The Canadian government’s environmental assessment process is in disarray.
On Oct. 13, the Supreme Court of Canada ruled in a 5-2 decision that most of Ottawa’s controversial Impact Assessment Act (IAA) was unconstitutional and far outside the government’s authority to assess and make decisions on major resource and infrastructure projects
Only 10 out of 188 sections in the Act — passed in 2019 — were deemed valid. And that was a narrow section of the IAA concerning projects on federal land and that are federally financed.
The ruling has a major impact in restricting the way Ottawa regulates mining, power plants, highways, and other large-scale infrastructure projects. It reduces the government's ability to delay or say no to projects within a province. Besides infringing on provincial authority, the court deemed the process too vague and held no defined procedural timelines.
It was a crushing back-to-the-drawing-board blow that forces Ottawa to rewrite a good chunk of one of the government’s signature pieces of legislation.
“The message is pretty clear,” said Maureen Killoran, national co-chair at Olser, Hoskin and Harcourt LLP. “It tells the (federal) government to stay in its own lane.”
The Supreme Court’s opinion has legal tongues wagging and the Macdonald-Laurier Institute rounded up four experts on the subject in a Dec. 15 webcast to provide insight on what the rocky legislative road might look like to develop natural resource projects in Canada.
The ruling surely sets the bar for any revisions to the Act that may come down from Ottawa.
To what degree federal Environmental Minister Steven Guilbeault respects the Supreme Court’s decision, and substantially revises the IAA, remains to be seen.
The court’s decision was only an opinion, but it offers a preview of how a formal legal challenge might go. And it may set the table for resource-rich provinces like Alberta, Saskatchewan and Ontario to challenge a raft of other significant federal clean energy and environmental legislation.
Killoran called it the most important decision on Canadian environmental regulation in decades. It restores balance to federal and provincial powers in determining the basis for how major resource projects can proceed, she said.
“This is a really big deal for federalism and in particular for the provinces.”
Moderator Heather Exner-Pirot, a director with the Institute, pointed out the mining industry is closely scrutinizing the future implications, based on the volume of projects to be assessed in this sector.
While Ottawa amends the legislation, Ontario has already pressed ahead with a formal challenge. Queen’s Park seeks to capitalize on a window of opportunity to totally get rid of the Act, which has delayed various Ontario projects, including the stalled Ring of Fire mining development in the James Bay region.
With the IAA, Ottawa took a holistic approach to examine the socio-environmental impacts of resource projects.
While stepping on the province’s toes, the court determined the Act was being regulated too broadly. Decisions were being based on concepts like sustainability, sex and gender, and other elements rather than established, well-defined areas of federal authority.
With no clear timelines provided, critics viewed the IAA as creating an over-regulated regime that prevented major projects from advancing in a timely fashion.
Killoran said regulatory uncertainty can be the “death of a big project” and stifles investment in multi-billion-dollar projects. Industry was in a place where it was not certain on the federal government's criteria to step in.
She suggests Ottawa must totally rethink the legislation.
Martin Ignasiak, a partner at Bennett Jones LLC, said the IAA was a flawed scheme in capturing privately or provincially funded projects on provincial lands that do not require the use of federal power.
The court’s decision “drove a truck through the idea that the federal government can come up with a list of projects and impose legally binding prohibitions on them because it's a large-scale project," he said.
The ruling makes it clear that the federal government should exercise its regulatory powers where it has jurisdiction, such as fisheries and species at risk.
The purpose of assessment legislation is all about getting projects approved in a timely and environmentally way, not about being “the panacea of all the world’s problems."
“We're not going to solve gender issues; we're not going to solve all of the incredible challenges faced by Indigenous communities by trying to deal with those in the context of the review of a specific industrial or natural resource project. So we have to get the focus of these assessments right.”
For years, he said, that approach has chased off investment on “strategically important" Canadian projects that maintain our standard of living.
Respecting the Supreme Court's ruling will deliver good public policy that reduces intergovernmental duplication, shortens regulatory timelines, and delivers certainty to project developers, he said. Assessments will be focussed and done in a more environmentally responsible way.
Ignasiak stressed Canada has "two orders" of government with different responsibilities. The federal government needs to “step back and consider returning to regulating the areas it’s responsible for.”
With the current IAA not longer in effect, Ignasiak said the decision has produced some real results since October. There are resource projects that are proceeding today, likes mines and other facilities, that couldn’t previously.
The big question is what happens if Ottawa comes back with only minor changes to the IAA that the provinces and industry do not find acceptable, or is not in keeping with the Supreme Court’s decision?
Killoran said count on more conflict between governments that end up in the courtroom.
She wonders how much politics will play a role in Ottawa’s upcoming amendments?
“I worry a little bit that there is conflation between politics and policy here. If they come back with minor superficial amendments, is that proper policy or is that playing to the politics of an issue when an election is is maybe a year or two in our future?”
Lamenting the court decision was Jesse McCormick, senior vice-president of innovation, research and legal affairs at the First Nations Major Projects Coalition.
He had previously worked on policy for former federal environment minister Catherine McKenna when the IAA — in the form of Bill C-69 — was first crafted.
McCormick felt the IAA offered a “real step forward for First Nations” with mandatory consideration of Indigenous rights and knowledge, and recognition of their governance bodies as part of a project’s impact. It made Indigenous project advisory committees required.
The Act provided some “real gems and opportunities for First Nations.”
But there's room for improvement in the revised version.
To expedite projects, he suggested an "Indigenous accelerator mechanism" in cases where there's alignment between a project developer and an Indigenous partner. That way some of the IAA requirements can be pushed aside since the Indigenous community is satisfied with a project's impact.
He said not much rewriting needs to be done to get the Act in line with the Constitution. The IAA itself and the project designation process were both valid, the decision-making processes were not.
The key is finding that "sweet spot" that respects provincial authority, addresses sustainability issues, while spurring economic development.
Martin Olszynski, associate professor of law at the University of Calgary, said the court decision isn't much of a game-changer. A federal committee has already been at work, examining ways to streamline the assessment process.
He called the court’s decision a “curt and incomplete analysis” that leaves many questions unanswered, such as Ottawa’s jurisdiction over Indigenous people and any material changes that may take place on their lands.
It’s up to the feds, Olszynski said, to tighten up its project screening decisions and do a better job of acting in its jurisdictional areas, such as Indigenous people, fish populations and habitat, migratory birds, and species at risk.
“We’ll have to see where Parliament lands.”
Olszynski suggested that once Guilbeault’s amendments are passed, they should be directly referred to the Supreme Court.
“That is the fastest way to bring certainty to whatever it is that they cook up in the long run.”