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Marla Orenstein is director of energy, environment and economy at the Canada West Foundation.

On Oct. 13, the Supreme Court of Canada provided its decision on the constitutionality of the federal Impact Assessment Act (IAA, which was formerly Bill C-69) and found that the federal government had overstepped its bounds. The law, the Supreme Court found, was largely unconstitutional – specifically, the way the Act empowered the federal government to approve, reject and regulate resource and infrastructure projects based broadly on environmental or social impact, and not only the effects that fall under federal jurisdiction.

Significantly, the Court’s reference-case ruling affirmed that effects under federal jurisdiction do not include greenhouse gas (GHG) emissions. In its judgment, the Court stated that federal jurisdiction “does not extend to enabling the federal government to comprehensively regulate greenhouse gas emissions” and that “the inclusion of such sweeping regulatory powers in impact legislation is … impermissible.”

This constitutes the second round of what will be at least a three-round boxing match between the federal and provincial governments in Canada’s highest court over which order of government has the right to control actions ordinarily under provincial jurisdiction that result in GHG emissions.

Supreme Court rules federal environmental impact law is unconstitutional

The first round went to the federal government in 2021, when the Court ruled that a federal carbon tax was constitutional. That decision hinged on the fact that the Greenhouse Gas Pollution Pricing Act (GGPPA) didn’t limit emissions themselves – it just imposed a pricing system backstop, an action within the federal government’s rights which allowed provinces leeway in how they implemented their own carbon price. However, the Court also specified that “although the matter has a clear impact on provincial jurisdiction, its impact on the provinces’ freedom to legislate and on areas of life that would fall under provincial heads of power is qualified and limited.”

This brings us to where we are today: round two. Unlike the GGPPA, the IAA has provided an avenue for the federal government to make decisions about proposed projects that otherwise lie within provincial boundaries and jurisdiction ever since it was enacted in 2019. Ten provinces challenged the legislation. Friday’s ruling confirmed the provinces’ position and also provided clarity that federal jurisdiction over emissions is restricted to pricing, and not to the emissions themselves: “[a]ny legislation that related to non-carbon pricing forms of [greenhouse gas] regulation … would not fall under the matter of national concern.”

That ruling will have strong implications for the future of the federal government’s proposed Clean Electricity Regulations (CER). While constitutional responsibility for electricity generation falls squarely on provincial governments, the CER will impose restrictions on emissions from electricity generation, and will have major effects on how it is generated. Like the IAA, the CER would attempt to regulate emissions directly, not just price them. Several provinces – in particular Saskatchewan and Alberta – have made clear that if the federal government pushes ahead with this legislation, it will once again wind up in the Supreme Court. In Friday’s decision, the SCC has fairly clearly drawn a boundary, which it appears the CER would fall outside.

And so round three would likely go to the provinces as well – as would a challenge to the federal government’s proposed oil and gas emissions cap.

The environment is a shared constitutional responsibility, and neither the federal government nor the provinces have sole jurisdiction. Both orders of government have committed to reducing emissions and to reaching net zero by 2050. However, there is clearly not yet alignment among the jurisdictions of how to get there – through what mechanisms and on what timeline. While co-operative progress is being made in some areas, such as methane emissions and, to a certain extent, around agriculture, further wrangling in the courts is likely until both orders of government can find better ways to make progress together and can agree on who has final decision-making authority.

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