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Supreme Court of Canada Rules Federal Impact Assessment Act Largely Unconstitutional
The Supreme Court of Canada, in a 5-2 majority decision, has issued an advisory opinion stating that the federal Impact Assessment Act is largely unconstitutional. The court found that the law, which assesses the environmental and social impacts of major resource and infrastructure projects, oversteps federal authority and infringes on provincial jurisdiction over natural resources. The ruling represents a significant victory for Alberta and other provinces that challenged the legislation. The federal government has acknowledged the decision and has pledged to revise the law to align with the court's guidance.
Source: Supreme Court of Canada
Introduction
In a landmark decision with profound implications for environmental regulation and federal-provincial relations, the Supreme Court of Canada has ruled that the federal government's key environmental assessment law, the Impact Assessment Act (IAA), is largely unconstitutional. The advisory opinion, delivered with a 5-2 majority, concluded that the legislative scheme is a federal overreach into areas of exclusive provincial jurisdiction, particularly the management of natural resources.
Background of the Impact Assessment Act
The Impact Assessment Act, formerly known as Bill C-69, was enacted by the Trudeau government in 2019. It replaced the previous environmental review process established by the Harper government. The IAA was designed to create a more comprehensive and predictable process for reviewing major projects, such as pipelines, mines, and interprovincial highways. Its mandate was to assess not only the environmental effects of a proposed project but also its potential health, social, and economic impacts, including its effects on Indigenous peoples and its contribution to climate change.
From its inception, the Act was highly contentious. Critics, particularly in Western Canada, dubbed it the "No More Pipelines Bill," arguing that its broad scope and subjective criteria would create insurmountable hurdles for new energy projects, deter investment, and stifle economic development. The government of Alberta led the charge against the legislation, launching a constitutional challenge shortly after it became law.
The Constitutional Challenge and Division of Powers
The core of the legal dispute revolved around Canada's constitutional division of powers, as outlined in Sections 91 and 92 of the Constitution Act, 1867. Section 92 grants provinces exclusive authority over matters such as the development and management of natural resources and local works. Section 91 grants the federal government authority over areas like fisheries, navigation, trade and commerce, and matters of national concern.
Alberta argued that the IAA was a "Trojan horse" that allowed Ottawa to use its environmental jurisdiction to effectively veto projects that fell squarely within provincial control. The province contended that the Act's primary focus, or its "pith and substance," was the regulation of projects themselves, rather than the regulation of specific federal aspects like impacts on fisheries or navigable waters.
The Alberta Court of Appeal sided with the province in a 2022 opinion, finding the Act unconstitutional. The federal government appealed that decision to the Supreme Court of Canada, setting the stage for a definitive constitutional showdown.
The Supreme Court's Reasoning
Writing for the majority, Chief Justice Richard Wagner affirmed that while the federal government has a clear role in environmental protection, the IAA as written was overly broad. The court found that the Act's designation process, which determines which projects are subject to federal review, was not sufficiently tied to areas of federal jurisdiction. The legislation treated all environmental effects, whether major or minor and whether federal or provincial, as the basis for federal decision-making.
The majority opinion stated that the IAA's focus was on regulating "designated projects" as a whole, thereby intruding on the provinces' exclusive power to manage resource development within their borders. The court distinguished between regulating the environmental effects that fall under federal heads of power (which is permissible) and regulating the entire project because it might have some federal effects (which is not).
The two dissenting justices argued that the Act was a valid exercise of federal power, contending that the environment is a shared responsibility and that complex projects with interprovincial and international consequences require a holistic federal overview.
Reactions and Immediate Consequences
The ruling was immediately hailed as a major victory for the governments of Alberta and Saskatchewan. Alberta Premier Danielle Smith called it an "existential" win for the province, asserting that it reaffirms provincial rights to control their own economic destiny. The decision is expected to bolster provincial arguments against other federal environmental policies.
Federal Environment Minister Steven Guilbeault and Justice Minister Arif Virani expressed disappointment with the outcome but respected the court's opinion. They announced the government would move quickly to revise the legislation to comply with the constitutional parameters set out by the court. The government's goal will be to narrow the Act's focus to ensure it clearly targets effects within federal jurisdiction.
Industry groups, including the Canadian Association of Petroleum Producers (CAPP) and the Mining Association of Canada, welcomed the clarity provided by the court. They expressed hope that a revised legislative framework would lead to a more efficient and predictable regulatory process, encouraging investment in major projects.
Conversely, environmental organizations and some Indigenous leaders voiced deep concern. They fear the decision will weaken environmental protections, create a regulatory patchwork across the country, and make it more difficult to address cumulative environmental effects and national climate change goals. They argue that a strong federal backstop is necessary to ensure major projects are held to a high standard of environmental and social responsibility.
What Happens Next?
The Supreme Court's decision is an advisory opinion, meaning it does not strike down the law but provides guidance that the government is expected to follow. The federal government is now tasked with redrafting the Impact Assessment Act. This process will involve careful negotiation to create a law that is both constitutionally sound and effective at protecting the environment.
In the interim, there is uncertainty for the dozens of projects currently undergoing review under the existing IAA. The government will need to provide clarity on how these assessments will proceed. The ruling sets a significant precedent that will shape the future of environmental law and federal-provincial dynamics in Canada for years to come.
Insights
- Why it matters: This ruling significantly clarifies the constitutional boundaries of federal and provincial powers over environmental regulation. It addresses a core tension in Canadian federalism regarding control over natural resource development, setting a precedent that will influence future legislation and intergovernmental relations.
- Impact on Canada: The decision creates immediate regulatory uncertainty for major infrastructure and resource projects. It emboldens provinces seeking greater autonomy over their economies and may lead to challenges against other federal environmental initiatives. The federal government must now redesign its environmental assessment framework, potentially leading to a more decentralized approach to project approvals.
- What to watch: Watch for the federal government's proposed amendments to the Impact Assessment Act and the reaction from provinces and industry. The handling of projects currently in the review pipeline will be critical. Also, monitor for potential legal challenges to other federal climate policies, such as the clean electricity regulations or the oil and gas emissions cap, based on the precedent set by this ruling.