Ottawa Reshapes Environmental Review Process with New Legislation

The federal government has tabled a new bill aimed at replacing the contentious Impact Assessment Act (IAA), marking a significant pivot in Canada's approach to approving major natural resource and infrastructure projects. The proposed legislation is a direct and necessary response to the Supreme Court of Canada's advisory opinion in October 2023, which concluded that the IAA, formerly known as Bill C-69, was largely unconstitutional due to its overreach into areas of provincial jurisdiction.

The new law, titled the "Assessment of Effects of Designated Projects Act," seeks to thread a delicate constitutional needle. It aims to create a durable, efficient, and constitutionally sound framework that respects the division of powers while upholding Canada's commitment to environmental protection and Indigenous reconciliation. Environment and Climate Change Minister Steven Guilbeault introduced the bill, emphasizing that it provides the clarity and predictability that project proponents and investors have been seeking.

Background: The Supreme Court's Rebuke

The original Impact Assessment Act, enacted in 2019, was a cornerstone of the Liberal government's environmental policy. It broadened the scope of federal reviews beyond purely environmental effects to include social, health, and economic impacts, as well as impacts on Indigenous peoples and climate change commitments. However, several provinces, led by Alberta, argued that the law gave Ottawa a de facto veto over resource projects that fell squarely within provincial jurisdiction.

The Supreme Court, in a 5-2 majority decision, agreed with the provinces. The court found that the IAA's focus on a project's overall "public interest" was too broad and blurred the lines of constitutional authority. Chief Justice Richard Wagner wrote that the federal government could not regulate projects solely based on their potential environmental effects; rather, the federal role must be tied to specific heads of power granted to it under the Constitution, such as fisheries, navigation, and the rights of Indigenous peoples.

Key Changes in the New Bill

The newly introduced legislation makes several key changes to align with the court's guidance. The primary shift is a move away from assessing a project's overall wisdom or public interest and a return to focusing specifically on "adverse effects within federal jurisdiction."

Key adjustments include:

• Jurisdictional Clarity: The definition of "effects within federal jurisdiction" has been tightened to explicitly link federal oversight to constitutional powers. This means assessments will concentrate on impacts to fish and fish habitat, aquatic species, migratory birds, federal lands, and the rights of Indigenous peoples.
• Decision-Making Framework: The final decision-making process is being redefined. Instead of a broad "public interest" test, the minister or cabinet must now determine if the adverse federal effects are "significant" and, if so, whether they are justifiable in the circumstances.
• Cooperation with Provinces: The bill emphasizes cooperation and seeks to avoid duplication by allowing federal authorities to substitute a provincial assessment process if it is deemed equivalent in its rigour and consideration of federal effects.

The new environmental assessment law is designed to be more targeted, ensuring that federal involvement is triggered only when there is a clear and direct link to a federal responsibility.

Reactions from Stakeholders

The response to the new bill has been mixed, reflecting the diverse interests at stake.

Provincial governments, particularly in Alberta and Saskatchewan, have offered a cautiously optimistic reaction. While they view the Supreme Court ruling and the subsequent legislative change as a victory for provincial rights, they have pledged to scrutinize the new text to ensure it fully respects their constitutional authority over resource development. The risk of future legal challenges remains if the provinces feel the new law is merely a cosmetic rewording of the old one.

Industry groups, including the Canadian Association of Petroleum Producers (CAPP) and the Mining Association of Canada, have long called for a more predictable and efficient regulatory process. They have generally welcomed the government's move to provide constitutional clarity. Their primary hope is that the new framework will reduce project delays and provide the certainty needed to attract capital for major investments in energy and mining.

Conversely, environmental organizations have expressed concern that the new legislation weakens federal oversight. They argue that by narrowing the scope of assessments, the government may fail to consider the cumulative and climate-related impacts of major projects, potentially undermining Canada's ability to meet its emissions reduction targets. They fear a return to a more fragmented, project-by-project review process that misses the bigger picture.

Indigenous leaders and groups are carefully analyzing the bill to see how it affects the Crown's duty to consult and accommodate. While the focus on Indigenous rights as a federal head of power is maintained, the key will be in the implementation and whether the new process meaningfully incorporates Indigenous knowledge and ensures that projects do not infringe on treaty and Aboriginal rights.

The Path Forward

The bill will now proceed through the parliamentary process, where it will be debated, studied in committee, and potentially amended. The government has indicated a desire to pass the legislation quickly to restore stability to the assessment process. However, given the political sensitivity of the issue, a thorough and potentially contentious debate is expected. The ultimate success of this new legislative framework will be measured by its ability to foster responsible development, protect the environment, respect Indigenous rights, and withstand the inevitable legal and political pressures to come.