Major energy projects in Canada currently face extraordinary completion risk – whether by way of undue delay, major restructuring or outright abandonment. A material contributor to such completion risk has been judicial review: the policies, practices and standards that Canada's courts have applied in reviewing administrative decisions made to assess and approve proposed projects. One need look no further than the delay and restructuring of the Trans-Mountain Expansion project or the abandonment of the Northern Gateway project – each of which was, at the very least, materially affected by the timing and/or outcome of judicial review.
When proposed energy projects are approved by administrative bodies like the Canadian Energy Regulator, or equivalent provincial bodies, opponents of those projects frequently appeal or otherwise apply to courts to review and quash those decisions. The questions for administrative decision-makers, and the courts who hear appeals of, or otherwise review, those decisions, is what standard must be met to avoid those decisions being over-turned.
From the perspective of overall system coherence and efficiency, an administrative law that encourages a reasonableness standard of review – and embraces a relatively restrained and deferential approach by the courts to administrative decisions – would be an optimal outcome. As a general rule, this type of approach tends to result in more administrative decisions being upheld and fewer being quashed or revised – particularly at the tail-end of a usually lengthy administrative process.
In our previous Completion Risk post , we had noted there is widespread uncertainty about the current standard for judicial review of administrative decisions. See Paul Daly, "Struggling Towards Coherence in Canadian Administrative Law – Recent Cases on Standard of Review and Reasonableness", (2016) 62:2 McGill LJ 527 and Shaun Fluker, "The Great Divide on Standard of Review in Canadian Administrative Law", ABlawg.ca, July 23, 2018.
We had identified this issue as among a handful of policy, legal and regulatory issues that have contributed to an extraordinary level of completion risk faced by major energy projects in Canada – and particularly those subject to federal jurisdiction.
The principal issues in administrative law roiling the courts for the last decade have been:
- when to apply a relatively deferential reasonableness standard for judicial review and when to subject administrative decision–makers to a more exacting, entirely undeferential, correctness standard of review; and
- if applying a reasonableness standard, what does that mean in practical terms.
For major energy projects, the consequences of which standard of review will be applied and the appropriate conduct of any such review are enormous.
In the case of Northern Gateway, a robust judicial review process contributed to a delay of several years and resulted in the original federal approvals for the project being quashed. See Gitxaala Nation v. Canada (AG) 2016 FCA 187. By the time the judgement was rendered the federal government had changed. The new federal government had campaigned explicitly against Northern Gateway. For a variety of reasons – likely including a change in market conditions but certainly not excluding political, regulatory and legal challenges – Northern Gateway was cancelled shortly after the release of the Gitxaala decision.
Regarding the Trans-Mountain Expansion, judicial review and associated corrective administrative proceedings and Aboriginal consultations delayed completion for two to three years. See Tsleil-Waututh Nation v. Canada (AG) 2018 FCA 153. It is somewhere between arguable and probable that only the nationalization of Trans-Mountain by the federal government kept the project alive over the course of the whole judicial review process.
These administrative law issues came before the Supreme Court in Vavilov, in December 2019. See
Canada (Citizenship and Immigration) v. Vavilov 2019 SCC 65. The Supreme Court, in a far-reaching 7 – 2 decision, fundamentally recast the Canadian law of judicial review of administrative decisions, but not in a way that is likely to promote, encourage or assist systemic coherence and efficiency in administrative decision-making on major energy projects.
The Standard of Review
On the relative balance between a reasonableness and a correctness standard, the Supreme Court decisively expanded the role of correctness. While deciding that reasonableness is the presumptive standard for judicial review, the Court held the following key issues are to be subject to a full correctness review:
- all questions of law on statutory appeals
- all questions of constitutional law
- all questions of law which are of "central importance to the legal system as a whole"
- all questions of jurisdiction, where regulatory mandates overlap.
See Paul Daly, "The Vavilov Framework and the Future of Canadian Administrative Law", ssrn.com/abstract = 351968 at p.5.
In Vavilov the Supreme Court adopted a classic notion of the rule of law and the centrality of courts in controlling and overseeing the correctness of how legal issues were resolved in administrative law proceedings. Vavilov appears to roll back some key administrative law developments over the last 40 years; among other things reducing judicial deference to administrative decisions involving the legal interpretation and application of their own home statutes. In the words of the minority in Vavilov: "the majority's reasons are an encomium for correctness and a eulogy for deference". See Vavilov at para. 201.
Conduct of a Reasonableness Review
The Court in Vavilov did not stop there. In addition to its analysis of the applicable standards for judicial review – and likely of equal precedential importance – the Court went on to describe a set of tests or rules for conducting reasonableness review. The majority in Vavilov described their overall reasonableness standard as requiring a "robust" review, as opposed to a restrained one. See Vavilov at para.13. As one commentator has noted, the majority in Vavilov:
Originally published 07 July, 2020
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