Impact Assessment Act Deemed Unconstitutional
On May 10, 2022, the Alberta Court of Appeal (“Court”) rendered its long awaited opinion on the constitutional validity of the Impact Assessment Act, RSC 2019 c.28 s-1 (“Act”) and the Physical Activities Regulations (“Regulation”) SOR/2019-285 (collectively referred to as the “IAA”). By a 4-1 majority, the Court determined that both the Act and the Regulation are unconstitutional.
In June 2019, the Act and Regulation were enacted as part of Bill C-69 to revise and replace the existing federal assessment regime under the Canada Environmental Assessment Act, RSC 2012 c.19 s.52 (“CEAA 2012”) to determine the impacts of physical activities (i.e. projects) undertaken in Canada. In addition to the assessment function, the IAA also revised the federal decision making process in relation to projects. After the implementation of the Act, the Regulation was enacted by the federal Cabinet outlining the list of “physical activities” that the Act classifies as “designated projects.”
Falling within the purview of the IAA are activities such as new or expanded oil and gas projects, mine or mill projects, and renewable energy projects that are above threshold sizes or capacities, all of which fall within provincial jurisdiction. However, under both CEAA 2012 and IAA, the effects of such projects on matters within federal jurisdiction (such as migratory birds and fish and fish habitat) are made subject to federal environmental assessment.
While activities of this nature were included in the previous regulatory regime under CEAA 2012, one of the main changes in the new IAA framework is the determination the federal government makes with respect to adverse effects. Previously, under CEAA 2012, the federal Environment Minister determined whether, taking into account proposed mitigation measures, a project was likely to have significant adverse effects within federal jurisdiction. If so, the Minister referred the matter to Cabinet to make a determination whether the adverse effects of the designated project were justified. Under the IAA, this analysis changes to a determination of whether any adverse effects of the designated project are in the public interest. In addition, the number and scope of the factors to be considered in an assessment under the IAA has been significantly expanded from the CEAA 2012 regime.
On that basis, the Alberta Government referred to the Court the question of whether the Act and the Regulation were constitutional. The Court heard arguments from February 22 – 25, 2021.
The Majority, comprised of Chief Justice Fraser, Justice Watson, and Justice MacDonald (with Justice Strekaf concurring), determined that the IAA and the Regulation are unconstitutional.
For the following reasons, the Majority opined that the IAA was ultra vires Parliament:
“Parliament has the authority to legislate to protect the environment. However, it must do so in accordance with the Constitution. For reasons explained in detail in this Opinion, we have concluded that the subject matter of the IAA is properly characterized as “the establishment of a federal impact assessment and regulatory regime that subjects all activities designated by the federal executive to an assessment of all their effects and federal oversight and approval”. When applied to intra-provincial designated projects, this subject matter does not fall under any heads of power assigned to Parliament but rather intrudes impermissibly into heads of power assigned to provincial Legislatures by the Constitution Act, 1867” (para 31-32).
The Majority characterized the subject matter of the IAA as “the establishment of a federal impact assessment and regulatory regime that subjects all activities designated by the federal executive to an assessment of all their effects and federal oversight and approval”. This perspective permeates the opinion and underlies the constitutional analysis of the division of powers in the majority opinion.
Division of Powers vis-à-vis the Environment:
The “environment” is not an enumerated head of power found in either s.91 or s.92 of the Constitution Act, 1867, 30 & 31 Victoria, c. 3 (U.K.) (“Constitution”). Therefore it does not fall within the exclusive jurisdiction of either the federal or provincial government. In Friends of the Oldman River Society v. Canada (Minister of Transport),  1 S.C.R. 3 (“Oldman River”), the Supreme Court of Canada found that when either government legislates for purposes relating to the environment, that legislation must be linked to a specific head of power within its jurisdiction.
The Majority held that the IAA is both an impact assessment and a regulatory regime which establishes a comprehensive impact assessment process to assess effects of certain physical activities carried out in Canada. The Majority was particularly critical of what it saw as the regulatory aspect of IAA, which it viewed as representing a major intrusion into provincial jurisdiction. Alberta did not challenge the application of IAA to activities within exclusive federal jurisdiction (for example, assessing projects on federal lands), but did challenge the application of IAA to projects that involve intra-provincial activities that fall under exclusive provincial jurisdiction.
Canada argued that under the IAA it regulates only “effects within federal jurisdiction” from a designated project as various changes or impacts to the environment, health, social or economic matters from or by a designated project. In rejecting that argument, the Majority held that while these may be effects within federal jurisdiction for the purposes of the Act, that does not mean they fall within federal jurisdiction for the purposes of the division of powers in the Constitution. The Majority states that in the IAA Canada has “self-defined” “effects within federal jurisdiction” but such self-definition cannot give Canada constitutional jurisdiction over intra-provincial projects, including the incidental effects of authorizing an intra-provincial project on a federal head of power unless such effects sufficiently linked to federal jurisdiction.
While there is no argument that projects such as oil sands mine fall squarely within provincial jurisdiction, the Majority does not explain why the effects of an oil sand project on matters clearly within federal jurisdiction (such as Indigenous peoples, migratory birds, or fish) is objectionable under the Constitution.
