Environmental law continued to be a hot topic of debate in Canada in 2023, as various challenges to federal government efforts to regulate the environment came to a head. In 2024, we expect to see these challenges continue to develop, and new ones arise, as stakeholders continue their efforts to find balance between shared provincial and federal jurisdiction over the environment.

One of the most visible challenges to federal legislation in 2023 was the battle around plastic regulation. In November 2023, the Federal Court retroactively quashed and declared The Order Adding “Plastic Manufactured Items” as a Toxic Substance to Schedule I of the Canadian Environmental Protection Act (the Order) invalid and unlawful, calling the government’s policy “unreasonable and unconstitutional” (the PMI Decision). The Court found that designating all plastic manufactured items as toxic was overbroad and without an evidentiary foundation, given that the government had only studied twelve (12) categories of plastic manufactured items (PMI). Designating a substance as toxic is significant because it exposes that substance to the regulation-making powers of the federal government. It is common ground that the Order adding PMI to Schedule I of the Canadian Environmental Protection Act (CEPA) enabled the promulgation of the Single-Use Plastics Prohibition Regulations. These regulations are the subject of another federal court case (T-1468-22) that is on hold, pending the disposition of the appeal of the PMI Decision. Recently, the Federal Court of Appeal granted a stay on the judgment rendered in the PMI Decision pending the disposition of the appeal, but has required the appeal to be expedited and heard no later than June 7, 2024.

The effect of the PMI Decision is arguably inconsequential—as in June 2023, Bill S-5 changed the legal underpinning of designating PMI as a toxic substance—however, this decision is an important example of the influence of industry participation on the legislative process. We expect that the appropriateness of the PMI designation and its impact on the Single Use Plastics Prohibition Regulations will continue to be a hot topic into 2024. In the meantime, the federal government has issued a Notice of Intent with respect to the reporting of certain plastic products pursuant to its powers under section 46 of CEPA. The stated purpose of the reporting is that the government is seeking to understand the types of plastic placed on the market in relation to certain categories of goods and the current landscape for diverting those materials, and so we expect this reporting will form the basis for proposing further regulation of plastic—whether by supporting the designation of PMI as a toxic substance or by other means.

Another contentious challenge reached an end in October 2023, when the Supreme Court of Canada found the federal Impact Assessment Act (IAA)to be largely unconstitutional. In response to Government of Alberta’s challenge, the Supreme Court found that the Act’s regulation of “designated projects” was outside of the legislative authority of the federal government. Following the release of this decision regarding the Act’s unconstitutionality, the Government of Ontario filed an application for judicial review to the Federal Court (T-2233-22) regarding the federal involvement in two provincial infrastructure projects in Ontario. This review is likely to be met with its own opposition, outside the question of constitutionality of the IAA, as the proposed project Highway 413 requires carving out land from Ontario’s Greenbelt. Looking forward, as further discussed here, provincial governments will be closely watching the evolution of the amendments to the IAA, as well as the status of Ontario’s application, in order to determine whether any further challenges, in general or project-specific, are required in respect of the environmental assessments processes at the provincial and federal level. In particular, it will be interesting to see how the Supreme Court's scaling back of the principle of cooperative federalism – insisting instead on the integrity of the separation of powers - will impact other cases dealing with the constitutional review of regulations.

Increased pushback to federal regulation of the environment will take various forms over the next year, with participation from both industry stakeholders and the provincial governments. Challenges are likely to occur in the area of greenhouse gas emissions regulation, both provincially, as provinces continue to implement intensity-based emissions reductions legislation and cap-and-trade systems and stay on pace with the national carbon pricing policy, and federally, as the Canadian government follows through with its announcements at COP 28, which included further regulation in oil and gas sector emissions. Industry participants should stay actively engaged in the legislative process as such legislation evolves, in order to ensure that industry voices are heard and the effects are not overreaching. Another potential avenue for challenges may stem from the practical effects of the duty of the federal government to recognize Canadians’ rights to a healthy environment when administering CEPA. This right came into force in 2023, and the federal government must implement a framework on how to properly consider this right while making decisions in the areas that CEPA regulates; which includes toxic substances, pollution, hazardous waste, and environmental emergencies, among others.

Whether such challenges succeed or not, a clear message was sent in 2023: provinces and industry are not idly sitting by and accepting the quickly evolving environmental normative framework as it unfolds in Canada, but are actively participating in the evolution of this framework. The federal government should now expect that an increased focus on evidence and justification of its use of its legislative competences under the Constitution is required to ensure success when it comes to implementing modified or new federal legislation in respect to environmental matters. All in all, 2024 is ramping up to be another interesting year of challenges in environmental law.

For more information on this topic, please reach out to the authors, Dina Awad, Mira Gauvin, Stéphane Beaulac, Yulia Konarski or Kate Wiltse.

To read other articles in the Dentons’ Pick of Canadian Regulatory Trends to Watch in 2024 series, click here.

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