By Martin Ignasiak, October 17, 2023
Last Friday, the federal ministers of Natural Resources and Environment and Climate Change held a joint press conference in response to the Supreme Court of Canada’s decision in the Reference re Impact Assessment Act (IAA). The ministers made a number of statements suggesting that the Court’s decision could be dealt with through minor legislative amendments, saying “we will make the adjustments suggested by the Supreme Court” and that “some of the language needs to be tightened up.” Environment Minister Guilbeault even questioned whether any legislative amendments would be required to bring the IAA in compliance with the Court’s ruling.
Admittedly, the two ministers had not yet had a chance to fully digest the Court’s majority decision declaring a significant portion of the IAA to be unconstitutional. Nevertheless, Canada’s lawyers had a couple of hours to review the decision, so the ministers should have known that minor amendments aren’t going to cut it. To be clear, the Court’s decision means the federal government needs to rethink its entire approach to when and how it assesses major projects.
To put the scope of the Court’s decision into perspective, consider the following. The Court divided the IAA scheme into two distinct parts. The first part — contained in sections 81 to 91 of the IAA — deals only with projects carried out or financed by the federal government on federal lands or outside Canada. As expected, this was upheld by the Court – no one challenged this part of the IAA.
The focus of the Court’s decision was on the rest of the IAA, which deals with the contentious “designated projects” regime. The Court determined that this part of the IAA – “made up of the IAA’s remaining provisions and regulations” – is unconstitutional. The majority opinion, written by Chief Justice Richard Wagner, stated that “Parliament has plainly overstepped its constitutional competence in enacting this designated projects scheme.” The IAA contains over 150 sections, and the Court only upheld the part created by 11 of those sections – determining the rest to be constitutionally flawed. This alone should have alerted the ministers to the fact that minor legislative amendments aren’t going to address the Court’s concerns with the designated projects regime.
But there’s more. In the course of finding the designated projects scheme unconstitutional, the Court’s opinion struck fatal blows to many of the central and defining aspects of the IAA. The Court confirmed that the federal public interest decision must focus on the acceptability of the adverse federal effects only and “not veer towards regulating the project qua project or evaluating the wisdom of proceeding with the project as a whole.” The Court determined that the IAA’s prohibition preventing designated projects from proceeding on the basis that they “may cause” federal effects, including on fish and Indigenous peoples, is unconstitutionally broad because it captures “privately or provincially funded projects that are on provincial lands and that do not otherwise require the exercise of a federal power, duty or function.” The Court took issue with the provisions in the IAA that allow Canada to designate projects, require assessments, and make public interest decisions on the basis that a project emits greenhouse gas emissions. On this point, it said that Canada “is, in substance, attempting to do an end run around this Court’s recent national concern jurisprudence.”
The Court’s decision makes it clear that Canada cannot simply regulate mines, power plants, highways or other major infrastructure because they are large-scale industrial projects with environmental, social or health effects. Canada must instead remain laser focused on regulating federal matters. Contrary to the ministers’ statements at their press conference, amendments won’t address the Court’s criticisms of the IAA’s designated projects regime. Instead, to properly reflect the Court’s opinion, the federal government must revisit its entire approach to environmental assessment.
Fortunately for Canada, there already exists a framework for federal environmental assessment that is entirely consistent with the constitutional principles set out by the Supreme Court last week: the original Canadian Environmental Assessment Act (CEAA 1992). It was enacted by Prime Minister Mulroney’s government in 1992, and remained in place through the governments of Prime Ministers Chretien and Martin, with only minor amendments, until 2012 when it was repealed. For 20 years, it imposed federal assessment requirements whenever a project required a federal permit. In cases where the effects on areas of federal jurisdiction were potentially more significant, it required a rigorous information gathering exercise, including Indigenous consultation, to determine if those effects were justified.
CEAA 1992 was also good from a policy perspective. It established a robust federal assessment regime that was predictable because it only applied to projects that needed a federal permit. Some have argued that projects should not escape federal assessment just because they don’t require a federal permit. With respect, these critiques are completely missing the point. If a project can be designed so it doesn’t need a federal permit, this minimizes, if not eliminates, the project’s impacts on areas of federal jurisdiction (for instance, fisheries). From an environmental effects perspective, this is a positive result and should be encouraged by Canada.
Finally, many supporters of the IAA’s now unconstitutional “designated projects” regime argue that the federal government must regulate large projects no matter what. However, the Supreme Court has now made it clear that the federal government has no jurisdiction to do so – Canada cannot simply regulate “project qua project”. Nevertheless, some will continue to assert that provincial governments can’t be trusted to manage environmental issues and respect Indigenous rights.
These arguments have no merit. First, people in every province support responsible environmental management and provincial governments give heed to this. To wit, all ten provinces have enacted their own environmental assessment regimes. Second, the law is clear that like the federal government, provincial governments have a constitutional obligation to consult with and accommodate Indigenous interests when taking steps to permit a project. To the extent a province fails to conduct itself in accordance with these obligations, it is up to the Courts, not the federal government, to supervise a province’s conduct and if necessary, intervene. As stated by our Supreme Court, to be constitutional, the federal assessment regime’s “main thrust must be directed at federal matters.”
As a starting point, the federal government must acknowledge that any future federal assessment regime will have to much more closely resemble the regime that existed under CEAA 1992 as opposed to the IAA. If no federal permit is required for a project to proceed, the assessment will be undertaken by the province. If a federal permit is required, and the effects on federal jurisdiction are potentially significant, Canada will carefully consider whether those effects are justified and will only do so after consulting with Indigenous peoples. These must be the key pillars of the new regime.
It is important to emphasize that a federal assessment regime triggered by applications for federal permits does nothing to diminish Canada’s ability to regulate within its areas of jurisdiction. Canada will continue to have available to it all of the powers in the Fisheries Act, Species at Risk Act, Migratory Birds Convention Act, 1994, and the Navigation Protection Act. Canada and the provinces will need to collaborate on how to coordinate their respective assessment processes and manage areas where their jurisdictions overlap (water resources and fisheries, for example). This is how cooperative federalism, endorsed by the Supreme Court, is supposed to work.
Martin Ignasiak, KC, is the Head of Energy Regulatory Practice at Bennett Jones LLP and works closely with clients across Canada in developing and executing strategies for obtaining regulatory approvals for large scale industrial projects, including mines (diamonds, iron ore, oil sands, gold, coal), oil & gas, pipelines, and electric generation facilities (gas, renewable).
