Background

Canada's Impact Assessment Act (the IAA) of 2019 replaced the Canadian Environmental Assessment Act, 2012. The IAA establishes a federal regime for the assessment of the environmental and other impacts of physical projects and establishes a decision-making process for prescribed activities under federal control.

Under the Physical Activities Regulations (the PAR), enacted under the IAA, designated activities trigger IAA application, including new and expanded mining projects, oil sands facilities, processing activities and projects, oil and gas extraction, and hydroelectric projects and facilities. As of the date of this bulletin, there are 64 assessments currently registered for review within Nova Scotia (whether on federal lands or otherwise).

The application of the IAA  to projects located entirely within provincial boundaries (and not just to projects that would normally be subject to federal jurisdiction) raised questions regarding the constitutional validity of the IAA.

Following reference to the Alberta courts, in an advisory opinion released on May 10, 2022, a 4-1 majority of the Alberta Court of Appeal (the ABCA) determined the IAA  and PAR to be unconstitutional in their entirety. The majority characterized the IAA as intruding “fatally into provincial jurisdiction.”

Majority Decision

The majority decision of the ABCA considered a 1992 Supreme Court of Canada (the SCC) decision in Friends of the Oldman River Society v. Canada (Minister of Transport  (Oldman River)1. In that decision, the SCC notably determined that the “environment” is not a subject matter specifically assigned to either governmental head of power under the Constitution Act, 1867. The SCC also said that federal legislation surrounding environmental affairs must continue to be thoroughly scrutinized to ensure it is not used to quietly undermine the provinces' authority to regulate matters within their jurisdiction.

The ABCA determined that the IAA was effectively the type of legislation anticipated in Oldman River. The majority did not accept the federal government's characterization of the IAA as creating a process of environmental assessment that allows the federal branch to protect against “adverse effects within federal jurisdiction”.2 Instead, they determined that the IAA grants the federal government a unilateral ability to label projects as “designated projects”. This creates a regime that allows any and all “designated” projects to be subject to federal oversight and approval. Such projects could be stalled without contest to decide whether they are in the public interest. Therefore, the majority characterized the IAA as intruding “fatally into provincial jurisdiction” and the proprietary rights as owners of public lands and natural resources.3

The ABCA also found that the IAA instead fell under various heads of provincial power including, but not limited to: development and management of natural resources; proprietary rights as owners of public lands; management of public lands; property and civil rights; and local or private matters4. The ABCA further clarified that where an activity falls exclusively within provincial jurisdiction, the federal government's jurisdiction over that activity is “limited to the environmental effects of that activity on a federal head of power”.5 Consequently, Parliament cannot regulate the entire project when one aspect of its environmental effects falls within federal jurisdiction.

Conclusion

Ultimately, the majority of the ABCA advised that upholding the legislation would result in the “centralization of the governance of Canada to the point [Canada] would no longer be recognized as a real federation”.6 While the opinion is advisory in nature, and therefore not technically binding, in practice it is not usual for governments to ignore a high court's opinion in reference cases. Accordingly, Prime Minister Trudeau has indicated that the government plans to appeal the decision, stating that the IAA delivers on a promise to “reform a broken system” and “restore public trust” in how decisions are made about major developments.

Potential Effects on Nova Scotia Renewable and Green Energy Developments

Nova Scotia has geographic characteristics that make the province attractive for the production of green and renewable energy. The province has committed to drastically reducing its greenhouse gas emissions, and to obtaining 80% of its total electricity from renewable energy by 2030. These commitments necessitate prioritizing renewable energy and green energy projects in the province.

Recently the federal and provincial governments have agreed to expand the mandate of the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) “to include offshore renewable energy development in the Canada-Nova Scotia offshore areas”. This facilitates development of offshore renewable energy, and most notably, offshore wind energy developments, by streamlining regulation. While the enabling legislation to give effect to this change will shed further light in the role of Environment Canada and the IAA in any offshore wind development projects, this announcement fueled a sense of optimism that this announcement will provide the much-needed regulatory certainty that is critical for large energy infrastructure projects in the renewable energy sector in the future. Further, in view of the recent geo-political events and the growing demand for non-Russian energy sources, clean energy developments and projects in Nova Scotia are attracting interest again. Some other notable developments include:

  • The recently revived Goldboro LNG facility proposal for Guysborough County;
  • The acquisition of the Bear Head Energy project in Point Tupper, NS by Buckeye Partners L.P., with plans to develop a large-scale energy production, distribution and export hub that will offer lower-carbon energy solutions, including LNG and hydrogen;
  • The NS government's recent RFP to secure up to five wind and solar energy projects that will supply 10% of the province's electricity on 25-year contracts having the potential to generate over $550 million in construction activity

While these developments are promising for Nova Scotia's clean energy mandates, proponents will require clarity regarding the applicable regulatory regime affecting their projects. While the SCC will eventually determine the fate of the IAA, any decision will take time to be released, leaving the effects of the IAA to be determined through its application in the meantime.

This article originally appeared on The Lawyer's Daily website published by LexisNexis Canada Inc.

Footnotes

1 Friends of the Oldman River Society v. Canada (Minister of Transport), 1992 CanLII 110 (SCC), [1992] 1 SCR

2 Reference re Impact Assessment Act, 2022 ABCA 165, at para 262.

3 Ibid at para 372.

4 Supra note 1 at para 410.

5 Ibid at para 179.

6 Ibid at paras 421 and 423.

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