On May 10, 2022, the Court of Appeal of Alberta (Court) issued its opinion in Reference re Impact Assessment Act (2022 ABCA 165) whereby the majority of the Court determined that the federal Impact Assessment Act, SC 2019 c. 28 (IAA), and associated Physical Activities Regulations, SOR/2019-285 (Regulations), are unconstitutional. In doing so, the Court provided its opinion on two questions:
- Is Part 1 of An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts, S.C. 2019, c. 28 unconstitutional, in whole or in part, as being beyond the legislative authority of the Parliament of Canada under the Constitution of Canada?
- Is the Physical Activities Regulations, SOR/2019-285, unconstitutional, in whole or in part, by virtue of purporting to apply to certain activities listed in Schedule 2 thereof that relate to matters entirely within the legislative authority of the Provinces under the Constitution of Canada?
The IAA was originally introduced in February 2018 in the highly controversial Bill C-69 (see Blakes Insights: Federal Government Overhauls Canadian Environmental Legislation; Federal Government Passes Controversial Environmental Legislation and Tanker Ban; and A Rocky Road: How Environmental Concerns Are Influencing the Face of Mining). The federal legislative scheme provides for the assessment of environmental, as well as social, economic, cultural and heritage impacts, of certain physical activities carried out in Canada. The range of physical activities includes "designated projects" as determined by the federal Minister of the Environment under the IAA or by the Governor in Council under the Regulations. Within the IAA are unilaterally expandable schedules as to the types of construction, development, business, commerce and other intra-provincial activities that may be deemed designated projects.
The IAA and the Regulations authorize Parliament to require federal oversight and ultimate approval of intra-provincial activities that are otherwise within provincial jurisdiction, based principally on the environmental effects of those projects. The majority concluded that this aspect of the IAA unduly extends the scope of the federal government's powers to matters that are reserved to the provinces under the Constitution, including the right of Alberta and Saskatchewan to manage their natural resources. In determining the constitutionality of the IAA, the subsidiarity principle which holds that power ought to be distributed to the level of government best suited for addressing a particular societal objective, weighed heavily in the Court's opinion. The majority stated that the environment is not a superordinate subject matter that transcends or trumps the division of powers and, where doubt arises about classification of impugned legislation, the subsidiarity principle favours provincial jurisdiction.
The majority identified multiple instances of federal jurisdictional overreach under the IAA. Under the IAA, the federal government can prohibit a designated project that is within provincial jurisdiction from proceeding notwithstanding that no federal permit is otherwise required for that project. While the extension of the federal government's authority over such projects is asserted on the basis that they nevertheless have "effects within federal jurisdiction," the Court found that Parliament's definition of such effects included ones that were not within federal jurisdiction when applied to intra-provincial designated projects. In the opinion of the majority of the Court, the resulting encroachments into provincial jurisdiction rendered the entirety of the IAA and the Regulations ultra vires Parliament and thus invalid.
The majority stated that although the IAA's primary target is fossil fuel projects, other intra-provincial activities such as light rail transit systems, flood control projects, wind farms or solar farms may similarly fall within the IAA's purview. Thus, the Court reasoned that the IAA subjects all provincial industries, including a province's development of its natural resources, to federal regulation and gives Parliament an effective veto power that undermines the division of powers under the Constitution.
The lone dissenting opinion of the five-member Court panel was that, under the IAA, the federal regulation of intra-provincial designated projects is appropriately limited to those that may have effects upon areas of federal jurisdiction. The dissenting opinion stated that the project-based federal environmental assessment regime created by the IAA and the Regulations specifically targets effects within federal jurisdiction and the IAA should therefore be found to be appropriately within the scope of Parliament's constitutional authority. The dissent opined that the IAA is expressly designed to permit and encourage inter-jurisdictional cooperation in the conduct of assessments and sharing of information across agencies and governments. The dissenting justice called for federal and provincial legislatures to work in concert in a manner consonant with the double aspect doctrine, cooperative federalism and the presumption of constitutionality.
Both the majority and dissent focused solely on the effect of the legislative scheme as it relates to intra-provincial projects. The Court did not consider the application of the IAA to projects that are squarely within federal jurisdiction, such as interprovincial pipelines.
Although the majority opinion creates some uncertainty with respect to the future application of the legislative scheme to provincially-regulated natural resource projects, it is important to note that this opinion is advisory in nature, so there are no legal or practical effects on the current application of the IAA and the Regulations.
Shortly after the Court's opinion was released, Ministers Lametti and Guilbeault jointly announced the Government of Canada's intention to appeal and reiterated support for the legislative scheme. Accordingly, the Supreme Court of Canada will be the final arbiter as to the constitutionality of the IAA and the Regulations. We will continue to monitor and report on developments in this area.
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