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A law allowing the federal government to review energy, mining and industrial projects to protect Indigenous peoples and the environment is an unconstitutional overreach into provincial jurisdiction, the Supreme Court ruled 5-2 on Friday.

The ruling was met with words like “ecstatic” and “thrilled” from business groups. Alberta Premier Danielle Smith called it “a great day” and a substantial win for her province. Ontario Premier Doug Ford said the ruling would allow the province to “get shovels in the ground.” Some environmental groups expressed disappointment, while others said the court left Ottawa room to tighten up the law and continue with federal review of projects.

The federal government committed to revising the Impact Assessment Act and putting the revisions quickly before Parliament for approval, as an assurance to the business community of stability and certainty in project review.

And because the Supreme Court ruling was an advisory opinion and did not strike down the law, projects already in the assessment process will continue to be reviewed under the current law, within parameters set by the court, Environment and Climate Change Minister Steven Guilbeault told a news conference.

“We will follow the guidance of the court and collaborate with provinces and Indigenous groups to ensure an impact assessment process that works for all Canadians,” Mr. Guilbeault said.

The Impact Assessment Act took effect in August, 2019, enabling Ottawa to regulate energy projects and other development proposals based on effects that fall into federal jurisdiction – such as on Indigenous peoples, birds, fish, endangered species and climate change.

Exner-Pirot: Supreme Court ruling on federal environmental law a step toward brighter industrial future

Just two years ago, the Supreme Court upheld a federal carbon tax, 6-3, over the objections of Alberta, Ontario and Saskatchewan. In that case, the court said climate change is an existential crisis to humankind, and the federal government has the authority to legislate on such vital matters of national concern.

But three of the judges who endorsed the carbon tax joined with two who opposed it and said the 2019 approach to environmental assessment went beyond federal authority.

Canada’s founding 1867 Constitution sets out which powers belong to the provinces and which to Ottawa, a system known as federalism. But the constitution is silent on whose duty it is to protect the environment, and in previous rulings, the court has said both levels share responsibility, and that federalism should be treated as flexible and based on co-operation.

The Impact Assessment Act sets out a complex framework for designating certain projects for review, analyzing their adverse effects on areas in federal jurisdiction and weighing mitigation measures and sustainability concerns. All that with an eye to determining the public interest in addressing the adverse effects.

That law grew out of a major campaign promise from the Liberals in the 2015 election, and produced heated controversy. When it was introduced as Bill C-69, it was denounced by critics, especially in Alberta, as the “no-more-pipelines act.” Alberta referred the question of its constitutionality to the province’s Court of Appeal, which ruled 4-1 last year that it was not just unconstitutional, but “an existential threat … to Canada itself.” (In a reference case, a court’s opinion is advisory, not binding; governments use them to shape policy and law.) Ottawa appealed.

The Supreme Court majority did not use the strong language used by the Alberta court, and affirmed that Ottawa has a role to play in protecting the environment. But it said the law sets out a process very different than how Ottawa describes it.

Instead of determining the public interest in adverse effects, the 2019 law gives federal officials the authority to determine the public interest in an overall project, the majority said. And that law gives those officials the authority to put a permanent hold on a project, the Supreme Court majority said. (The Alberta court’s majority had described that as a federal veto.)

As a hypothetical example, the Supreme Court’s majority set out a mining project with negative effects on fisheries. The mining project is provincial, the fisheries a federal responsibility. The potential harm to the fishery “serves as the gateway to making a decision about the public interest in the project as a whole,” Chief Justice Richard Wagner wrote. He was joined by the lone Alberta judge on the court, Justice Sheilah Martin, and Justice Malcolm Rowe, Justice Suzanne Côté and Justice Nicholas Kasirer.

Andrew Bernstein, a lawyer who was not involved in the case, summarized the court’s position this way: “The federal government can’t use federal jurisdiction as a wedge to open the door to a full-fledged public interest assessment of the project as a whole.”

The Supreme Court also said that, while the federal government said it intended to protect only against “effects within federal jurisdiction,” its process for doing so was so vague and poorly designed that it allowed officials to go beyond those effects.

Still, a leading environmental lawyer said that, in practice, not much needs to change in the environmental assessment process, after the ruling.

“Overall this is a win for Canadians and for the environment,” said Anna Johnston, who represented Nature Canada and the West Coast Environmental Law Association, which were interveners in the case. (Interveners are not directly involved as parties but give their own perspective, based on their experience.)

She said the court had confirmed that the federal government has broad jurisdiction to assess the effects of projects such as mines, dams and pipelines, and consider factors such as climate and health. “The federal government was already applying the Act in the way the majority says is constitutional, and it shouldn’t take a lot of amendments to bring it into compliance with the majority’s opinion,” she said.

Stewart Elgie, a professor of law and economics and director of the Institute of the Environment at the University of Ottawa, agreed that the law will not be hard to fix.

“The new Act is worded too broadly in a couple of places, which creates the potential for Ottawa to act beyond its jurisdiction.”

The Supreme Court’s dissenters – Justice Andromache Karakatsanis and Justice Mahmud Jamal, the only two Ontario judges among the seven who heard the case – stressed the importance of a flexible approach to federalism and the environment, and said courts should presume the law will be administered in accordance with the constitution’s division of powers, and not find it unconstitutional because it could conceivably be misused.

Peter Gall, a lawyer who represented two interveners – the Independent Contractors and Businesses Association and the Alberta Enterprise Group – applauded the court.

“This is a great decision – both for economic development in Canada and for our federal system. Our clients are ecstatic with the outcome.”

The Alberta Premier, Danielle Smith, indicated that the province will be ready to contest any new attempt it perceives as stepping on its toes.

“Alberta will simply not accept being handcuffed by Ottawa’s unfair overreach with another blatant attempt to erode and emasculate the rights and constitutional authority of the provinces as equal and sovereign orders of government,” she said.

With a report from Emma Graney

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