OTTAWA-Canada’s top court ruled Friday that elements of the Liberal government’s four-year-old law strengthening environmental reviews for energy and mining projects are unconstitutional because they intrude on the exclusive rights of provinces to manage their natural resources.
The ruling, a 5-2 decision, could mark a blow to Prime Minister Justin Trudeau, who has made a more robust climate-change policy and curbing fossil-fuel emissions from energy projects a centerpiece of his agenda.
“In my view, Parliament has plainly overstepped its constitutional competence” in certain elements of its environmental-review scheme, wrote Chief Justice Richard Wagner for the majority. The court said the federal-assessment system casts too wide a net on which resource-development projects can be subject to an environmental review.
“It is clear that Parliament can enact legislation to protect the environment,” said the majority decision, “…so long as it respects the division of powers.”
Under Canadian law, the environment is an area of shared jurisdiction between lawmakers in Ottawa and provincial, or state, governments. Provincial governments, however, have responsibility for energy and natural resources within their own boundaries. The Supreme Court decision is the result of a legal challenge from oil-rich Alberta.
This decision, and the victory for Alberta, marks the latest legal row between the Trudeau government and the provinces about modern environmental policy, with Liberal government officials keen to reduce carbon emissions to mitigate climate-change impacts. In 2021, Canada’s top court ruled, in a 6-3 decision, that the federal government’s carbon tax, or the centerpiece of the Liberal government’s environmental-policy agenda, was constitutional. The case reached the top court following a challenge by the provinces.
Canadian officials said they would work quickly with provincial governments and indigenous groups to introduce amendments to the environmental-assessment law that are aligned with the Supreme Court’s guidance.
“I don’t want to prejudge the number of amendments that are going to be required but I think it can be dealt with in a relatively surgical way,” said Jonathan Wilkinson, Canada’s natural resources minister.
Alberta Premier Danielle Smith is scheduled to speak to reporters Friday afternoon.
Critics of the legislation, led by Alberta, said the review system introduced in 2019 increased the number of bureaucratic hurdles that resource companies faced, and that risked halting economic development. Alberta also argued the new federal system violated the constitution because the provinces have jurisdiction over resource development.
The Court of Appeal of Alberta, in a 4-1 decision, ruled in the provincial government’s favor in 2022, saying the new federal system “fatally intrudes” into provincial jurisdiction. “History teaches that government by central command rarely works in a geographically large country with a diverse population and divergent regional priorities,” the court of appeal said.
Canada appealed that Alberta higher-court judgment, leading to Friday’s decision.
Canada is the world’s fourth-largest oil producer, holding about 10% of the world’s proven reserves, and one of the biggest suppliers of uranium, nickel and potash.
The current environmental-review system, as designed by the current Liberal government and approved by Parliament in 2019, is more thorough relative to its predecessor in assessing the environmental, health and social impacts from a project – among them how it affects indigenous communities. The review also would take into account whether the project would hinder or contribute to Canada’s ability to meet its carbon-reduction targets – in Canada’s case, net zero emissions by 2050.
At the time, the government said the new system struck a balance between a robust climate-change policy and fostering investment in the energy and mining sector.
The Supreme Court’s main issue with the revamped system was that it subjected resource projects to a review even though their potential impacts were not clearly tied to areas of federal-government jurisdiction, such as fish and fish habitat, and migratory birds, said David Wright, a law professor at the University of Calgary who specializes in natural-resource law. Furthermore, Wright said, the top court believed the review system incorporated too many broad factors, such as climate change and sustainability.
“This puts the Liberal government in a very difficult position right now – and in the short term, there is regulatory uncertainty for proponents,” Wright said.
The Canadian Association of Petroleum Producers, a lobby group representing major oil-and-gas producers, applauded the decision, saying it believes provinces are best positioned to review and regulate resource-development projects. “Regulatory certainty and efficiency are key to facilitating natural resources projects that are in the interests of Canada,” the organization said.
Write to Paul Vieira at [email protected]
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