Challenges To Project Permits And Approvals: The Latest Word From The Courts (Video)

Major projects in all sectors take years of careful planning. Obtaining permits and approvals are a key part of that multi-year process. But even if a project receives all necessary permits and approvals, those permits and approvals may still be challenged in the courts.

The process for challenging an approval depends on how the project is regulated. Projects subject to federal environmental regulation under the Impact Assessment Act or its predecessor, the Canadian Environmental Assessment Act, 2012, are good examples. These approvals require both technical evaluation and broad consultation about the potential environmental effects of a project. Based on that evaluation, the federal government engages in a decision-making process whereby it decides whether (or not) to approve the project.

Federal approval decisions are subject to judicial review by the Federal Courts. If challenged, the courts will review both the decision-making process and its outcome to determine whether the process was fair and the decision is reasonable. The court will also consider whether the decision was made with adequate consultation (and if necessary, accommodation) of Indigenous groups. If any of these criteria are not met, the courts may set the decision aside, and proponents may be required to redo some or all of the regulatory process.

An overview of court challenges to projects

Several recent decisions provide fresh guidance (and timely reminders) about how courts review decisions relating to project approvals. While they all relate to environmental decisions, the principles they articulate apply to all federal decision-making. Here are three key takeaways:

• The Court is not a scientific or technical body.Courts are not experts in science and, absent egregious errors, will not second-guess the scientific or technical findings of expert decision makers.
  
  A recent challenge to Vancouver Fraser Port Authority's proposal to build a new shipping terminal in British Columbia demonstrates how this principle works. The challenger argued (among other things) that in its decision, the Minister of Environment had not established effective conditions to mitigate the project's effects on whales. The Court disagreed. The project conditions were "rationally connected to the likely adverse effects on the whales" and that was sufficient. The Court is not "an academy of science" and it is "beyond a reviewing court's role to assess how well the conditions will work"¹.
• Only actual decisions may be reviewed.Environmental approval processes involve many steps, including planning and assessment phases. Courts lack jurisdiction to review each of those steps. They only review decisions that affect "legal rights, impose legal obligations, or cause prejudicial effects". On this basis, courts have long held that recommendation reports prepared under the Canadian Environmental Assessment Act, 2012 are not amenable to review. These reports assist the Minister (or the Cabinet) in making decisions, but do not carry independent legal consequences².
  
  The Federal Court of Appeal recently applied this guidance to a report made under the Impact Assessment Act. The Court concluded that a regional assessment and report of offshore oil and gas exploratory drilling in Newfoundland and Labrador was not amenable to review. Since the assessment and report did not involve decision-making, they could not be judicially reviewed³.
  
  The Court also clarified that there are rare circumstances where an assessment report may be amenable to a challenge. These types of reports are often legally required pre-requisites to decision-making in environmental review schemes. A decision-maker must have and consider these reports before deciding on an approval. There may be circumstances in which a report is so defective that it does not constitute a "report" under the environmental review legislation. In that case, "a necessary pre-requisite" for a decision is missing and the subsequent decision may be vulnerable to invalidation⁴.
• The Court does not elevate form over substance.When a court reviews an approval decision made based on thousands of pages of evidence, it is supposed to rise above the form and emphasize the substance. The reviewing court's role is to ensure that the approval authority considered key issues before it, but the decision-maker's reasons for its decision do not need to be perfect.
  
  In a recent case, the Federal Court of Appeal recently reviewed whether a federal Minister and his Cabinet had adequately considered the environmental effects of a proposed railway project. The Minister had conducted a lengthy examination of air quality effects, but his decision and Cabinet's approval decision had, in some instances, used different nomenclature to describe these effects than the underlying report that the decision was based on. In the Court's view, these differences were legally irrelevant. The Minister had clearly considered the project's potential effects in his decision. The Court therefore upheld the approval, reversing a lower court decision that had set the approval aside. The Court noted "the danger that comes with undue emphasis on the labels or terminology used". What matters is the substance of the decision, not its form⁵.

Understanding the Court's role on judicial review can help inform key decisions in approval and permitting processes—and help proponents assess which types of risks may materialize into issues down the road. The best way for project proponents to protect themselves from these risks is to do whatever they can during the process to ensure an approval is robust and "litigation ready". Keeping judicial review risks in mind, and preparing for them, will help the decision withstand a judicial reasonableness review.

Footnotes

1 Georgia Strait Alliance v. Canada (Environment and Climate Change), 2025 FC 54, para. 150.

2 Mikisew Cree First Nation v. Canadian Environmental Assessment Agency, 2023 FCA 191 at para. 107.

3 Sierra Club Canada Foundation v. Canada (Environment and Climate Change), 2024 FCA 86, para. 49.

4 Ibid., para. 60-61; Northback Holdings Corporation v. Canada (Environment and Climate Change), 2025 FCA 31, para. 8.

5 Canadian National Railway Company v. Halton (Regional Municipality), 2024 FCA 160, para. 72.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.