The IAA went too far

The Supreme Court of Canada has ruled that the federal Impact Assessment Act is "largely" unconstitutional, delivering a blow to Ottawa's efforts to assess the environmental and social impacts of federally financed ressource and infrastructure projects. But the decision also reaffirmed that the federal government can weigh in on a provincial project if its impact is on a matter within federal jurisdiction.

For the 5-2 majority, Chief Justice Richard Wagner wrote that Parliament had overstepped its "constitutional competence" for two reasons.

 "First, it is not in pith and substance directed at regulating 'effects within federal jurisdiction' as defined in the IAA because these effects do not drive the scheme's decision-making functions," the court ruled. "Second, I do not accept Canada's contention that the defined term' effects within federal jurisdiction' aligns with federal legislative jurisdiction. The overbreadth of these effects exacerbates the constitutional frailties of the scheme's decision-making functions."

Still, the constitutionality of sections 81 to 91 of the IAA, regarding the federal government's right to conduct impact assessments on projects carried out on federal land and impact federal jurisdictions, is upheld.

Dissenting were Justices Andromache Karakatsantis and Mahmud Jamal, who found there was a sufficient federal connection to the scheme and that any particular disagreements could be solved using judicial review on a case-by-case basis.

As a reference case, the ruling is non-binding on the federal government and remains in effect. Even so, Natural Resources Minister Jonathan Wilkinson told reporters that the government will introduce amendments to the Act following the court's guidance.

The court also repudiated Alberta's argument, accepted by the province's Court of Appeal adopted, that it had interjurisdictional immunity from federal oversight or regulation.

"The fact that a project involves activities primarily regulated by the provincial legislatures does not create an enclave of exclusivity," Wagner wrote. "Even a 'provincial' project may cause effects in respect of which the federal government can properly legislate. Accordingly, the inclusion in the Regulations of some 'provincial' projects—in the sense that they involve activities primarily regulated by the provinces—is not itself problematic."

The takeaway for Andrew Leach, a professor of economics and law at the University of Alberta, is that "valid federal legislation applies and can have basically any effect of stopping a project—it's just that this particular piece of legislation goes too far."  

Leach also draws a distinction with the Greenhouse Gas Pollution Pricing Act decision, which held the federal carbon pricing law is constitutional. The substance of the IAA isn't so much about climate change as it is about major projects. Regarding projects directly regulated by the federal government—as opposed to just their impacts—Ottawa can consider a much broader range of considerations. So, while former Alberta premier Jason Kenney referred to the IAA as the "No More Pipelines Act," the court's ruling ensures that federal authority over pipelines remains intact. 

If the federal government can sufficiently narrow the IAA's scope, it can salvage it, says Leach, drawing parallels to the 1992 ruling by the SCC in Friends of the Oldman River. That decision upheld federal authority to conduct an environmental assessment of a major dam built by the Alberta government, while cautioning that federal jurisdiction was not absolute.

"You can't just create a regulatory authority regime over all potential projects that might have an effect on things like greenhouse gas emissions," he says.

Andrew Bernstein, a partner at Torys LLP in Toronto, says, "you can't use federal jurisdiction like fisheries or Indigenous people as a wedge or a hook. If it affects fisheries, you can ask if the impact is too significant to approve the project. You have to stay in your lane, and your lane in respect of a provincially regulated project is much narrower." Likewise, the court dismisses the idea that interprovincial effects fall under federal jurisdiction under the national concern doctrine.

Ultimately, this raises doubts about the federal government's capacity to consider greenhouse gas emissions as a federal impact, Bernstein points out. He adds that Ottawa will need to think carefully about the boundaries of its jurisdiction on that front.

 "The court clarified what was already clear in its carbon pricing reference," says Nathalie Chalifour, a law professor at the University of Ottawa. "There is no writ large jurisdiction to either level of government on greenhouse gasses or climate change generally, but there is clear federal jurisdiction on aspects of climate change and GHG regulations."

Chalifour also notes that the dissent expressed more confidence in the government's ability to apply the IAA in good faith. "The way the legislation has been applied to date has been with a lot of rigour and good faith, and I don't think it's intended to be some sort of colourable attempt to intrude on provincial jurisdiction."

Josh Ginsberg, the director of the Ecojustice Environmental Law Clinic, is also disappointed with the majority decision. However, he finds encouragement in that the court reaffirmed the role of federal environmental assessments. "We are going to be looking for legislation which maintains the federal role in environmental assessment to the maximum extent, and as defined by Supreme Court in this judgment," Ginsberg says. 

During debate on the legislation that became the IAA, then called Bill C-69, the CBA's Environment, Energy and Resources Law Section and Aboriginal Law Section supported using the project list approach to ensure greater certainty when new impact assessments would apply.

"We believe clear criteria and a transparent process should be established to periodically review and update the project list to ensure that projects with clear links to matters of federal interest are appropriately assessed," the submission reads.