Demos
Bill C-28 2nd reading · Commons

Canadian Space Launch Act

The Canadian Space Launch Act amends the Aeronautics Act and other laws to create a legal framework governing commercial rocket launches from Canadian soil.

EconomicGovernance

Sponsor · Hon. Steven MacKinnon

What it means for you

Canadian companies wanting to launch rockets would need to follow new federal rules, and the government would gain new powers to regulate and oversee the emerging commercial space industry in Canada.

The debate · 6 points

Supporters say

  • Canada needs clear rules for commercial space launches to allow the industry to grow safely — right now there is no dedicated legal framework, leaving a gap that holds back Canadian companies.
  • Establishing a licensing and oversight regime puts Canada on par with other countries that already regulate commercial space launches, helping Canadian firms compete internationally.
  • Federal oversight of space launches can protect public safety, national security, and Canadian airspace while still enabling new economic opportunities in a fast-growing sector.

Critics say

  • Critics argue the bill gives too much power to the executive branch — ministers and unelected officials — without enough oversight or checks and balances from Parliament.
  • Concerns have been raised about government space procurement practices alongside this bill, including a controversial $200-million lease of a Nova Scotia launch site, suggesting the new framework may not have adequate safeguards against wasteful spending.
  • Some members believe the bill should also be studied by the Standing Committee on Science and Research, not just the transport committee, to ensure the science and innovation dimensions receive proper scrutiny.

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Demos deep analysis

What this bill does

Bill C-28, called the Canadian Space Launch Act, creates a legal framework for launching rockets and returning spacecraft to Earth from within Canada. It does this mainly by updating the Aeronautics Act — the federal law that governs aviation — to cover launch vehicles (such as rockets) and re-entry vehicles (spacecraft designed to return intact from orbit). The bill sets up a permit and certificate system for operators and launch sites, creates rules about who pays if something goes wrong, and gives the federal government new powers over land near launch sites. It also updates three other federal laws to make clear that space launch vehicles are not treated as ordinary aircraft under those laws.

What changes

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1 New definitions: what counts as a launch vehicle, re-entry vehicle, and launch site

Companies and individuals who operate rockets or returning spacecraft; aerodrome (airfield) operators who want to host launches; federal regulators at Transport Canada.

  • Rockets and vehicles designed to reach orbit or beyond are now officially called 'launch vehicles' under the Aeronautics Act.
  • Vehicles designed to return substantially intact from orbit are now called 're-entry vehicles.'
  • These definitions are temporary until the federal Cabinet (Governor in Council) sets permanent definitions by regulation.
  • Launch sites and re-entry sites are given their own legal categories — 'certified' (already approved) and 'designated' (declared needed, possibly through expropriation) — and are no longer treated as ordinary airports.
  • Four other federal laws are updated so that launch and re-entry vehicles are not accidentally treated as regular aircraft under aviation passenger rules, air service licensing, or the no-fly list screening law.
2 New permits and certificates required before launching or landing

Launch and re-entry vehicle operators; airfield operators seeking to host space launches; Transport Canada.

  • Operators must obtain a permit or a 'notice of determination' from the Minister of Transport before launching a rocket from Canada or landing a re-entry vehicle in Canada.
  • Airfields used for launches or landings must hold a separate certificate from the Minister.
  • The federal Cabinet gains the power to make regulations covering how these permits and certificates are issued, renewed, changed, suspended, transferred, or cancelled.
  • International safety standards can be incorporated into these regulations.
3 Who pays for damage: a new financial responsibility and indemnification system

Launch and re-entry vehicle operators; the federal government (as the party internationally liable under the 1972 treaty); third parties who could be harmed by a launch or re-entry; Canadian taxpayers.

