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Ottawa Introduces New Environmental Assessment Law in Response to Supreme Court Ruling
The federal government has tabled new legislation, the Major Projects Review Act, to replace the Impact Assessment Act (IAA) after the Supreme Court of Canada found the latter largely unconstitutional. The proposed law aims to create a constitutionally sound and efficient review process for major resource and infrastructure projects. It focuses on effects within federal jurisdiction, seeking to provide clarity for industry and investors while upholding environmental standards and Indigenous consultation rights. The move comes amid ongoing debate over federal authority, with provinces and industry groups cautiously awaiting the bill's full details and implementation.
Source: Supreme Court of Canada - Reference re Impact Assessment Act
Introduction
The Government of Canada has formally introduced new legislation aimed at overhauling the federal environmental assessment process for major projects, a direct response to a landmark Supreme Court of Canada opinion that found its predecessor, the Impact Assessment Act (IAA), to be largely unconstitutional. Tabled in the House of Commons by the Minister of Environment and Climate Change, the proposed "Major Projects Review Act" seeks to establish a clearer, more constitutionally sound framework for evaluating large-scale energy, mining, and infrastructure developments.
The new bill is the culmination of months of consultation and drafting following the Court's October 2023 advisory opinion. The government's stated goal is to create a predictable and timely review process that respects provincial jurisdiction while ensuring that projects with effects in federal areas of responsibility undergo rigorous assessment. This legislative reset is critical for unlocking billions of dollars in potential investment, but it must navigate the same federal-provincial tensions that led to the previous law's legal challenge.
Background: The Supreme Court's Decision
The path to this new legislation began when the Supreme Court found the federal Impact Assessment Act largely unconstitutional in a 5-2 majority opinion. The Court ruled that the IAA, enacted in 2019, overstepped federal authority by creating a review process that treated all environmental effects as federal concerns, thereby intruding into areas of exclusive provincial jurisdiction over natural resources and local projects. Chief Justice Richard Wagner, writing for the majority, clarified that while the federal government has a clear role in assessing environmental impacts, its authority is not limitless. Federal oversight must be anchored in specific heads of federal power, such as fisheries, navigation, Indigenous peoples, and migratory birds.
The ruling affirmed that the federal government could not designate projects for review based on a broad public interest test or its potential to cause any environmental change. Instead, the trigger for a federal assessment must be the project's potential to cause adverse effects on matters that fall squarely within federal legislative authority. This decision was a significant victory for provinces like Alberta and Saskatchewan, which had argued the IAA created regulatory uncertainty and deterred investment in their resource sectors.
Key Features of the Proposed Legislation
The new Major Projects Review Act attempts to directly address the constitutional flaws identified by the Supreme Court. While the full text will be scrutinized in the coming weeks, government officials have highlighted several key changes:
- A Focused Jurisdictional Trigger: The new act explicitly ties the requirement for a federal review to a project's potential impacts on areas of federal jurisdiction. The broad “public interest” considerations that the Court found problematic have been removed as a primary trigger for assessment.
- Revised "Designated Projects" List: The list of project types that automatically require a federal review will be narrowed. The government aims to focus only on those projects with the highest likelihood of significant adverse federal effects, reducing the number of smaller projects caught in the federal net.
- Enhanced Cooperation and Substitution: The legislation strengthens mechanisms for cooperation with provincial governments. It aims to create a "one project, one assessment" system where possible, allowing federal authorities to substitute a provincial review process if it is deemed equivalent in its assessment of federal effects. This is intended to reduce duplication and shorten timelines.
- Clarified Decision-Making Criteria: The act specifies that the final decision by the federal minister must be based solely on the project's likely effects within federal jurisdiction. While broader sustainability and climate change goals can be considered as context, they cannot be the determining factor for projects that are otherwise constitutionally within provincial control.
- Commitment to Indigenous Consultation: The bill reaffirms the government's duty to consult and accommodate Indigenous peoples, ensuring their rights and interests are considered when a project may impact them.
Reactions from Stakeholders
The introduction of the bill has elicited a range of reactions. Provincial governments that challenged the original IAA have expressed cautious optimism. The Premier of Alberta stated that while the province is pleased to see Ottawa acknowledging the Court's decision, "the devil is in the details." Provincial officials will be closely examining the legislation to ensure it represents a genuine retreat from federal overreach. This issue is part of a wider pattern of federal-provincial disputes, including the ongoing controversy where the federal carbon tax faces renewed provincial pushback over affordability and jurisdiction.
Industry associations, including the Mining Association of Canada and the Canadian Association of Petroleum Producers, welcomed the move toward greater regulatory certainty. In a joint statement, they noted that a clear and predictable review process is essential for attracting the capital needed for major projects, particularly those related to critical minerals and energy transition. However, they also warned that the implementation of the act will be crucial and called for a streamlined process that avoids unnecessary delays.
Conversely, several national environmental organizations have voiced concerns that the new legislation may weaken environmental protections. They argue that by narrowing the scope of federal review, the government risks creating regulatory gaps where cumulative effects on climate change and biodiversity are not adequately assessed. They are calling for amendments to ensure that Canada's national climate targets are a central component of any major project approval.
The Path Forward
The Major Projects Review Act now begins its journey through the legislative process, where it will be debated and potentially amended by the House of Commons and the Senate. The federal government faces the difficult task of balancing the constitutional demands set by the Supreme Court, the economic imperatives of resource development, the calls for stronger environmental oversight, and the complex landscape of federal-provincial relations. The success or failure of this legislation will have long-lasting implications for Canada's economy and environment, determining how the country builds everything from new mines and pipelines to clean energy projects for decades to come.
Insights
- Why it matters: This legislation is fundamental to how Canada will approve and build major resource and infrastructure projects. It redefines the balance of power between Ottawa and the provinces on environmental and economic matters, directly impacting multi-billion dollar investments in mining, energy, and transportation.
- Impact on Canada: A successful law could provide much-needed regulatory certainty, attracting investment and streamlining project approvals. A flawed law could lead to further legal challenges, prolonged federal-provincial disputes, and continued uncertainty for industry, potentially hindering Canada's economic growth and energy transition goals.
- What to watch: Key developments to watch include the parliamentary debate and potential amendments to the bill, the detailed reaction from provincial governments after legal analysis, and how the new Impact Assessment Agency of Canada interprets and implements its revised mandate once the law is passed.