The Sheppard East Light Rail Transit (SELRT) project comprises approximately 13 km of new light rail, which will be constructed along Sheppard Avenue East in Toronto. There is a 380 metre long section of the route that will be constructed as tunnel below Highway 404, which is owned by the Ministry of Transportation Ontario (MTO). MTO has published guidelines for tunneling under its highways. An impact analysis was undertaken to predict the surface settlement and angular distortion of Highway 404 resulting from the construction of the twin tunnels. The results were then compared to the performance criteria defined in MTO’s guidelines. As a result of this analysis, it was necessary to request an adjustment to MTO’s current performance criteria. This paper presents details and results of the impact assessment, approaches taken to satisfy the requirements defined by MTO, and provides details of the adjustment permitted by MTO.