Breaking news!

After many months of consideration, the Supreme Court of Canada (SCC) has issued its decision on the Impact Assessment Act (IAA), which was introduced as Bill C-69 in 2018.

The SCC decision sided with the provinces and found the Act unconstitutional.

This email is intended to give you the nuts-and-bolts version of what was decided and what it means. The ruling has important consequences, so read on.

The background

This case is about which order of government—federal or provincial—has the authority to conduct impact assessments and make final approval decisions for projects entirely within a province.

The government of Alberta referred the question to the courts because it maintained that the Impact Assessment Act (IAA) gives the federal government overly broad assessment and decision-making powers. It claimed that these powers go far beyond federal responsibility for the environment—and that this infringes not only upon the province’s own environmental responsibilities but also on provinces’ jurisdiction to manage and develop natural resources. The other provinces joined Alberta as intervenors in the case, because all are concerned about how the Act changes constitutional division of powers.

To be clear, this case was not about the need for a robust impact assessment process to determine environmental, social, economic and health impacts of proposed projects. That need was recognized by all parties.

The decision and its reasons

The sections of the Act that apply to assessment of projects on federal lands or that cross international or interprovincial boundaries are fine. However, the Act is unconstitutional as it applies to projects entirely within provincial boundaries.

The environment is a shared jurisdiction between the federal and provincial orders of government. However, the Court noted that “shared” doesn’t mean that both orders of government get to make decisions about all aspects. Some topics are exclusively federal and some are exclusively provincial, and governments can’t make decisions outside of what is in their own “basket.” The Court found the IAA unconstitutional because it gives the federal government the ability to reject projects based on factors that are not in the federal government’s jurisdiction.

One of the factors that the federal government uses to make decisions about project approval under the IAA is greenhouse gas (GHG) emissions. With respect to emissions, the Court was very clear that regulating emissions directly was not in the federal government’s power. It can impose pricing on emissions, as it does with the carbon tax. But it cannot regulate the emissions themselves—and in doing so with the IAA, the federal government was “attempting to do an end run around this Court’s recent … jurisprudence.”

What comes next

As a reference case, this decision does not overturn legislation. However, the government now has an obligation to change the Act to conform to the SCC’s finding of unconstitutionality. It is not yet clear what this could look like. Possibilities include:

  • The federal government eliminates from its list projects that are entirely within provincial jurisdiction, and only applies federal impact assessment to projects on federal lands and interprovincial / international projects. (Highly unlikely.)
  • The federal government keeps the project list as-is or pretty close, but uses a justification that relates only to federal heads of power, such as impacts on Indigenous rights and title. (Possible.)
  • The scope of assessment for projects is kept broad, but decision-making is explicitly restricted only to federal heads of power. (Definitely possible. The federal government argued that it already does this, although the Court found that it did not and cited letters from the Ministers of Environment and Energy to that effect.)
  • The federal and provincial governments work together to create a system of project authorization (both assessment and permitting) that is environmentally robust, efficient, seamless, and in which everyone “sticks to their knitting.” (Desperately needed, hopefully attainable.)

Implications

This decision provides some boundaries for what is and is not permissible. However, it is not likely to result in a flood of projects coming forward under either federal or provincial environmental assessment regimes. As noted above, there are different approaches that the federal government could take to respond. Until that happens and some clarity is provided around how the process may change as a result, many project proponents—both those going through the IAA now and those waiting in the wings—are likely to drag their feet on their applications.

This decision also has strong implications for other pieces of proposed federal legislation – in particular, the Clean Electricity Regulations and the oil and gas emissions cap. Both of those use the mechanism of direct regulation of emissions, which the Court stated is not available to the federal government. If the federal government chooses to push forward with them, we are likely to see yet more court challenges from the provinces.

At the Canada West Foundation, we will continue to analyze these important developments and what they mean for the West. And we will continue to push for good public policy – policy with a smart goal, that is designed well, implemented well and that takes into account different regional circumstances and respects constitutional jurisdiction.

Keep an eye on this space!

Want to read more from CWF about improving the Impact Assessment Act? Here are some links to our previous writing:

REPORT | Competitive Canada: Recommendations to improve federal assessment for major projects
Marla Orenstein, September 2023

REPORT | Federal Impact Assessment Under Review: Measuring progress on projects and timelines
Marla Orenstein, April 2023