Majority finds feds overreached authority in trying to enact strong environmental assessment regime
On Friday, October 13, the Supreme Court of Canada (SCC) released the Reference re Impact Assessment Act, a decision which may prove to have serious consequences for the environment. The court, with Karakatsanis and Jamal JJ. dissenting in part, held that Parliament’s 2019 Impact Assessment Act (“IAA”) is unconstitutional in part.
Author’s Note: although the material challenged is not contained solely within the IAA, IAA is used as an umbrella term throughout this article to include the IAA and additional Regulations..
Background
A four-year review of the federal environmental impact assessment scheme culminated in the 2019 enactment of the Impact Assessment Act. As Chief Justice Wagner explains at the outset of his decision, the IAA “is essentially two schemes in one.” Part one concerns federal projects, while part two concerns designated projects, which are defined in the IAA as “one or more physical activities that (a) are carried out in Canada or on federal lands; and (b) are designated by regulations made under paragraph 109(b) or designated in an order made by the Minister under subsection 9(1).” The “Project List” made pursuant to s. 109(b) sets out the designated physical activities covered by the scheme. These activities are major projects with significant potential adverse effects on areas of federal jurisdiction related to the environment, such as aerodromes, canals, and oil and gas pipelines. Being that part one—the federal aspect—of the IAA is plainly intra vires, the constitutionality of IAA’s regulation of designated projects was the primary issue in this appeal.
The Lieutenant Governor in Council of Alberta initially referred the question of the IAA’s constitutionality to the Alberta Court of Appeal (ABCA) and a majority of the court first deemed the legislative scheme unconstitutional in May 2022. In their decision, the majority proceeded through the two-step constitutional validity analysis, characterizing the IAA, then classifying it. The majority first found the pith and substance of the IAA—establishing a regulatory scheme through which the federal government can designate the projects requiring its assessment of effects, oversight, and approval—infringed provincial proprietary rights over public lands and natural resources. Then, at the classification stage, they concluded the IAA scheme did not fall under any federal heads of power, making the entire entirety of the scheme unconstitutional. Finally, considering interjurisdictional immunity, the majority held that even if the scheme were valid, the doctrine would apply to protect the cores of provincial heads of power.
The Decision
Chief Justice Wagner proceeded through the constitutional validity analysis similarly to the ABCA, first addressing characterization of the IAA. He cautioneds against characterizing the legislative scheme in a manner that predetermines its classification—for example, the Attorney General of Canada submitted that the environmental assessment scheme prevents “adverse environmental effects in relation to matters within federal jurisdiction.” The ABCA erred similarly by finding the IAA’s purpose and effects constituted impermissible federal overreach at the characterization stage. Chief Justice Wagner avoided falling into this pattern by characterizing the two distinct parts of the IAA separately. He found the pith and substance of the designated projects section of the scheme to be “to assess and regulate designated projects with a view to mitigating or preventing their potential adverse environmental, health, social and economic impacts.” Notably, this characterization does not mention jurisdiction.
Moving to classification, Chief Justice Wagner emphasized that, per Canadian Western Bank v Alberta, laws are classified based on their dominant characteristic, not secondary effects. The environment is not a head of power contained in the Constitution and, in turn, no level of government has exclusive jurisdiction over environmental assessment. Past decisions have recognized that, in some instances, both levels of government can exercise legislative authority over a single activity or project. To support the validity of the designated projects scheme, Canada cited its power over sea coast and inland fisheries, Indians and land reserved for Indians, imperial treaties, and national concern under peace, order, and good governance (POGG). The Chief Justice declined to accept these arguments, finding IAA’s regulation of designated projects to be ultra vires for two main reasons.
First, the designated projects scheme’s decision-making functions are not actually confined to regulating federal effects. There are four decision-making junctures in relation to designated projects: (1) designating physical activities, (2) screening whether an impact assessment is necessary, (3) determining the scope of the assessment and factors to be considered, and (4) the public interest determination and resulting oversight and regulation. Under the scheme, decision-makers can consider a number of factors, but there is no guidance on how they are to be used in actually drawing a conclusion. According to Chief Justice Wagner, this provides decision-makers “practically untrammelled power to regulate projects qua projects, regardless of whether Parliament has jurisdiction to regulate a given physical activity in its entirety.” Although the screening decisions and public interest determinations must be rooted in federal effects, the fact that only two of the factors taken into account by a decision-maker are tied to federal jurisdiction means an impact assessment could be determined on a basis other than, or not sufficiently related to, a project’s federal effects. The mandatory public interest factors also are not confined to areas of federal jurisdiction.
