A Ripple or a Wave? the Supreme Court’s Opinion on the Impact Assessment Act

This is a brief summary of the Impact Assessment Act reference case by Anna Johnston, counsel for the intervenors West Coast Environmental Law Association and Nature Canada on the file. You can find a more detailed analysis here.

On October 13, 2023, the Supreme Court of Canada released its opinion on the constitutionality of the federal Impact Assessment Act (IAA), with a 5-2 majority, led by Chief Justice Wagner, finding that the main scheme of the Act is unconstitutional.

West Coast intervened in the case along with Nature Canada, so we had a front-row seat to the arguments. In this blog, we describe what the decision says, and what the consequences are for federal impact assessment and beyond.

What the majority said

The majority identified two schemes in the Act:

1. A comprehensive impact assessment regime that applies to major projects that are designated in regulations or by the Minister (the “designated projects” scheme); and
2. An environmental assessment process for projects on federal lands and projects outside Canada (sections 81-91 of the IAA).

It found no problem with the latter scheme – only the “designated projects” scheme is unconstitutional. (I should note that there is a third scheme in the Act, the provisions governing regional and strategic assessments. Since the Court took no issue with those provisions, they are presumed to be intra vires.)

The majority rejected the notion that natural resource projects fall within an enclave of provincial exclusivity and confirmed that Parliament has jurisdiction to enact laws to assess and regulate projects from a federal perspective, so long as the regulation of federal matters is the law’s dominant characteristic.

It noted that many projects have both a federal and a provincial aspect. For example, mines have activity aspects (e.g., mining) as well as effects aspects. Because the provinces have constitutional authority over natural resources, they have “activity jurisdiction” over mining projects. But when mines have significant impacts on federal matters, such as fisheries, the federal government has “resource jurisdiction” related to those effects. In that way, the provinces and federal government can have shared jurisdiction over a project, but each must stay in their constitutional lane.

According to the majority, the IAA unconstitutionally permits federal officials to veer too far into the provincial lane. There are four reasons why:

1. The definition of federal effects. The IAA defines “effects within federal jurisdiction” as including changes to fish and fish habitat, aquatic species, migratory birds, federal lands, interprovincial environmental effects, impacts resulting from any change to the environment on Indigenous peoples, and changes to Indigenous peoples’ health, social or economic conditions. The majority found this definition to be overly broad. In its reasons, it highlighted three specific issues:

• • Greenhouse gas (GHG) emissions: The majority called the assertion of jurisdiction over all interprovincial environmental effects “astonishing” in its breadth because it “captures an unlimited range” of interprovincial effects (at paras 183-184). While Parliament has authority to enact minimum price stringency for GHGs, Canada’s lawyers hadn’t made the case for how Parliament could have authority to regulate all GHGs.
  • Indigenous peoples: Similarly, the majority found this definition to be overly broad. It held that Parliament’s authority is focused on the protection and welfare of Indigenous peoples, whereas this definition captures trivial and non-adverse impacts that go beyond that focus. (See this University of Calgary blog for a more detailed analysis of this aspect of the opinion).
  • Migratory birds: The majority also questioned the scope of Parliament’s power over migratory birds. It confirmed that federal jurisdiction extends to matters covered by the 1916 Migratory Birds Convention (and empire treaty), but questioned whether that authority extends to matters covered by amendments to the Convention made by Canada and the US after the patriation of our Constitution in 1982.

2. The main prohibitions. Section 7 of the Act prohibits proponents of designated projects from doing anything connected to carrying out a project if it might cause federal effects. This prohibition lasts until either the Impact Assessment Agency of Canada (“Agency”) determines that an impact assessment is not required, or the Minister or Governor in Council says that the federal effects are in the public interest. If the Minister or Governor in Council decides that the federal effects are not in the public interest, the prohibition stands.The majority found section 7 to be problematic because it doesn’t just prohibit harms to areas of federal jurisdiction, it prohibits any changes to areas of federal jurisdiction. While I would argue (indeed, did argue in this reference) that the Constitutional heads of power do not distinguish between harms, benefits or other changes, it is not yet clear whether confining federal jurisdiction to prohibiting harms rather than any changes will have many practical implications.

