gas processing facilities and storage facilities. CAPP also advocated for prioritizing substitution with provincial processes to deliver “one project, one assessment” and for scaling up the Indigenous Loan Guarantee Program to support Indigenous equity participation in resource projects. Notwithstanding this broad industry support, concerns remain across stakeholder groups regarding implementation, particularly with respect to Indigenous consultation requirements, whether existing CER processes can realistically meet the federal government’s proposed one-year decision-making timeline, and the strength of environmental assessments.

During the engagement process, Indigenous groups expressed apprehension that the elimination of independent review panels under the IAA could diminish transparency and meaningful participation in project decision-making, allow projects to proceed without adequate Indigenous input, and fail to account for existing co-management regimes and treaty settlement areas. Members of the public expressed concerns regarding lack of public participation and the potential weakening of the independence and comprehensiveness of environmental assessments under the amended regime.⁶

In response, the Impact Statement states that public participation opportunities remain under the CERA through public hearings and comment periods for certain applications, as well as through the adjudication process and supplemental Crown consultation processes for larger infrastructure projects. The Impact Statement also asserts that the CER’s hearing processes will enable the Crown to discharge its duty to consult and meet its obligations under the United Nations Declaration on the Rights of Indigenous Peoples Act, and that assessments conducted under the CERA will respect existing co-management regimes and treaty settlement areas. However, the Impact Statement notes that for modern treaty groups whose self-government agreements do not contain specific provisions related to environmental assessments, the amendments could have implications on groups’ right to be engaged in federal decision-making respecting lands and resources in modern treaty areas.

Whether these assurances and the overall objectives of the amendments will be realized in practice remains to be seen, and will depend in significant part on the processes and service standards adopted by the CER for these assessments and the adequacy of resources allocated to the CER to discharge its expanded responsibilities under the amended framework.

Proponents of projects previously subject to IAA designation should assess whether their projects are affected by the amended Regulations and engage with the CER regarding the applicable review process.

Proponents of major projects should consider the potential implications of these developments for project structuring, timelines and stakeholder engagement, particularly as the federal government has signalled that meaningful Indigenous economic participation and partnership with Indigenous Peoples are expected to be integral components of the approval process for major projects.⁷

For project developers, investors, and lenders, the significance of these changes can extend beyond regulatory process. A more predictable decision pathway can reduce development-period uncertainty, limit the amount of capital that must remain at risk pending a federal decision and help provide greater clarity around the timetable for procurement, financing and final investment decision. For financed projects, greater certainty as to the applicable decision process may also simplify lender due diligence and the structuring of regulatory conditions precedent, long-stop dates and construction schedules. These benefits will ultimately depend, however, on how efficiently the CER administers its expanded role and how the federal process interacts with remaining applicable federal and provincial regimes, Indigenous consultation requirements, and other permitting considerations.

Footnotes

1 IAA, s 7.

2 Regulations, s 2(1), Schedule.

3 CERA, ss 180, 247, 297.

4 Regulations, s 2(1).

5 See the Impact Statement.

6 See the Impact Statement.

7 See, for example, s 5(6) of the Building Canada Act, under which the Governor in Council, in deciding whether to designate a project as a national interest project, may consider the extent to which the project can advance the interests of Indigenous Peoples (s 5(6)(d)).