Canada’s highest court dealt a serious blow to the Trudeau government with its Oct. 13 ruling in the reference case that found the federal Impact Assessment Act unconstitutional. This complex law was introduced in 2019 and quickly nicknamed the “no more pipelines” law by opponents. This is because under the act it is highly unlikely any new pipelines will be built in Canada.
The effects of the law were not limited just to pipelines. The federal assessment process under the Impact Assessment Act reviews all kinds of projects – including those wholly within the borders of a single province, like mines, oil projects, or hydroelectric plants.
Alberta objected to this legislation, arguing – successfully – that the federal government was regulating in areas of provincial jurisdiction.
The constitutionally controversial portion of the Impact Assessment Act related to “designated projects.”
“Designated projects” under the act are subject to a statutory prohibition on any activities that may cause adverse “effects within federal jurisdiction,” absent approval from the federal government.
How do projects get put on the “designated projects” list? That’s part of the problem. There is a list set by regulation, but the federal environment minister also has far ranging authority to unilaterally decide a project will be subject to the Impact Assessment Act because, in his opinion, it may cause “effects within federal jurisdiction.”
Once on this list, projects are subject to a lengthy years-long federal assessment on an exceedingly wide range of economic, social, health, environmental, and even gender-related impacts. The Impact Assessment Act essentially gave the federal government a “veto” power over natural resource projects, including projects wholly within a single province, if the project so much as glanced towards federal jurisdiction.
For example, most natural resource development projects will have some effect on greenhouse gas emissions, which, even if small, can cross provincial boundaries. Under the act, this would be enough to have a wholly provincial project placed on the designated project list, then indefinitely stopped or stalled by Ottawa.
In a 5-2 decision from the Supreme Court, the offending provisions of the Impact Assessment Act were declared unconstitutional. The “designated projects” portion of the act was found to be ultra vires – outside the authority of – Parliament and thus unconstitutional.
The majority of the court found that the Impact Assessment Act 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 claimed such broad authority in the first place on the sections of the Constitution giving Ottawa the power to regulate “Indians, and Lands reserved for Indians,” “Sea Coast and Inland Fisheries,” and the peace, order and good government (POGG) power. Recall that it was under the POGG power that the Supreme Court protected the federal government’s Greenhouse Gas Pollution Pricing Act, a federal law establishing national minimum standards for carbon pricing in Canada.
This new Supreme Court decision in the Impact Assessment Act reference is significant and could have the effect of stemming some of the bleeding of provincial jurisdiction caused by the earlier carbon price decision of the same court.
It is worth noting that the Supreme Court holding is technically that the Impact Assessment Act is constitutional “in part.” There were other provisions that the Supreme Court took no issue with – for example, the federal government’s authority to regulate projects wholly on federally owned lands, or projects outside of Canada.
Don’t let so-called experts on Twitter fool you: this was a resounding victory for Alberta and for provincial rights. The regulation of projects on federal lands or outside the country itself is never what concerned the provinces: it was the federal government’s intrusion into their jurisdiction and the federal prohibition on provinces developing the bounty of their own natural resources that drew ire.
The question now is what will the federal government do next. In response to the decision from the Supreme Court, federal Natural Resources Minister Jonathan Wilkinson said he saw the need for only small changes in the law.
“The concerns that are raised by the Supreme Court… can be dealt with in a relatively surgical way,” he said the day the decision was released.
This is curious. The portions of the Impact Assessment Act which were declared incompatible with Canada’s supreme law are core to the function of the act itself. To address the court’s reasoning, the government will need to make significant legislative amendments. If the response is going to be “surgical” in nature as Wilkinson claims, it’s surgery on a fatally wounded patient.
The government no doubt wants to ensure that the projects it previously stopped or indefinitely stalled will remain so. It’s unclear now how it can achieve that.
It’s also important to acknowledge that while this case has been portrayed as a fight between environmental protection versus resource development, there is another important principle at stake: federalism.
The Fathers of Confederation made a deliberate choice to strike a delicate balance between centralization and regional diversity. Failure to adhere to Canada’s constitutional division of powers leads to an unwieldy patchwork of legislation which may adversely impact capital investment, resource development, and economic prosperity.
As Chief Justice Wagner wrote, “environmental protection remains one of today’s most pressing challenges. To meet this challenge, Parliament has the power to enact a scheme of environmental assessment. Parliament also has the duty, however, to act within the enduring division of powers framework laid out in the Constitution”.
