Ottawa Overhauls Environmental Review Law in Response to Supreme Court Rebuke

Introduction

The Government of Canada has introduced legislation aimed at overhauling its national environmental assessment process, a direct response to a landmark Supreme Court of Canada advisory opinion. The amendments to the Impact Assessment Act (IAA), originally passed as Bill C-69, seek to realign the federal review process with the constitutional division of powers, a move that could reshape the future of major energy and resource projects across the country.

Background: The Controversial Bill C-69

Enacted in 2019, the Impact Assessment Act was a cornerstone of the Liberal government's environmental and reconciliation agenda. It replaced the previous review process under the Harper government, broadening the scope of assessments to include factors like climate change, gender-based analysis, and long-term sustainability. Proponents argued it created a more holistic and trustworthy system. However, the legislation was met with fierce opposition from several provinces, particularly Alberta and Saskatchewan, and industry groups. Critics dubbed it the "no more pipelines act," arguing its broad criteria and ministerial discretion created unacceptable uncertainty and delays for investors, effectively sterilizing resource development.

The Supreme Court's Verdict

The constitutional battle culminated in an October 2023 advisory opinion from the nation's top court. In a 5-2 decision, the Supreme Court found the IAA to be largely unconstitutional. Chief Justice Richard Wagner, writing for the majority, stated that while the federal government has a clear role in environmental protection, the IAA's framework overstepped its jurisdiction. The Court found that the Act's designation mechanism, which determined which projects required federal review, was overly broad and intruded into areas of exclusive provincial jurisdiction, such as the management of natural resources. The law incorrectly treated all environmental effects as federal matters, rather than focusing on effects related to specific federal powers like fisheries, migratory birds, and the rights of Indigenous peoples.

The Legislative Fix

The newly tabled legislation directly addresses the constitutional defects identified by the Court. The amendments propose to pivot the focus of federal assessments from the effects of a project in general to the adverse effects within areas of federal jurisdiction. Key changes include:

• Narrowing the Scope: The trigger for a federal assessment will now be explicitly tied to a project's potential impacts on areas of federal constitutional authority. The term "effects within federal jurisdiction" is more precisely defined to align with the Court's guidance.
• Eliminating Broad Discretion: The amendments aim to reduce the federal Environment Minister's discretion to designate projects for review, making the process more predictable and rules-based.
• Focus on Cooperation: The bill emphasizes cooperative federalism, reinforcing the principle that provinces are the primary regulators for most resource projects within their borders. It seeks to harmonize federal reviews with provincial ones to avoid duplication.

Reactions and The Path Forward

Initial reactions have been cautiously mixed. The Alberta government, which led the constitutional challenge, has expressed that the changes appear to be a step in the right direction, acknowledging that Ottawa is respecting the Supreme Court's decision. However, provincial officials have stated they will scrutinize the bill's details to ensure it fully relinquishes federal overreach.

Industry groups, such as the Canadian Association of Petroleum Producers (CAPP) and the Mining Association of Canada, have welcomed the move towards greater regulatory certainty. For years, they have argued that a clear, efficient, and predictable review process is essential to attract the multi-billion dollar investments required for major projects. They will be watching closely to see if the amended Act delivers on this promise in practice.

Conversely, some environmental organizations have voiced concerns that narrowing the Act's scope could weaken environmental protections. They worry that a more constrained federal role might create gaps in oversight, particularly for projects with significant cumulative effects or greenhouse gas emissions that cross provincial boundaries. The debate now moves to Parliament, where the amendments will be studied, debated, and potentially further refined before becoming law. The outcome will have profound implications for Canada's ability to balance economic development with its environmental commitments for decades to come.