A majority of the Supreme Court of Canada (SCC), in a 5-2 opinion released earlier this month, found the federal Impact Assessment Act (the Act) to be unconstitutional in part and inconsistent with shared federal and provincial jurisdiction over the environment. The SCC’s conclusions in Reference re Impact Assessment Act (the Decision) are expected to have significant implications for major projects across Canada, including mines, pipelines, and other interprovincial infrastructure and activities. This bulletin briefly summarizes the key findings of the SCC and our anticipated next steps for Canada’s impact assessment and approval regime.
Impact Assessment Act
The Act, which received Royal Assent in 2019, seeks to provide an information gathering and regulatory scheme for certain projects and activities carried out in Canada or on federal lands so as to prevent significant environmental, health, social, or economic effects. The Act also regulates certain federal “aspects” of projects, including in respect of: Indigenous Peoples; federal lands; fish and fish habitat; aquatic species; migratory birds; changes in a province other than the one in which the activity or project is occurring; and changes in the environment outside of Canada.
The Act contains two assessment components for gathering information as part of the regulatory scheme. The first portion, provided in sections 81 to 91 of the Act, deals with projects carried out or financed by federal authorities on federal lands or outside Canada and requires determining whether projects are likely to cause significant adverse environmental impacts. The second portion, which is provided in much of the rest of the Act and regulations, deals with “designated projects”, defined as physical activities carried out in Canada or on federal lands and are designated by regulations. This portion is aimed at mitigating or preventing potential adverse environmental, health, social and economic impacts arising from the activities.
Overview of Opinion
The opinion of the majority of the SCC, written by the Chief Justice, affirmed that Parliament has the power to enact legislation to protect the environment, including enacting a scheme of environmental assessment that is directed at the federal aspects of projects. However, as with any legislation, such a scheme must be consistent within the division of powers framework set out in the Constitution.
The majority concluded that the first part of the Act that deals with projects carried out or financed by federal authorities on federal lands or outside Canada is intra vires Parliament’s legislative authority and within Parliament’s constitutional jurisdiction.
In conducting the pith and substance analysis of the “designated projects” component of the Act, the majority determined that its pith and substance was to assess and regulate designated projects with a view to mitigating or preventing their potential adverse impacts. This SCC found that this essentially grants decision-makers the power to assess and regulate almost any project in Canada “regardless of whether Parliament has jurisdiction to regulate a given physical activity in its entirety” under an assigned head of power. It was consequently deemed ultra vires or beyond the legislative authority of Parliament for two reasons:
- Decision-makers must make decisions in the “public interest”, pursuant to the Act, that consider federal and non-federal effects and the court expressed concern that requiring an assessment of such non-federal effects would blend assessments of adverse federal effects with other adverse effects that are not federal. This creates risks for projects with little or no potential for adverse federal effects thereby requiring them to “undergo impact assessment on the basis of less relevant, yet mandatory, considerations”. The majority noted that “the adverse non-federal effects can amplify the perceived severity of the adverse federal effects and, effectively, become the underlying basis for the conclusion that the latter are not in the public interest”.
- The majority expressed concern for the Act’s definition of “effects within federal jurisdiction”, finding that it does not align with federal legislative jurisdiction under the Constitution and that its “overbreadth exacerbates the constitutional frailties of the scheme’s decision-making functions.”
The minority, including Justices Karakatsanis and Jamal, would have found the Act constitutional in its entirety and intra vires Parliament’s legislative authority. The minority opinion relied heavily on the doctrine of cooperative federalism and the presumption of constitutionality in conducting statutory and constitutional interpretation.
Government Response and Next Steps
The Honourable Steven Guilbeault, Minister of Environment and Climate Change, and the Honourable Arif Virani, Minister of Justice and Attorney General of Canada, issued a statement on the SCC’s opinion on the constitutionality of the Impact Assessment Act, indicating that:
- the Court’s opinion provides new guidance on the Act, while explicitly affirming Parliament’s right to put in place impact assessment legislation and collaborate with the provinces on environmental protection;
- the government remains committed to the principles of respect for the environment, Indigenous rights and ensuring projects get assessed in a timely remain and that the Ministers will work quickly to improve the Act through Parliament;
- the federal government will collaborate with provinces and Indigenous groups to ensure an impact assessment process that works for all Canadians; and
- their immediate priority will be to provide guidance to stakeholders and Indigenous partners to ensure predictability for projects affected by the opinion (currently 23 projects).
We anticipate that the federal government will introduce amendments to the Act that aim to respond to the Decision in the coming months.