The Significance of the Reference re Impact Assessment Act, 2023 SCC 23

On October 13, 2023, the Supreme Court of Canada (the “SCC”) released their decision on the Reference re Impact Assessment Act (the “IAA”). This reference, as the name suggests, dealt with the constitutionality of the government of Canada’s Bill C-69, an act to enact the Impact Assessment Act, among other things. Simply put, the IAA, in its proposed form, would have allowed the federal government to review designated projects which have any impact on the environment whatsoever, and veto the projects which do not meet with their approval.

Despite the federal government having the necessary political support to pass Bill C-69, many of Canada’s provincial governments, including Alberta, Ontario, and Saskatchewan have taken the position that Bill C-69 goes beyond the legal jurisdiction of the federal government.

As a result, the government of Alberta challenged Bill C-69, and the Alberta Court of Appeal agreed that the legislation, in its current form, is unconstitutional. Although receiving a favourable decision from the Alberta Court of Appeal, the final determination on the constitutionality of Bill C-69 would be decided by the Supreme Court of Canada. After reviewing both the written and oral submissions by the federal government, the province of Alberta, and various intervenors such as other provincial governments and indigenous groups, the Supreme Court of Canada largely upheld the decision of the Alberta Court of Appeal insofar as much of Bill C-69 is to be considered unconstitutional.

The Alberta Court of Appeal

In a four-to-one decision by the Alberta Court of Appeal, the Court determined that Bill C-69 was unconstitutional, or said another way, ultra-vires the powers of the federal government. In non-legal terms, the essential element of the decision was that the powers granted to the federal government by Bill C-69 were too broad and intruded on aspects of governance that are firmly within the jurisdiction of the provincial governments.

The Court of Appeal acknowledged that the “environment” is not a head of power that has been assigned to either Parliament or provincial Legislatures. As a result, no one level of government has exclusive jurisdiction over environmental concerns and instead must link any environmental legislation to an already established head of power, such as the regulation of fisheries, for instance, in the case of the federal government. The Court noted that although Parliament has certain jurisdiction over environmental issues the Impact Assessment Act constitutes “legislative creep” which would, if upheld, substantially erode provincial jurisdiction over the management of public lands, local works and undertakings, property and civil rights, and local or private matters.

The Supreme Court of Canada

The Supreme Court of Canada largely agreed with the Alberta Court of Appeal with respect to the IAA being outside the power of the federal government. Upon analyzing both the purpose and the effects of the IAA and its Regulations, the Court found that they established a two-part scheme: one based on “designated projects”, and another based on addressing federally managed or financed projects on federal lands or outside of Canada. The latter part of the legislation is not controversial as there is no question that Parliament can enact legislation to regulate the federal aspects of projects. That being said, Parliament’s jurisdiction is necessarily restricted where an activity is not within its legislative competence, i.e., outside of its jurisdiction.

The substance of the designated projects scheme of the IAA is to assess and regulate projects in order to mitigate potential effects on the environment, health, society and the economy. The SCC determined that these potential effects are not merely effects within federal jurisdiction and as a result they do not drive the scheme’s decision-making process. In essence, Parliament failed to distinguish between the assessment factors that are within their jurisdiction and those that are not resulting in a situation where the decision maker undertaking an assessment would have the ability to regulate projects in their entirety and not merely where the project involves an area of federal jurisdiction.   

As a result, the Court determined that the entire designated projects scheme was unconstitutional, meaning that the most effective part of the legislation will not be allowed to stand as it is.

Going Forward

Notwithstanding the SCC’s finding that Bill C-69 is unconstitutional, the federal government is not likely to abandon the Impact Assessment Act outright. It is expected that the IAA will be re-drafted to conform to the Constitution. Given that the SCC found that the entirety of the “designated projects” scheme was invalid, it remains unclear if this portion of the legislation will be removed in its entirety, or more likely, whether the list of assessment factors will be redrafted to only relate to heads of power which are firmly within federal jurisdiction.

In any event, the government of Canada must re-draft the IAA substantially, and will hopefully do so in a way which will avoid another lost challenge at the Supreme Court of Canada.