The Canadian Government’s “Zero Plastic Waste Agenda” has had profound regulatory impacts on a variety of businesses. Among the most prominent changes that came with this agenda was the Single-use Plastics Prohibition Regulations (the Regulations), which implemented a timeline for prohibiting the import, export and sale of six common consumer plastic goods. The Regulations were issued based on the addition of “Plastic Manufactured Items” (PMIs) to the List of Toxic Substances in Schedule 1 of the Canadian Environmental Protection Act (CEPA), which was registered on April 23, 2021.

In a recent decision (the Decision), the Federal Court has ruled that a key aspect of the Federal Government’s actions in support of its Zero Plastic Waste Agenda, specifically the listing of PMIs under Schedule 1 of CEPA, was unreasonable and unconstitutional. Though the Federal Government has already indicated it will be appealing the Decision, the Decision has not been stayed and could impact the implementation of the Regulation, which could have broad reaching consequences across a variety of industries.

Responsible Plastic Use Coalition v. Canada (Environment and Climate Change)

Dow Chemical Canada ULC, Nova Chemicals Corporation and Imperial Oil alongside Responsible Plastics Use Coalition (RPUC and collectively, the Applicants) brought an application for judicial review of the Governor-in-Council’s (GIC) Order to list PMIs on Schedule 1 of CEPA (the Order) in May 2021. RPUC is a not-for-profit corporation comprised of companies in the plastic industry doing business in Canada.

In the Decision, released on November 16, 2023, Justice Furlanetto of the Federal Court sided with the Applicants and found that the Order was unreasonable and unconstitutional.

The Order was Unreasonable

Justice Furlanetto found that the Order was unreasonable as the GIC did not have sufficient evidence to categorize all PMIs as toxic – it was too broad a category for the evidence that existed. The GIC is obligated to first determine whether a substance is toxic before they have the authority to list it under Schedule 1. A finding of toxicity is a precondition to the GIC’s regulatory authority.

Justice Furlanetto accepted the Applicant’s argument that the GIC had insufficient evidentiary foundation for concluding all PMIs are toxic. The Applicants argued that only twelve items (including the six goods that are the subject of the Regulations) were identified as causing environmental harm in the scientific assessment relied upon by the GIC, and that this was an insufficient basis on which to deem all PMIs as toxic. Justice Furlanetto agreed and this evidentiary failure led to the ultimate finding that the Order was unreasonable.

Further, Justice Furlanetto agreed with the Applicants that the Minister of Environment and Climate Change’s (MECC) decision to deny all 52 requests for a Board of Review was unreasonable. Numerous stakeholders in the consultation phase raised concerns that the Order did not accord with a risk-based approach to toxic substance management. The 52 requests asked for a Board of Review to be instituted to determine the nature and extent of the environmental danger posed by PMI’s. Justice Furlanetto found that MECC had failed to address the key question in response to these requests: whether the Science Assessment relied upon by the GIC included evidence that all PMIs are toxic. The Federal Court held that the MECC’s failure to provide a specific response to the Applicant’s central concern in their Board of Review requests rendered the decision unreasonable.

The Order was Unconstitutional

Justice Furlanetto found that the Order was unconstitutional as it fell outside of the Federal Government’s legislative powers. It is well established that protection of the environment through prohibitions against toxic substances is a legitimate public objective in the exercise of the criminal law power of the Federal Government under the constitution. However, PMIs as a category includes substances for which there was “no reasonable apprehension of environmental harm”. To be a proper exercise of the Federal Government’s criminal law power, the substance that is identified as toxic must pose harm or danger to the environment. Failing to restrict the regulation to only those substances that have true potential for environmental harm led the Federal Court to find the Order ultra vires the Federal Government’s powers and therefore unconstitutional.

Bill S-5

Importantly, after the hearing for this matter but prior to the issuance of the Decision, Bill S-5, Strengthening Environmental Protection for Healthier Canada Act, was given royal assent. This bill repealed and re-enacted Schedule 1 of CEPA, such that the current listing of PMIs on Schedule of CEPA was not based on the Order, but on the implementation of Bill S-5. Though it was argued that this made the application moot (as quashing the Order would not directly remove PMIs from Schedule 1 of CEPA), Justice Furlanetto decided that the matter was not moot as there remains a live controversy, particularly with respect to the impact on another ongoing application about the Regulations which, as discussed below, had been stayed pending release of this decision.

However, fact that the Order had been superseded by Bill S-5 did impact the remedy available. Though the Order was retroactively quashed and declared invalid, Justice Furlanetto clarified that the Decision would not delete PMI from the existing Schedule 1 of CEPA. Despite her ruling that the listing of PMIs through the Order was unreasonable and unconstitutional, PMIs remain on Schedule 1 of CEPA.

Implications and Next Steps

What happens to the Regulations?

The Regulations themselves continue to be in force. However, the Regulations were directly challenged in July 2022 by Petro Plastics Corp., RPUC and Oregon Precision Industries. This matter was stayed in August 2023 pending the final decision in this matter. Now that the Decision has been issued, that challenge to the Regulations can proceed.

PMIs

Justice Furlanetto’s conclusion regarding the insufficient evidentiary foundation for Environment and Climate Change Canada (ECCC) to conclude that all PMIs are toxic and their listing in Schedule 1 of CEPA showcases the vulnerability of the scientific assessment process lead by ECCC and Health Canada and raises questions as to whether and how the Federal Government plans to address this critique.

The frequent, significant changes to the regulatory landscape for plastics and with ongoing litigation regarding the same, it will be very important for businesses involved with and exposed to the plastics industry, as producers or consumers, to remain alert to developments in this space and develop strategies as to how they will respond as the situation evolves.

With deep expertise in cross-border trade and regulatory matters, the McCarthy Tétrault Marketing, Advertising and Product Regulatory team is uniquely positioned to advise Canadian business on the scope, application, and potential impact of the Federal Court’s recent decision as well as plastics regulation more broadly. We invite you to contact us for further information.