On October 13, 2023 the Supreme Court of Canada (“SCC” or “Court”) issued its decision Reference re Impact Assessment Act, 2023 SCC 23, Impact Assessment Act, S.C. 2019, c. 28, s. 1 finding that the federal Impact Assessment Act (the “IAA” or the “Act”) is in part ultra vires the federal government. While the decision is likely welcome by industry and provincial governments, for many Indigenous groups the judgment is highly concerning, as it removes some of the existing protection for their rights and for the environment on which they depend. Given the weaknesses in some provincial environmental assessment processes, the federal legislation has long been viewed as an important layer of protection for Indigenous nations, as well as for critical components of the environment.
The majority of the Court (written by Wagner C.J. with Côté, Rowe, Martin and Kasirer JJ. concurring) found that Act’s pith and substance exceeds federal jurisdiction because:
- The scheme’s decision-making functions are not driven by “effects within federal jurisdiction”; and
- The defined term “effects within federal jurisdiction” is much broader than what it purports to be.
Its nature as a reference case means that there is no specific order striking down the legislation and as a result, the Act remains in force. However, there is no doubt that the IAA will be re-written or replaced. The federal government may seek to move quickly to establish a replacement regime before the next election. If, however, the federal government does not bring in a new federal environmental assessment scheme before the next election and there is a change in government, it is unclear what the next government will do in terms of replacement legislation.
Regardless of what form the new legislation takes, a change in the impact assessment scheme will have far-reaching consequences for Indigenous communities as it relates to ongoing assessments, ongoing or upcoming legislative processes, and the negotiation of agreements with government and industry, among other things. These implications will be more carefully examined in Part 2 of this blog post.
In 2019, the federal government repealed the Canadian Environmental Assessment Act, 2012, S.C. 2012, c. 19, s. 52 (“CEAA 2012”), and enacted the IAA. This took place after a four-year review of the federal environmental assessment process by the Expert Panel for the Review of Environmental Assessment Processes, which recommended a major overhaul of the CEAA 2012. Although the IAA does not necessarily reflect the recommendations of the Expert Panel, the legislative process that led to the Act was nonetheless lengthy, with substantial consultation with Indigenous nations, industry, and environmental groups.
Alberta Court of Appeal Reference
Upon its enactment, Alberta sought to challenge the Act by way of a reference question to the Alberta Court of Appeal. In Reference re Impact Assessment Act, 2022 ABCA 165, a majority of the Court of Appeal (Fraser C.J.A. and Watson and McDonald JJ.A.) concluded that the IAA and the Regulations are ultra vires the federal government and therefore unconstitutional in their entirety.
The Alberta Court of Appeal decision was subsequently appealed to the Supreme Court of Canada, which released its decision on October 13, 2023.
Several Indigenous nations intervened in the reference, and many of them supported the constitutionality of the federal regime. Given the weaknesses in many provincial environmental assessment processes, Federal legislation is part of an important layer of protection for Indigenous nations, as well as for critical components of the environment, including fish, migratory birds, and navigable waters.
Supreme Court of Canada’s Decision
A majority of the SCC held that the major component of the Act exceeds Parliament’s jurisdiction and therefore is unconstitutional.
The Court found that the Act’s pith and substance exceeds federal jurisdiction because, while the Act employs a defined term “effects within federal jurisdiction” as an anchor for the scheme, those effects do not actually drive the scheme’s decision-making functions. The Court finds, for instance, that the screening decision under s. 16(2) is not driven by possible federal effects, but rather an ‘open-ended’ list of factors that are all of seemingly equal importance. Similarly, the Court took issue with the ‘public interest’ decision-making sections of the Act (ss. 61-64), which require either the Minister or the Governor in Council to determine whether the adverse effects within federal jurisdiction are in the public interest. The Court held that factors that must be taken into considering in making this decision permit the decision maker to blend their assessment of adverse federal effects with other adverse effects that are not federal. This thus changes the public interest determination into a decision about whether the Project as a whole is in the public interest (as opposed to a decision about whether adverse federal effects are in the public interest), and this is an impermissible overstep of federal jurisdiction.
The Court also found the defined term “effects within federal jurisdiction”, went far beyond the limits of federal legislative jurisdiction. Specifically referencing s. 2(b)(ii) – the “interprovincial effects” clause – which is defined as “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 Court holds that the breadth of this clause would capture an unlimited range of interprovincial environmental changes. The Court then goes on to hold that because the act creates certain prohibition based on the defined “effects within federal jurisdiction”, this results in an impermissibly broad prohibition.
There was no challenge to the application of the federal assessment regime to projects carried out or financed by federal authorities on federal lands or outside Canada; and the Chief Justice, writing for the majority, affirmed that that component of the Act is intra vires. He also found that that portion of the Act can be severed from the ultra vires portion and upheld. However, he concluded that the other more substantial component of the Act – the application of the federal assessment regime to “designated projects” – is ultra vires. Justices Karaktsanis and Jamal dissent on that point.
Additionally, the Court acknowledged that the environment is not a head of power and that management of environmental effects cuts across many different areas of constitutional responsibility. The Court also noted that Parliament has substantial jurisdiction to regulate environmental effects and that shared federal and provincial responsibility for environmental assessment is workable and a central feature of environmental decision-making in Canada.
It is clear from the majority judgment that Parliament has substantial jurisdiction to regulate the environmental effects of projects that are not on federal land and are not otherwise “federal projects”. But Parliament must exercise its jurisdiction to regulate the environmental effects of projects narrowly, in a manner more precisely focused on effects within federal jurisdiction.
The Court’s judgment also means that provinces will have greater practical power to ensure that projects with large environmental effects can proceed. Most provincial governments (many of whom intervened in the case) and industry groups will likely welcome that result.
Part 2 of this Blog Post will examine more specifically the implications of this decision on Indigenous communities.
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