  • Launch and re-entry vehicle operators are removed from the general aircraft insurance requirement that applies to other aircraft owners.
  • Instead, a new tailored 'financial responsibility' requirement will be set by regulation specifically for space launch operators.
  • The Minister of Transport may — when judged to be in the public interest — agree to cover (indemnify) an operator's liability to outside parties for loss or damage caused by a launch or re-entry.
  • The Minister may also require operators to cover (indemnify) the Government of Canada for any liability Canada faces under an international treaty called the Convention on International Liability for Damage Caused by Space Objects (a 1972 treaty that makes launching countries responsible for damage their space objects cause).
  • The Minister or an authorized Transport Canada officer can exempt an operator from financial responsibility rules, or lower the minimum required amount, if doing so is judged to be in the public interest.
  • Regulations will define what counts as 'financial responsibility' — it may include instruments other than traditional insurance.
4 Government powers to stop a launch for safety or security reasons

Launch and re-entry vehicle operators; the public near launch sites.

  • The Minister of Transport gains the power to order a halt to a launch, a re-entry, or any related activity for reasons of safety or security.
  • Operators must comply with a stop order from the Minister.
5 Land-use rules near launch and re-entry sites

Landowners and developers near launch or re-entry sites; provincial and municipal governments; Indigenous communities with interests in candidate site areas.

  • The federal Cabinet gains the power to make zoning regulations that prevent land near a certified or designated launch or re-entry site from being used or developed in ways the Minister considers incompatible with safe site operations.
  • Before making such a zoning regulation for a designated (not yet certified) site, the federal government must first try to reach an agreement with the relevant provincial government, or the Minister must determine that immediate action is needed.
  • The Minister may instead enter into an agreement with a provincial authority, allowing the province to regulate land use near launch sites in the same way it normally regulates land within its jurisdiction.
  • Violating provincial land-use rules made under such a federal-provincial agreement is a criminal offence punishable on summary conviction (a less serious criminal charge, typically handled without a jury).
  • Both the Aeronautics Act and the Explosives Act apply to launch and re-entry vehicle operators; if the two laws conflict, the Explosives Act rules take priority.

What might happen next

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Likely

Who: Launch and re-entry vehicle operators

What: Launch and re-entry vehicle operators are likely to face immediate compliance costs as they map their operations against Aeronautics Act requirements now that their vehicles are legally classified as 'aircraft.'

One view

One viewpoint holds that being explicitly included in the Aeronautics Act removes legal ambiguity that previously created uncertainty for obtaining insurance or investment, producing a long-run benefit that outweighs short-term costs.

Another view

Another viewpoint holds that applying an aviation law designed for planes to orbital rockets creates compliance obligations that do not fit the technology, raising costs without matching safety gains until space-specific rules are finalized.

Likely

Who: Launch and re-entry vehicle operators

What: Operators are expected to engage Transport Canada early to understand the new permit and certificate process, even before the detailed regulations are written.

One view

One viewpoint holds that having a defined permit pathway — even before all the rules are written — gives operators a clear legal route to conduct launches from Canada for the first time.

Another view

Another viewpoint holds that document categories without implementing regulations create a period of uncertainty that delays rather than enables operations.

Likely

Who: Launch and re-entry vehicle operators and their investors

What: The availability of government indemnification is expected to reduce operators' liability exposure, which may make it easier for launch companies to attract investors and financing.

One view

One viewpoint holds that government indemnification is a necessary tool for a sector where catastrophic liability risk cannot be insured at affordable rates, and that the public benefit of a domestic launch industry justifies the government's contingent financial exposure.

Another view

Another viewpoint holds that open-ended ministerial indemnification authority without a fixed dollar cap shifts potentially large costs to taxpayers and may reduce operators' incentives to invest in safety.

Likely

Who: Launch and re-entry vehicle operators and their customers

What: Operators are expected to factor the risk of a ministerial stop order into their launch contracts with customers, adding clauses about what happens if the government halts a launch.

One view

One viewpoint holds that a ministerial stop power is an essential safety backstop for a high-hazard activity, and that the cost of adjusting contracts is a proportionate price for operating in a regulated environment.