Moreover, the term “effects within federal jurisdiction,” which influences each decision-making juncture, is itself overbroad and ultimately does not come under s. 91 of the Constitution. Chief Justice Wagner highlighted one especially problematic example of an effect within federal jurisdiction: “a change to the environment that would occur…in a province other than the one where the physical activity or the designated project is being carried out.” The term ‘environment’ is defined broadly within the IAA and the interprovincial effects clause therefore captures, in the view of the Chief Justice, an unlimited range of interprovincial environmental changes. Due to overbreadth of defined federal effects, s. 7 of the IAA also contains prohibitions on certain conduct beyond the scope of Parliament’s authority under the federal heads of power. For example, one of the prohibited activities is doing anything in the course of a designated project that could result in “any change occurring in Canada to the health, social or economic conditions of the Indigenous peoples of Canada.”
The decision diverges from the ABCA’s by ultimately concluding that the federal projects component of the IAA (ss. 81 to 91), which is clearly intra vires Parliament and constitutionally valid, can be severed from the unconstitutional designated projects portion. Previously, the ABCA had found, in accordance with Canada’s submission, that the IAA was not severable and had “to stand or fall as a whole.” Chief Justice Wagner also did not address the ABCA’s raising of the doctrine of interjurisdictional immunity, given his finding that the designated projects section of the IAA is ultra vires.
The Dissent
Justices Karakatsanis and Jamal joined together for a strong dissent, finding the IAA constitutional. At the outset of their decision, the dissent emphasized the importance of all levels of government using their powers to protect the environment. In discussing federalism generally, they focused on how, in accordance with the court’s past jurisprudence on the subject, legislation is presumptively constitutional. Moreover, legislation is not unconstitutional “simply because it could conceivably be misused.”
The dissent characterized the pith and substance of the designated projects scheme under the IAA more narrowly than the majority: they found that the act establishes “an environmental assessment process to (1) assess the effects of physical activities or major projects on federal lands, Indigenous peoples, fisheries, migratory birds, and lands, air, or waters outside Canada or in provinces other than where a project is located, and (2) determine whether to impose restrictions on the project to safeguard against adverse federal effects, unless allowing those effects is in the public interest.”
In terms of classification, the dissent outlined how adverse federal effects, in fact, anchor decision-making under the IAA. First, the designation process embodies the precautionary principle and engages in appropriate information gathering to assess projects’ potential federal effects. Second, individually considering the discretionary factors to be taken into account in the screening process reveals that the majority’s concern over them is misguided—the discretionary screening decision is anchored in potential adverse federal effects. If it was ever determined that a project with no such potential effects had to undergo an impact assessment, this would be unreasonable and unreflective of the IAA’s purpose.
Justices Karakatsanis and Jamal agree with the majority that the actual environmental assessments are not limited to only federal effects but find this is necessary for federal authorities to make an informed decision about the project. Finally, the majority’s criticism of the public interest determination process conflicts with guidance from Friends of the Oldman River Society v Canada, where the SCC held that federal environmental assessment can involve an integrated decision-making process that weighs federal and non-federal harms of a designated project with potential benefits.
The dissent ultimately finds the term “effects within federal jurisdiction” constitutional because each of the effects defined under s. 2 properly falls under Parliament’s jurisdiction over the sea coast and inland fisheries, imperial treaties, Indians and Lands reserved for the Indians, and POGG. Again, they emphasize that speculative concerns about potential misuse of the IAA (to stretch federal authority) should not be the basis for a finding of invalidity. Ultimately, Justices Karakatsanis and Jamal hold the IAA as entirely constitutional.
Briefly commenting on interjurisdictional immunity, the dissent notes that the ABCA offered no precedent to support its application of the doctrine to the heads of provincial power it invoked and they therefore see no reason why it would apply here.
Where do we go from here?
Regardless of whether one agrees or disagrees with the majority’s decision in this case, the declaration of the designated projects section of the IAA’s invalidity will undoubtedly have significant consequences. Alberta Premier Danielle Smith touted the decision as a win for provincial rights and Ontario Premier Doug Ford welcomed the decision as confirming what his government has “been saying all along.” The Canadian Association of Petroleum Producers, who intervened in the case, also expressed it was pleased with the decision.
It obviously remains to be seen what the provinces will do with the increased environmental leeway this decision grants, but it feels safe to say that this decision is not a positive development for environmental protection. Ecojustice, another intervener, was disappointed in the Supreme Court’s conclusion, stating that “[s]trong environmental laws [like the IAA] are crucial to protect the health and wellbeing of the planet.”
