IAA slapdown gives feds a chance to live up to rhetoric on critical minerals

“Accelerating activity in the critical minerals space is essential to meeting global clean energy needs and to building a prosperous economy that will thrive in our net-zero future. Simply put, our future depends on critical minerals.”  

That’s a quote from a press release issued this year by Federal Natural Resources minister Jonathan Wilkinson. In it, he outlined where some of the nearly $4 billion the federal government earmarked for mining in its 2022 budget was going.

But now, the feds have a chance to do something that could make a far greater difference to Canada’s mining sector than mere cash from the state ever could. The question is, will they take it?

On Oct. 13, the Supreme Court of Canada released a 5-2 opinion that the Impact Assessment Act (IAA) – formerly Bill C69 — is in large part unconstitutional because it encroaches on matters that are under provincial jurisdiction.

Danielle Smith, the premier of Alberta, which brought the case to court, celebrated it as a “massive win” for the provinces.

“This legislation is already responsible for the loss of tens of billions in investment as well as thousands of jobs across many provinces and economic sectors,” Smith said in a statement. “The ruling today represents an opportunity for all provinces to stop that bleeding and begin the process of reattracting those investments and jobs into our economies.”

The leader of the United Conservative Party, who became premier a year ago, has called the IAA the “Don’t Build Anything Anywhere Act,” while another popular moniker in the Western province is the “No More Pipelines Act.” Other provinces, including Ontario, were intervenors in the case supporting Alberta’s position. Environmental and Indigenous groups lined up to support the legislation, which passed in 2019.

Court opinion

Essentially, the Supreme Court has said that the federal government should ‘stay in its lane’ when making decisions about projects, says Eden Oliver, senior counsel at Allen McDonald Swartz in Toronto.

“The court didn’t like the idea of the federal government making decisions that take into account factors that really fall under provincial powers legislation,” Oliver said. “Two levels of government are making decisions based on the same criteria and may come to different conclusions, but those criteria are not within their constitutional scope.”

The court opinion is a reference case, not a constitutional challenge, meaning the decision is not binding and it does not strike down the law.

However, the federal government says it will rework the law to conform with the court’s guidance within months.

In the meantime, the feds have paused any new decisions on project designations, while the Impact Assessment Agency of Canada will offer opinions on whether all of the 23 projects currently in the process affect areas under federal responsibility. Minister Jonathan Wilkinson has said he believes the changes to the legislation can be “surgical.”

Dani Bryant, a partner at law firm Fasken, says it’s too early to tell what the implications of the court opinion will be, outside of delays for proponents on impact assessment decisions. “I don’t think that we know how big of a deal it is until we see how the federal government amends or redrafts the legislation.”

However, Bryant noted that the opinion doesn’t say the federal government can’t use a designated process regime, which is similar to the process under the IAA’s predecessor, the 2012 CEAA act.

“For projects for which an impact assessment is triggered, they would still have to go through the whole impact assessment.”

But the resource sector is hopeful that it could bring some regulatory streamlining

around the constitutional division of powers and shared power over environmental regulation. “Frankly, this is a good decision because it is clarifying,” Oliver said.

She says the federal government should use this regulatory hitch to rework the legislation to create a regulatory regime that attracts investment while allowing it to uphold its responsibilities.

“It’s really an opportunity for cooperative federalism,” she said. “Ideally, the provincial and federal governments would work together to find a streamlined approach to regulation of projects and do it in a way that stops the delays. People are spending huge amounts of money in preparing for these assessments — four and a half, five years of investment.”

It ain’t easy being green

While much of the media coverage has focused on oil and gas projects, the IAA regulates mining projects, including “green” and critical minerals.

 But the legislation is so new that no mining projects have been through the entire process yet.  

The industry is starting to chafe at the complexity and layering of regulations — especially as it looks to help Western governments in their purported quest for homegrown, secure minerals supplies.

Throw in a tough two-year bear market for juniors and developers, and you have an industry hoping for some regulatory relief.

Jeff Killeen, director of policy and programs at the Prospectors & Developers Association of Canada, says there’s definitely some “consultation fatigue” among PDAC members and frustration over inefficiencies in federal processes.

However, he doesn’t expect “wholesale” change in the federal government pending IAA rewrite.

“It certainly doesn’t lower the regulatory standards or the transparency or disclosure required around project development. And that’s part of the… [reason] why we attract more mineral exploration investment each and every year than any other country in the world,” he said.

In the meantime, the federal government must consider how investment in mineral exploration in Canada is down about 50% from 2021 levels as it tries to catalyze new mine developments and balance its various goals, Killeen says.

“We’re trying to reach net zero by 2050. We’re still trying to protect 30% of Canada’s lands and oceans by 2030 and we’re trying to build new critical mineral mines. So we have to be cognizant of all and make sure the government is dovetailing these strategies so that they’re not working in conflict.”