Another view

Another viewpoint holds that a broad stop power without published criteria or compensation creates a regulatory risk that makes Canadian launch services less competitive compared with other countries.

Likely

Who: Landowners and developers near candidate launch sites

What: Landowners near potential launch sites are expected to seek legal advice about federal zoning restrictions that could limit what they can do with their property.

One view

One viewpoint holds that federal zoning authority over land near launch sites is a necessary extension of the federal government's power over aeronautics, and that the existing precedent of airport zoning validates this approach.

Another view

Another viewpoint holds that restricting land use without paying compensation is effectively a taking of property rights, and that a compensation mechanism should accompany any zoning restriction.

Likely

Who: Provincial governments

What: Provincial governments in provinces with likely launch site locations are expected to negotiate land-use agreements with the federal government rather than allow unilateral federal zoning.

One view

One viewpoint holds that the requirement to consult provinces before imposing federal zoning is a meaningful constraint that encourages negotiated agreements respecting provincial jurisdiction.

Another view

Another viewpoint holds that the consultation requirement introduces delays that could allow incompatible development to proceed during negotiations, undermining the safety purpose of the zoning power.

Likely

Who: Transport Canada

What: Transport Canada is expected to need new staff and expertise in space launch operations to write and administer the new regulations.

One view

One viewpoint holds that investing in Transport Canada's space launch expertise positions Canada as a credible launch jurisdiction, with long-run economic returns that justify the institutional investment.

Another view

Another viewpoint holds that redirecting Transport Canada resources to an entirely new regulatory area may reduce the department's capacity to maintain existing aviation safety oversight.

Uncertain

Who: Launch operators, third parties who could be harmed, and the general public

What: During the period before financial responsibility regulations are finalized, there will be no legally required minimum insurance or financial coverage floor for launch operators.

One view

One viewpoint holds that commercial counterparties such as customers and lenders will require operators to carry coverage anyway, making the gap period functionally similar to a regulated regime.

Another view

Another viewpoint holds that the absence of a statutory minimum leaves third parties exposed to uninsured losses if an operator is undercapitalized, and that regulations should be finalized as quickly as possible.

Longer-term scenarios

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Scenario — not a prediction Compliance costs concentrate the market among large operators Plausible

One scenario analysts consider is that, over a 5–10-year period, the combined administrative burden of the new permit system, dual compliance with the Aeronautics Act and the Explosives Act, and the slow pace of regulation-writing creates a cost floor that smaller rocket companies cannot afford. In this scenario, two to four well-funded operators dominate Canadian launch licensing, while smaller innovators — including university-affiliated and sub-orbital operators — either move to the United States or New Zealand (which have more established frameworks) or remain in a pre-commercial holding pattern. Canadian space-sector employment and economic output would grow more slowly than in comparable countries that completed similar regulatory frameworks earlier.

What could prevent this: Transport Canada could create a dedicated space operations team with its own hiring authority, reducing the bottleneck of scarce specialists. A simplified permit pathway for lower-risk missions (such as sub-orbital flights) could lower the cost floor for smaller operators. Aligning Canadian rules with those of the U.S. or U.K. could reduce duplicative compliance work. Provincial economic development programs could subsidize compliance costs for early-stage operators.

Scenario — not a prediction Federal-provincial legal disputes over land near launch sites Plausible

One scenario analysts consider is that, over a 5–10-year period, landowners near launch sites challenge federal zoning restrictions in court, while provincial governments simultaneously negotiate delegation agreements to keep land-use control at the provincial level. Courts would be asked to decide how far federal aeronautics power extends over provincially regulated property. Depending on the outcomes, either a broad federal footprint over land near space infrastructure becomes established law — with implications for future federal projects beyond aeronautics — or courts narrow the federal power, making launch site viability depend on which province the site is in.

