Court ruling good step in right direction—but federal government won’t change course

In a sharp blow to the Trudeau government’s efforts to stifle energy infrastructure across Canada, the Supreme Court of Canada recently ruled that the Impact Assessment Act (IAA), better known as Bill C-69, is largely unconstitutional. The court’s judgement, if heeded by the federal government, could breathe new life into Canada’s energy sector and help restore provincial autonomy over the development of infrastructure and control of natural resources.

Bill C-69, one will recall, gave the federal government authority over activities, which were previously exclusively within the purview of provincial governments, including the construction of oil pipelines. But Bill C-69 was not limited to pipelines—in fact, it created a category of “designated projects” that, according to the Trudeau government, impacted areas of federal jurisdiction (the environment, Indigenous issues, economic impacts, etc.). Bill C-69 also set up an expanded system of project reviews that expanded decision-making criteria significantly, particularly to include potential impacts on the climate. All told, Bill C-69 frustrated efforts to build energy infrastructure and raised the level of investor risk for any major project that might fall under the federal government’s “designated project” assessment process.

But the Supreme Court judgment recognizes, and declares constitutionally invalid, the concept of “designated projects” and the overly wide scope of the assessment process. Specifically, in legal speak, that the IAA’s definition of effects within federal jurisdiction “dilutes the focus at the key decision‑making junctures, shifting it away from federal aspects and encompassing aspects that are within provincial jurisdiction” allowing for the possibility of “impermissibly broad prohibitions.”

On the arbitrary nature of the assessment process, the Court writes, “The [assessment] scheme requires the decision maker to consider a host of factors but does not specify how those factors are to drive the ultimate conclusion. The scheme’s decision‑making mechanism thereby loses its focus on regulating federal impacts. Instead, it grants the decision maker a practically untrammelled power to regulate projects qua projects, regardless of whether Parliament has jurisdiction to regulate a given physical activity in its entirety.”

The judgement is being celebrated as a major win for Canada’s energy sector, and for those premiers that wish to have control over construction projects and their natural resource endowments. But they should not celebrate too much, too early or too soon, as the Trudeau government seemingly plans to respond to the Court’s ruling with only minor tweaks, and some tightened definitions of the IAA. “Federal Environment Minister Steven Guilbeault said the court’s opinion doesn’t strike down the law and won’t change how federal assessments have been conducted,” reported the Calgary Herald. “He said the government has been cautious in its application.” Instead, Guilbeault intends to “tighten the act” and refine the definition of the “public interest.”

Bill C-69 was antipathy-based legislation, shoved into place despite critics having observed its Constitutionality problems. It was driven by antipathy against Canada’s energy sector, and antipathy toward provincial leaders who wanted to maintain provincial autonomy over their natural resources. The Court’s decision to vitiate most of Bill C-69 is an important positive step forward for rational energy and natural resource development in Canada, but proponents of sound public policy must keep a wary eye on the next steps of the Trudeau government. And provincial governments must hold the Ottawa’s feet to the fire on the Court’s judgment.