The Supreme Court Saved Canada

Original Date: October 13, 2023

Author: Tim Platnich

The Supreme Court of Canada (SCC) released its decision in Reference re Impact Assessment Act on October 13, 2023. In my opinion this may be the most impactful decision on Canadian federalism made by the SCC this century.

Canada, as a federal country was on the line. The Impact Assessment Act (IAA) was a wide reaching piece of federal legislation that, if valid, would have allowed the Federal Government to regulate virtually every activity in any province that might have environmental, social, health, gender, or economic impacts now and in the future (for good or for bad) and impacts on indiginous people.

Among other lines of argument, the Federal Government argued that it had jurisdiction to enact such wide reaching legislation based on its 'national concern' branch of the peace order and good government provision (POGG). The Federal Government was successful in using this power in legislating a carbon tax on greenhouse gas emissions. Notwithstanding cautions by the SCC that the use of this power was limited to the special legal circumstances of the carbon tax, the Federal Government took the bit in its mouth and tried to run rough-shod over areas of clear and exclusive provincial jurisdiction. The Alberta Court of Appeal, when it considered the Impact Assessment Act found that this legislation posed an existential threat to Canadian federalism. The Alberta Court of Appeal held that "The IAA involves another existential threat - one also pressing and consequential - and that is the clear and present danger this legislative scheme presents to the division of powers guaranteed by our Constitution and thus, to Canada itself."

The SCC seemed particularly concerned that once the Federal Government designated a project as a 'designated project', any person who took any steps in relation to that project committed a strict liability offence with steep fines attached. This effectively froze any prospective project until the whole assessment process was complete, which would take years. For the uninitiated, a strict liability offence is one where no 'guilty mind' is required. You are guilty if you commit the act even if you didn't intend to do so. The only defence is that you took all reasonable steps to determine whether your actions would breach the legislation or not. No cautious person would take any steps in face of such a consequence.

Of consequence was the Court's repeated reference to exclusive provincial powers including those related to non-renewable natural resources and electrical energy. The inference was very clear that the Federal Government would not be able to override these exclusive areas of provincial jurisdiction using POGG. POGG was successful with the carbon tax legislation because that was a matter of jurisdiction over the environment which is a shared jurisdiction i.e. provinces do not have exclusive jurisdiction in that area. The Federal Government can legislate in relation to the environment provided that it has specific jurisdiction in the area of the legislation. The Court repeatedly used the example of the Federal Government using its powers over fisheries and navigable waters to regulate specifically in those areas where projects, such as mining, were specifically under provincial jurisdiction.

This decision will certainly impact how the Federal Government proceeds in attempting to regulate the oil and gas industry with emission caps and in attempting to regulate how electrical energy is produced. These are matters of exclusive provincial jurisdiction. Yes, the Federal Government can tax emissions with its carbon tax but beyond that, what powers do they have given the reasoning in this case?