Tailoring Federal Assessment Processes to Advance Sustainability: A Reflection on the Supreme Court of Canada’s Opinion in the Impact Assessment Act Reference
October 27, 2023
On October 13, 2023, the Supreme Court of Canada (“SCC”) released its opinion in a reference case that examined the constitutionality of the federal Impact Assessment Act (“IAA”) and Physical Activities Regulations. The opinion of the majority—shared by five of the seven Supreme Court Justices who considered the case—is that the impact assessment process established by the IAA and Physical Activities Regulations is unconstitutional in part.
Sections 91, 92, and 92A of Canada’s Constitution Act, 1867 divide law-making authority between Parliament and the provinces. This distribution of legislative powers is known colloquially as the “division of powers”, and it provides the fundamental framework for governance by Parliament and the provinces within Canada’s federal system. Importantly, neither Parliament nor the provinces have exclusive constitutional authority to make laws concerning the environment. Several of the matters that fall under Parliament’s authority have environmental aspects, such as the sea coast and inland fisheries. Likewise, there are environmental aspects of many matters that fall under provincial authority, such as the development, conservation, and management of non-renewable natural resources within a province. In practice, federal and provincial areas of authority often intersect, which makes it important for law-makers to draw clear lines when necessary. But, arguably, it is even more important for Parliament and the provinces to work cooperatively to govern in the public interest from within their respective spheres.
Many of the proposed projects that trigger environmental impact assessment and decision-making processes throughout Canada have federal and provincial aspects. For example, proposed metal and mineral mines implicate provincial jurisdiction over the development of non-renewable natural resources, and they typically implicate federal jurisdiction over fisheries as well, because tailings disposal and effluent treatment facilities usually impact local fish and fish habitats.
The question at the heart of the reference case was not whether the federal government can enact environmental impact assessment laws to inform and guide federal regulation and decision-making. Canada’s courts answered that question in the affirmative more than thirty years ago, and the SCC reiterated that settled law in its recent opinion.
The real question at the heart of the reference case was whether the impact assessment regime established under the IAA and Physical Activities Regulations misconstrues the scope of the federal government’s power to regulate and make decisions about environmental matters that cut across federal and provincial spheres of authority. To that question, Chief Justice Wagner, writing for the majority, said, yes—aspects of the IAA and Physical Activities Regulations interpret federal authority too broadly and overstep the lines that define and protect the provincial spheres.
This conclusion clearly has ramifications for federal environmental impact assessment, but it does not mean that the federal government has to scrap the IAA regime entirely. Because this was a reference case, the SCC’s opinion did not have the legal effect of striking down the IAA or Physical Activities Regulations in whole or in part. In effect, the opinion presents a constitutionally-minded editor’s mark-up of the legislation. The opinion identifies the aspects of the regime that are unlawful from a constitutional point of view, and it affirms the validity of aspects that are constitutionally sound. In doing so, it provides valuable guidance that the federal government can now use to amend and tailor its impact assessment laws to ensure a proper fit for the contours of federal authority under Canada’s Constitution.
Implications for Sustainability-based Assessment
One of the stated purposes of the IAA as it currently stands is “to foster sustainability”. Amongst scholars and practitioners of environmental impact assessment law in Canada, the IAA was understood by many to be a step towards “next-generation” assessment and decision-making processes, with the “next generation” being characterized by processes that are designed to advance sustainability. In next-generation assessment and decision-making, we move beyond asking if the harmful environmental, cultural, human health, and socioeconomic effects of proposed projects can be deemed “acceptable” or “justifiable”, and we ask instead if proposed projects will make net positive contributions to sustainability. Although the IAA as it currently stands does not take us quite that far along the path to next-generation decision-making, it moves us in the right direction by adding sustainability considerations to the assessment and decision-making processes it establishes.
The SCC’s opinion in the IAA reference will likely have ramifications for the sustainability-based assessment and decision-making aspects of the IAA regime. The opinion of the majority says that the federal government’s pursuit of sustainability is “laudable” (paragraph 3), and it accepts that sustainability considerations can be taken into account in impact assessments (paragraph 172). Nevertheless, the Justices are clearly concerned by the role that sustainability plays in impact assessment decision-making under the IAA as it is currently written.
Under the IAA as it currently stands, when federal decision-makers decide whether to reject or approve proposed activities that have undergone impact assessments, they must consider the extent to which the activity contributes to sustainability. The opinion of the majority in the IAA reference says that this requirement risks misdirecting federal decision-makers in cases where impact assessment decisions should be focused narrowly on the impacts within federal jurisdiction of “activities that are primarily regulated by the provinces” (paragraph 173; emphasis added). In the majority’s view, the overall sustainability of a proposed project could be a key decision-making factor when the project would fall primarily within federal jurisdiction, as would be the case with an interprovincial pipeline or railway (paragraph 173). However, when the proposed project would fall primarily within provincial jurisdiction, sustainability-based decision-making as currently envisioned by the IAA “shifts the dominant thrust of the decision away from the acceptability of adverse federal effects and directs it, instead, at the wisdom of proceeding with the project as a whole” (paragraph 174). The majority’s comments on this point emphasize that, in cases involving proposed projects that fall primarily within provincial jurisdiction, federal decisions should not be based on “the wisdom of proceeding with the project as a whole”; instead, federal decisions should be focused narrowly on specific impacts that fall within federal jurisdiction. The opinions of the majority and dissent also imply strongly, without stating explicitly, that the federal government’s power to authorize or prohibit impacts within federal jurisdiction should not be used improperly to block projects that fall primarily within provincial spheres of authority.
The passages of the opinion that address sustainability-based decision-making introduce some significant new judicial commentary on the limits of federal authority to approve or reject proposed activities. How the federal government will amend the IAA and Physical Activities Regulations in light of the opinion remains to be seen; however, as East Coast Environmental Law monitors the law reform process, we will work to ensure that Parliament does not abandon the sustainability-based aspects of the regime that are clearly within its constitutional authority.
The conclusion of this reference case highlights an important reality of environmental impact assessment law in Canada, which is that neither Parliament nor the provinces can act alone to implement comprehensive environmental impact assessment and decision-making processes. Inevitable intersections between federal and provincial jurisdiction mean that we need complementary and mutually-reinforcing processes, federally and provincially, that are designed to enable sustainability-based decision-making in the public interest.
Notably, the Government of Nova Scotia recently initiated a “modernization” of its environmental assessment process, and East Coast Environmental Law has been calling for changes that will move the process closer to being a next-generation regime. We anticipate that the coming months will bring opportunities for environmental impact assessment law reform advocacy at both the federal and provincial levels, and we look forward to the work that lies ahead.
Tina Northrup
Staff Lawyer