Scope and Purpose of the IAA:
While the IAA allows for a comprehensive assessment and review of designated projects anywhere in Canada with respect to effects within federal jurisdiction, the Court was focused on the effects of the Act on intra-provincial designated projects. The Majority noted that Provincial legislatures have the exclusive jurisdiction over “intra-provincial” designated projects under several provincial heads of power and that Parliament’s jurisdiction is limited to the consequences of those projects on federal heads of power.
Section 7 of the IAA prohibits the proponent of a designated project from doing “any act or thing in connection with the carrying out of the designated project, in whole or in part, if that act or thing may cause” any of the listed effects. The Majority viewed this as a mechanism by which the Government of Canada can dictate whether a proponent of an intra-provincial project can proceed or not. In essence, the Majority held that the IAA effectively grants the federal government a veto over intra-provincial projects.
The Majority emphasized the principle of federalism and the concept of “subsidiarity”, the principle that “law-making and implementation are often best achieved at a level of government that is not only effective, but also closest to the citizens affected and thus most responsive to their needs, to local distinctiveness, and to population diversity”.
In order to review the IAA for constitutional validity vis-à-vis federalism, the Majority first applied the “pith and substance test” and then classified the subject matter of the IAA under s.91 or s.92 of the Constitution, based on its “dominant purpose.” In its analysis, the Majority also considered the “double aspect” doctrine which recognizes that some fact situations can be regulated from different perspectives – one of which may relate to a provincial power and a federal power. The Majority concluded that, “where an activity, such as an intra-provincial designated project, is otherwise within exclusive provincial jurisdiction, Parliament’s jurisdiction is limited to the environmental effects of that activity on a federal head of power.”
Because Parliament does not have the jurisdiction to regulate intra-provincial designated projects, the Majority rejected the contention that under the IAA Parliament has only regulated what it calls “adverse effects within the federal jurisdiction.” Further, the Majority rejected that the IAA merely had an incidental effect on provincial powers.
Conclusion on validity:
The Majority found that the subject matter of the IAA, when applied to individual projects, falls within several heads of provincial power and that Parliament’s claimed power to regulate all environmental and other effects of intra-provincial designated projects improperly intrudes into multiple provincial heads of power. Thus, the Majority opined that the IAA is ultra vires Parliament and it would not be possible to sever the offending provisions from the Act.
Further, in the event the IAA is ultimately deemed constitutionally valid, the Majority held that the principle of interjurisdictional immunity would apply, thus protecting the “core” of the relevant provincial heads of power including s.92A.
Dissent by Justice Greckol:
In the dissenting opinion, Justice Greckol approached the IAA from a very different perspective than that of the Majority, by focusing on the legislative framework. Justice Greckol held that the IAA was designed to regulate effects within federal jurisdiction caused by designated projects and to authorize such projects when it is in the public interest. Justice Greckol opined that the IAA was a valid exercise of Parliament’s authority to legislate on the matter of the environment.
In support of this notion, Justice Greckol noted Professor Hogg’s conclusion that “the effect of the Oldman River decision is to confer on the federal Parliament the power to provide for environmental assessment of any project that has any effect on any matter within federal jurisdiction”.
Pith & Substance and Classification:
Justice Greckol found that the pith and substance of the IAA is “to establish a federal assessment regime that facilitates planning and information gathering with respect to specific projects to inform decision-making, cooperatively with other jurisdictions, as to whether the project should be authorized to proceed on the basis that identified adverse environmental effects purported to be within federal jurisdiction are in the public interest.”
On the issue of classification, Justice Greckol concluded that each of the effects listed in sec. 7 of IAA fall within a head of federal power. With respect to intra-provincial projects specifically, Justice Greckol concluded that under the IAA these projects are being assessed for the purpose of determining whether the effects within federal jurisdiction caused by the project are in the public interest.
Conclusion on validity:
Justice Greckol found that the IAA was a valid exercise of Parliament’s authority to legislate on the matter of the environment because most of the designated projects involve either activities within areas of federal jurisdiction (under s.91) or, in the case of “intra-provincial” projects (under s.92), have effects on areas of federal jurisdiction.
On the issue of interjurisdictional immunity, Justice Greckol rejected as being too broad Alberta’s argument that the core of s.92A(1) was the ultimate decision over the development of natural resources. The IAA does not impair the ability of the provinces to issue approval permits – rather, in some circumstances, it simply makes issuance of provincial permits issued insufficient.
The Majority opinion is consistent with the majority opinion in Reference re Greenhouse Gas Pollution Pricing Act, 2021 SCC 11 (“GGPPA”). In both decisions, a majority of the Court of Appeal of Alberta issue a strong rebuke to what it sees as significant overreach by the federal government into matters of exclusive provincial jurisdiction. In the GGPPA case, the Supreme Court of Canada disagreed with the Alberta Court of Appeal and it will be interesting to see whether that happens again with respect to the IAA Reference.
Arguably, if the IAA is ultimately found to be unconstitutional based on the Majority’s reasoning, the predecessor legislation CEAA 2012 was also unconstitutional (however, the constitutionality of CEAA 2012 was never challenged in the courts). The Majority never explains why CEAA 2012 was constitutional but the IAA is not.
Finally, it should be noted that the Court’s judgment is an advisory opinion only – it is not legally binding nor has any effect on the applicability of the IAA within Alberta at this point in time (contrary to what Environment Minister Jason Nixon has said publicly).