Supreme Court opinion finds federal environmental assessment act partly unconstitutional

The Supreme Court of Canada found, in a non-binding advisory opinion, that parts of the federal environmental Impact Assessment Act (IAA, or Bill C-69) are unconstitutional.

One part of the IAA, enacted in 2019, establishes an impact assessment process for projects carried out or financed by federal authorities on federal lands or outside Canada. It requires the federal authority, in such cases, to decide if the project is likely to cause significant adverse environmental effects. If so, it must then be determined whether these effects are justified in the circumstances, the court said.

The other part, which includes the remaining provisions in the IAA and the regulations, outlines what projects are considered “designated projects” under the Act and makes them subject to federal review automatically.

The Alberta Court of Appeal, in a 4-1 decision, ruled that the IAA and its regulations were unconstitutional, after the provincial government asked the court for its legal opinion.

Ottawa appealed that decision to the Supreme Court. Chief Justice Richard Wagner (photo below right), in a 5-2 ruling by the Supreme Court, wrote that the “designated projects” portion of the Act is unconstitutional for two reasons.

First, this portion of the IAA is not directed at regulating “effects within federal jurisdiction” as defined in the Act, because these effects do not drive the scheme’s decision-making functions.

The federal government can’t use the IAA as a “gateway to making a decision about the public interest in the project as a whole,” Wagner wrote.

Second, the defined term “effects within federal jurisdiction” does not align with federal legislative jurisdiction. “The overbreadth of these effects exacerbates the constitutional frailties of the scheme’s decision-making functions,” Wagner wrote.

In other words, the law can apply to projects on federal land, those that are federally funded, or in areas clearly within federal jurisdiction, including species at risk, fish and fish habitat, migratory birds, the rights of Indigenous peoples and greenhouse gas emissions. But the federal government was acting outside of its jurisdiction if it used the law more broadly.

“There is no doubt that Parliament can enact impact assessment legislation to minimize the risks that some major projects pose to the environment,” Wagner wrote. “This scheme plainly overstepped the mark.”

“Environmental protection remains one of today’s most pressing challenges, and Parliament has the power to enact a scheme of environmental assessment to meet this challenge, but Parliament also has the duty to act within the enduring division of powers framework laid out in the Constitution,” Wagner wrote.

The Supreme Court’s dissenters were Justice Andromache Karakatsanis and Justice Mahmud Jamal, the only two Ontario judges among the seven who heard the case. They said courts should presume the IAA will be administered in accordance with the constitution’s division of powers, and not find it unconstitutional because it could conceivably be misused.

Appearing before the Supreme Court, nine out of 10 provinces (British Columbia was the exception) and several business and industry groups opposed the IAA. A total of 11 First Nations, the First Nations Major Projects Coalition, and numerous environmental groups spoke in favour of it.

“Massive win” for provincial rights, says Alberta’s premier

The Supreme Court’s decision “is a massive win for the protection of sovereign provincial rights under the Constitution,” Alberta Premier Danielle Smith (photo at right) said in a statement.

“The federal government, through passage of Bill C-69, and continuing now with their proposed electricity regulations and oil and gas emissions cap, is blatantly attempting to erode and emasculate the rights and authorities of provinces as an equal order of government under the Canadian Constitution.”

Bill C-69  “is already responsible for the loss of tens of billions in investment as well as thousands of jobs across many provinces and economic sectors, Smith maintained.

The federal government accepts the court’s opinion, which Ottawa said affirmed the government’s role to put in place impact assessment legislation and collaborate with the provinces on environmental protection, Environment Minister Steven Guilbeault (photo at left) and Attorney General Arif Virani said in a statement.

Because the Supreme Court offered its opinion in ruling on a reference case, Guilbeault noted that the law itself was not struck down but needs amendments, although he didn’t know how long that process would take.

When applying the IAA, the federal government has tried to ensure that it stayed within areas it has jurisdiction over, “and the Supreme Court tells us this is what we need to do,” Guilbeault said during a virtual news conference.

“The court confirmed that the federal government has the authority to legislate in this area, and that environmental matters are matters of shared responsibility between the federal government and provincial and territorial governments,” said Natural Resources Minister Jonathan Wilkinson (photo below right).

“The court found that the Impact Assessment Act is constitutional, in part, but that in some instances the language in the act needs to be more closely tethered to areas of federal jurisdiction,” he said. “I think a lot of the amendments that would be required are fairly surgical.”

As of May 2023, there are 495 major projects in various stages of development with a combined capital value of $572 billion, including many critical minerals and clean energy projects, Wilkinson said.

Ottawa said there are 23 projects currently in the federal impact assessment process under the IAA, with eight final decisions having been issued by the minister or the agency allowing those projects to move forward.

The projects currently in the process will continue to be assessed under the IAA, Wilkinson said. “The Act remains in place. There is certainty for folks that are taking projects through.”

“The federal government continues to have a role, a legitimate role, with respect to whether projects move ahead, and if they do how they move ahead and in what manner they are going to go about addressing some of the environmental concerns that all Canadians would share,” Wilkinson said.

The decision doesn’t give provinces immunity from federal law, or mean that federal laws can’t affect things such as electricity or natural resources projects.

“At the end of the day, if a project were to essentially not address significant areas of environmental concern that relate to areas of federal jurisdiction, there is no way that the project could proceed,” Wilkinson said.

R$