   It is also unclear whether federal authority extends to prohibiting individually trivial effects that may contribute to cumulative effects. In the Yahey case, the BC Supreme Court found that the Province of British Columbia had infringed Blueberry River First Nations treaty rights by allowing widespread cumulative effects of industrial development in Blueberry’s territory, which suggests that governments should and sometimes must pay attention to so-called trivial effects.

3. The screening determination. During the initial planning phase, the IAA requires the Agency to determine whether an impact assessment of a designated project is required. Currently, that decision must be based on a number of factors, including the possibility that the project might cause adverse federal effects. The majority held that the potential for federal effects must be a more prominent consideration, not just one among many other equal ones.

4. Decision making. The final decision under the IAA is whether the project’s federal effects are in the public interest in light of the assessment report and five enumerated factors. For the majority, this public interest decision is “constitutionally vulnerable” for two reasons: first, some of the enumerated factors to consider are framed in relation to the project as a whole (e.g., the extent to which it helps or hinders Canada’s ability to meet its environmental obligations and climate commitments). Second, some of the factors go far beyond federal effects (e.g., the extent to which the project fosters sustainability writ large).The majority went on to find that federal officials can consider non-federal benefits of projects when deciding whether to approve adverse federal effects, but they cannot consider non-federal adverse effects.

   The majority’s logic is problematic. As I note above, the Constitution does not differentiate between impacts and benefits – a matter is a matter whether it is positive or negative. If it is constitutionally permissible for Parliament to consider the positive aspects of a matter (such as economic benefits) when deciding whether to allow adverse impacts on an area of federal jurisdiction, it must also be permissible to consider the negative aspects of that matter.

   Environmental, social, economic and health effects do not tend to fall into neat silos. For example, mines often use tailings ponds to store their waste rock. Often, these tailings ponds were once fish-bearing lakes. Turning a lake into a tailings pond takes work, which requires workers, who need to be housed somewhere. For mines built close to communities, workers are often housed in town rather than worker camps. Influxes of hundreds or thousands of workers and their families into communities can strain local services like healthcare and housing.

   Those are all “provincial” matters, but they are also the consequences of a federal decision to allow the proponent to impact fisheries. To say that a federal decision maker cannot consider the spinoff effects of its decisions is not just irrational, it also encourages officials to either ignore the repercussions of their decisions, or not be transparent about how decisions were made.

Affirmations from the Court

It is important to note that, despite the declaration that the designated projects scheme is unconstitutional, the majority did confirm important aspects of federal jurisdiction.

1. The federal government has the authority to enact environmental assessment regimes. This principle was already well-recognized by the courts, but it’s a helpful reiteration from the highest court, especially in this era of provincial leaders lighting their hair on fire every time the federal government pursues an environmental regulation.

2. The jurisdictional threshold for triggering assessments is low. The majority upheld the project list approach to designating which projects are subject to the Act. Under the project list approach, projects are listed in the Physical Activities Regulations according to type and size – any project listed in the regulations that are at or above the defined thresholds are considered “designated projects.”

   The majority held that federal effects need not be known at the time an assessment is triggered, and that federal authorities can trigger assessments based only on the potential for impacts on areas of federal jurisdiction. This finding allows Parliament to considerably expand the projects listed under the Physical Activities Regulations.

3. The scope of what can be considered is broad. The majority held that federal officials can consider all the factors currently listed in the IAA, including climate and sustainability, in impact assessments. While authorities are more limited in what they can consider when making final decisions, considering a broad scope of factors during the assessment will allow for greater transparency about the range of impacts and benefits that projects pose.

Next steps

Federal officials have said that the government will make minor amendments to bring the IAA into conformity with the majority’s opinion, likely in spring 2024. Those amendments are to be proposed through a new ministerial working group established to investigate how to make impact assessments and regulatory permitting processes more efficient.

In the meantime, the federal government has confirmed in interim guidance that the IAA will continue to remain in force. The Impact Assessment Agency will review current impact assessments and, where there is clear federal jurisdiction for each, projects that have already entered into assessments under the Act will have to remain in those processes.

As for regulatory certainty, in this current political climate any kind of certainty regarding environmental and climate policy seems unlikely. Ideally, provincial premiers will seek to cooperate with the federal government in future impact assessments rather than try to force Parliament out of the environmental picture, but that ideal future may be a long way away.