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Impact Assessment Act Designated Projects Scheme Unconstitutional: What Now?

Published:

November 1, 2023

Author(s):

• Alexandra Gosse
• Beth McGrath, KC
• J. Alex Templeton

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On October 13, 2023, the Supreme Court of Canada issued its judicial reference opinion: a significant portion of Canada’s federal environmental assessment legal regime is unconstitutional. In Reference re Impact Assessment Act the Court concluded the portion of the federal Impact Assessment Act and its Physical Activities Regulations dealing with projects on federal lands and outside Canada is constitutional – but the majority found the portion dealing with “Designated Projects” exceeds federal jurisdiction and is unconstitutional. The Court’s opinion isn’t technically binding on the federal government; however, it’s highly influential. To help you respond to the Court’s reference opinion, here’s a review of the federal Impact Assessment Act regime, the basis of the Court’s opinion and five key impacts to expect.

Federal Impact Assessment Act Regime

Projects subject to an environmental impact assessment under the Act includes all projects that meet one of these criteria:

• “Designated Projects” as described in the Physical Activities Regulations.
• Projects designated by the Minister of Environment and Climate Change not described under Designated Projects.
• Projects on federal lands and outside Canada assessed by federal authorities before decisions are made.

The Physical Activities Regulations set out the Designated Projects in a “Project List”. The Project List focuses federal impact assessments on projects with the most potential for adverse environmental effects within federal jurisdiction.

Court’s Reference Opinion

Provincial and territorial legislation gives each province and territory the power to refer a question to their respective provincial appeal court. The Supreme Court of Canada can consider an appeal of a reference decision of a provincial appeal court. Reference opinions are merely advisory – they are not technically binding on courts or parties and future courts and legislators are free to reach different conclusions. However, they can be influential – particularly when they come from the Supreme Court of Canada. The Province of Alberta initially referred the question of the constitutional validity of the Act and its Physical Activities Regulations to the Alberta Court of Appeal. The Court of Appeal found the entire Act and the Regulations are unconstitutional. The federal government appealed that decision to the Supreme Court of Canada. The majority of the Supreme Court concluded only the Impact Assessment Act’s “Designated Projects” scheme is unconstitutional, for two main reasons:

• It’s not directed at regulating “effects within federal jurisdiction” as the Act defines because these effects don’t drive the scheme’s decision-making functions.

• The definition of “effects within federal jurisdiction” is overly broad and goes beyond federal legislative jurisdiction because it captures any interprovincial environmental changes. For example, under this definition a project could be a designated project on the basis of greenhouse gas emissions – but greenhouse gas emissions don’t fall under a federal legislative authority under section 91 of the Canadian Constitution.

However, the entire Court concluded the scheme dealing with projects carried out or financed by federal authorities on federal lands or outside Canada as set out in sections 81 to 91 of the Act are within federal legislative authority and constitutional and can be separated from the unconstitutional Designated Project scheme.

5 Key Impacts 

The Court’s reference opinion raises the question: what now, particularly for proponents of prospective projects normally caught by the Impact Assessment Act and those currently undergoing impact assessments. As of October 27, 2023, there were 23 projects in the federal impact assessment process under the Act: 10 in the planning phase, 10 in the impact statement phase; and three substituted (referred to the province to undergo its equivalent assessment process in place of the Act’s process, the result of which is deemed an assessment under the Act) to the Government of British Columbia. Here are five key short and long-term impacts of the Court’s opinion.

Interim Guidance. The federal government’s response will determine the impact of the Court’s opinion, though the substance of the Minister’s response thus far illustrates the significant influence of a Supreme Court of Canada reference opinion. Ultimately, uncertainty continues for all proponents until the federal government amends the unconstitutional portion of the Act. However, on October 13, 2023, the federal Minister of Environment and Climate Change publicly stated that the federal government intends to work promptly to improve the Act, illustrating the influence of the Court’s opinion. In the meantime, in a October 26, 2023 news release the Minister announced “interim guidance” for project proponents, including:

• The Impact Assessment Agency of Canada will assess all projects currently under assessment and provide an opinion on whether they impact areas of federal jurisdiction.
• Proponents are invited to continue information sharing to advance their assessments.
• Consultation with Indigenous Peoples will continue through existing assessment processes as they relate to a clear area of federal jurisdictional responsibility.
• The Minister’s discretionary authorities to designate projects will be paused.
• Consideration of any new designation requests will only resume, as appropriate, once amended legislation is in force,
• The Impact Assessment Agency of Canada remains prepared to provide an opinion on whether a full impact assessment is warranted and to invite proponents to collaborate on an assessment.
• The three regional assessments currently underway will continue because they seek only to understand impacts and don’t involve decision-making on specific projects: the Ring of Fire in Ontario; offshore wind in Nova Scotia; and offshore wind in Newfoundland and Labrador.

Consider Another Shot. If the federal government rejected or limited your Designated Project under the Impact Assessment Act, now’s the time to review it and consider whether you can challenge the decision in light of the Court’s reference opinion.

Provincial & Territorial Regimes Still Apply. Remember that provincial, territorial and municipal environmental protection regimes still apply. Federal, provincial, and municipal governments share legislative responsibility for the protection of the natural environment. Each Canadian province and territory has environmental assessment legislation. These provincial and territorial impact assessment processes have similar objectives to those of the federal Act; however, they could be triggered by different activities. In addition, while provincial and territorial impact assessment processes are led by the relevant provincial or territorial authorities, they will typically require the involvement of relevant federal authorities to inform the terms and conditions applicable to any final impact assessment.

Act Amendments. Get ready for amendments to the Act. We expect the federal government will carefully focus the amendments to ensure both its purpose and effects are firmly within federal jurisdiction. This will likely include narrowing the Act’s scope. The federal government has also stated it will incorporate the Court’s call for greater collaboration between the federal and provincial governments.

Jurisdictional Fights. This is yet another recent Supreme Court of Canada reference opinion on constitutional jurisdiction over the environment – and could be a catalyst for even more. In 2021, the federal government successfully defended the federal Greenhouse Gas Pollution Pricing Act (GGPPA) in Reference Greenhouse Gas Pollution Pricing Act from a provincial constitutional challenge based on jurisdiction over the environment. But the outcome in that case differed: the Court concluded the Greenhouse Gas Pollution Pricing Act is constitutional. The Court’s opinion hinged on the fact that the GGPA only creates an emission pricing floor so provinces and territories can still create their own polices to meet emission reduction targets. And if the federal government couldn’t address greenhouse gas emissions on a federal level there would be irreversible consequences on the environment, human health and safety. However, as climate change goals continues to drive environmental legislation, and the impacts of the legislation on Canadians increases, there could be more provincial challenges to federal environmental legislation and regulations as the two levels of government spar over the parameters of their respective legislative authority over the environment. And these challenges will undoubtedly impact how the federal government drafts of environmental legislation in the future.

Please contact your McInnes Cooper lawyer or any member of our Environmental Law Team @ McInnes Cooper to discussyour environmental impact assessment.

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