In a somewhat unexpected decision last week, the Supreme Court of Canada deemed that the federal impact assessment scheme under the Trudeau government’s Impact Assessment Act was largely unconstitutional.
It’s a major decision that could have far-reaching consequences for Canadian energy policy and federal-provincial relations more generally.
At question was whether the federal government had the ability to regulate projects carried out or financed by federal authorities on federal lands or outside Canada. The federal government argued that although the regulation of natural resource projects is generally a provincial responsibility, the emissions and environmental effects of such projects means that federal jurisdiction is impacted. The Supreme Court disagreed.
Perhaps one of the most noteworthy sections from the Supreme Court decision came from Chief Justice Wagner: “the defined term ‘effects within federal jurisdiction’ does not align with federal legislative jurisdiction…but rather, goes far beyond its limits.” This overreach from the federal government shows either a lack of awareness from the government lawyers who drafted the legislation, or a political willingness to supersede those limits.
The reaction from the Trudeau government has been telling. Environment Minister Steven Guilbeault has underplayed the decision, saying they will “work quickly to improve the legislation through Parliament.” The idea that the legislation is just in need of a quick fix shows how Ottawa views the problem, and almost guarantees further court challenges on whatever new scheme that it ultimately designs.
Fundamentally, the Supreme Court ruling was not calling for a simple quick fix: it was a wholesale rejection of the law based on the Court’s critique of the federal government’s wrong-headed understanding of its jurisdictional scope. To reject this critique embedded in the decision is to ignore the ruling of the Court.
If the federal government decides to simply ram another constitution-violating regulatory process through Parliament, it won’t merely be an affront to the Court’s decision. The result will be terrible for national unity and Canada overall. In light of the political infighting and regulatory uncertainty, companies will simply look elsewhere to do major investments.
Provinces will blame Ottawa for losing those investments because of a quixotic political crusade, and relations between the provinces and the federal government will continue to degrade. If a revived permitting regime is again taken to court, tensions will again be ratcheted up. This can only end poorly for all involved.
This does not mean that Ottawa needs to retreat on the question of environmental protection, something the Trudeau government’s voting coalition would likely not tolerate. The Court stated that “Parliament can enact impact assessment legislation to regulate (provincially regulated projects) from a federal perspective, so long as the regulation of federal aspects represents the dominant characteristic of the law.”
There will continue to be major projects that will have federal aspects, such as mines on federal lands, impacts on fisheries, and offshore mineral rights. The government can take heart that the regulations it imposes on those projects can be as environmentally stringent as desired, and be well within its sanctioned constitutional limits. There may even be an opportunity to use these narrow areas as an opportunity to model a permitting regime for provinces to emulate.
More generally, the federal government should instead use this opportunity productively to seize the moment and begin to mend its relationships with the provinces that have become so poisonous.
It’s important to note that it’s not just about Alberta. Nine provinces were intervenors in this case against the federal law. Politically, this can be a moment to restore a more productive cooperative federalism as outlined in the Constitution Act. Provinces of course recognize the need for environmental protection, but they also understand the distinct need to speed up permitting to attract investment and build new projects.
Without reform, we invite greater reliance on riskier supply chains in raw materials that we can otherwise provide ourselves, like lithium, cobalt, nickel, and uranium. With reform, by contrast, we can leverage the country’s rich natural resource advantages and turn them into renewed sources of economic activity and greater influence in the world.
The Supreme Court decision wrote that “shared responsibility is neither unusual nor unworkable in a federal state such as Canada.” Environmental issues are not the only ones that require cooperation between our levels of governments, and this decision is a great reminder for governments of the dangers of not working together.
Political differences can and must be worked through to make Canada function, and doing so makes us all stronger.