What could prevent this: Early and substantive federal-provincial consultation — beyond the procedural minimum in the bill — could produce agreed frameworks that head off litigation. A clear federal policy limiting zoning restrictions to operationally necessary safety buffers, with defined compensation for affected landowners, would reduce the incentive to go to court. Existing Supreme Court of Canada decisions on aeronautics jurisdiction provide a reasonably settled legal foundation that courts could apply without creating new precedent.

Scenario — not a prediction A launch incident during the regulatory gap creates unplanned government costs Low probability

One scenario analysts consider is that, in the 3–5-year window between the bill becoming law and financial responsibility regulations being finalized, operators use the availability of government indemnification to attract investors and feel competitive pressure to launch before the cost of financial responsibility obligations is known. If a launch incident occurs during this window, the government's financial exposure — including potential claims under the 1972 international liability treaty — would be structurally uncertain because the regulations that set the financial parameters have not yet been made. The government's response — emergency regulations or legislative changes — could impose new financial requirements retroactively, destabilizing operators whose finances were structured around the earlier, unregulated terms. This could chill the next wave of launch investment as investors reprice the risk of mid-stream rule changes.

What could prevent this: Transport Canada could prioritize financial responsibility regulations as its first rulemaking action, minimizing the gap period. The Minister could attach interim financial coverage conditions to any indemnification approval before formal regulations exist. The Minister's stop-order power provides a backstop against launches that proceed without adequate financial coverage. Parliamentary scrutiny of indemnification agreements would create political accountability that moderates opportunistic behaviour during the gap.

Scenario — not a prediction Financial responsibility thresholds are set too low to cover real damages Plausible

One scenario analysts consider is that, over a generational time horizon, the financial responsibility thresholds set through the regulatory consultation process reflect what is commercially convenient for operators rather than what is actuarially needed to cover catastrophic third-party losses. Because operators are the most technically informed participants in those consultations, and because the bill also allows individual operators to apply for downward adjustments to their required coverage, the regime could provide the appearance of risk coverage without the substance. If a major launch incident causes large-scale damage — for example, debris falling over a populated area — the gap between the operator's required coverage and actual damages would fall on the federal government under the 1972 international liability treaty, and ultimately on future taxpayers who had no role in setting the original thresholds.

What could prevent this: An independent actuarial review of proposed thresholds against modelled loss scenarios would reduce the risk of industry-driven calibration. Mandatory periodic review of financial responsibility regulations — for example, every five years — would allow thresholds to be updated as the industry matures and real loss data accumulates. Public disclosure of the actuarial basis for threshold-setting, combined with parliamentary oversight of indemnification agreements, would create accountability. Benchmarking Canadian thresholds against comparable U.S. and Australian frameworks would provide an external reference point.

Scenario — not a prediction Host communities near launch sites bear costs without sharing benefits Plausible

One scenario analysts consider is that, over a 5–10-year period, launch and re-entry sites cluster in specific rural or remote regions — likely coastal areas in Nova Scotia or British Columbia, or parts of northern Ontario — where low population density and available Crown land make certification practical. Communities in those regions would bear the costs of federal zoning restrictions, potential land-use displacement, and the safety risks of rocket operations, while the economic benefits — employment, tax revenue, and economic activity — accrue primarily to urban aerospace clusters and shareholders of launch companies headquartered elsewhere. If Indigenous communities whose traditional territories overlap with candidate launch corridors do not receive meaningful engagement and benefit-sharing, sustained opposition could delay or prevent site certification, affecting the bill's commercial objectives.

What could prevent this: Federal and provincial governments could negotiate impact-benefit agreements with host communities as a condition of site certification, drawing on models from the resource extraction sector. The constitutional duty to consult Indigenous peoples under section 35 of the Constitution Act, 1982 would require meaningful engagement before federal zoning powers are exercised, providing a legal basis for benefit-sharing negotiations. Regional economic development programs could direct aerospace supply chain investment to host regions. Environmental assessment requirements for launch site development could provide a further forum for community input before operations begin.

Its path through Parliament

First reading
Apr 2026
Second reading
Third reading
Senate
Royal Assent