On October 13, 2023, the Supreme Court of Canada (SCC) released its advisory decision regarding the constitutionality of the federal government’s environmental assessment (EA) regime in Reference re Impact Assessment Act. A majority of the SCC found that much of the federal government’s Impact Assessment Act (the “Act”) and the Physical Activities Regulations ( the “Regulations”) under the Act are unconstitutional.
In summary, the SCC found that the sections of the Act that deal with projects carried out or financed by federal authorities on federal lands or outside Canada (the “federal undertakings” scheme in sections 81 to 91) are constitutional, whereas the remainder of the Act, which deals with “designated projects” and requires that such projects be assessed with a view to mitigating or preventing their environmental impacts, is unconstitutional.
The SCC’s decision reinforces that, although the environment is an area of shared jurisdiction and the federal government can establish a federal EA scheme, such a scheme must be directed at regulating “effects within federal jurisdiction” rather than be broadly focused on assessing and regulating the environmental, health, social and economic impacts of “designated projects”.
Background
As detailed in our earlier Update, under Canada’s Constitution, the federal government and provinces may only regulate matters falling within specifically listed “heads of power”. Provinces typically regulate environmental issues based on their stated provincial authority over property and civil rights, natural resources, and local undertakings. Federal environmental laws are typically justified under the federal government’s authority over fisheries, international and inter-provincial undertakings, criminal law, and matters of national concern. However, there is often overlap in these subject areas and, therefore, overlap in the regulation of environmental matters between the provinces and federal government.
The Act came into force in 2019 and replaced the Canadian Environmental Assessment Act, 2012 (“CEAA, 2012”). The CEAA, 2012 applied to projects designated in regulations or ministerial orders and, for such projects, required an assessment of environmental effects relating to matters falling within the federal heads of power set out under the Constitution.
The Act adopts a broader approach to federal EAs than its predecessor legislation. There are two systems under the Act: (1) a “designated projects scheme”, and (2) a “federal undertaking scheme”. The federal undertaking scheme applies only to projects undertaken by the federal government, projects funded by the federal government, and projects outside of Canada.
The designated projects scheme applies to projects that are designated by the Regulations or projects that are designated by ministerial order. If a project is designated, the Impact Assessment Agency of Canada (the “Agency”) must perform a preliminary screening of the project to decide whether the Act applies. The Agency has broad discretion in making this determination, based on whether the project would cause an “adverse effect” (including adverse impacts to land, water, air, and socio-economic impacts) on matters that fall within federal jurisdiction.
If the Agency determines a project will cause an adverse effect on a matter within federal jurisdiction, it must conduct an impact assessment of the project including requiring information from the proponent to assess the project’s environmental effects. The Agency then issues an assessment report to the Minister of Environment and Climate Change (the “Minister”), which may also recommend conditions.
Under the Act, the Minister must determine whether any identified adverse effects of a designated project are in the “public interest” and must ultimately issue a decision approving (conditionally or unconditionally) or refusing the project.
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