Economic Development and Henry VIII Clauses: Some Thoughts on Recent Canadian Legislation
Any observer of contemporary politics will tell you that winds of change are blowing across Canada. President Trump’s return to office in Washington DC has disrupted a stable trading relationship, prompting Canadian politicians provincially and federally to focus efforts on eliminating internal trade barriers and promoting large-scale economic development projects with a view to compensating for fall-offs in trade with the United States.
Getting shovels in the ground, however, is easier said than done, especially where there are regulatory requirements sitting between the shovels and the ground. Both federally and provincially, politicians are reaching for Henry VIII clauses which would allow them to set aside regulatory requirements impeding economic development.
British Columbia was first into the fray, although the initial clause was subsequently dropped after public outcry. But Parliament is considering legislation containing a Henry VIII clause and Ontario’s legislative assembly recently passed a law that tests the boundaries of permissible delegation. In my view, the proposed federal legislation is constitutionally permissible (and, if appropriately deployed, could be salutary) but the Ontario legislation could well go beyond even the expansive boundaries of delegation of legislative authority recognized by Canadian courts (see here).
It is convenient to start with Bill C-5, currently making its way through Parliament. Clause 4 states the purpose of the proposed legislation as being “to enhance Canada’s prosperity, national security, economic security, national defence and national autonomy by ensuring that projects that are in the national interest are advanced through an accelerated process that enhances regulatory certainty and investor confidence, while protecting the environment and respecting the rights of Indigenous peoples”. Clause 5 would allow the federal cabinet to designate projects of “national interest”. Any factor the cabinet considers relevant can be considered, but an illustrative list is given:
(6) In deciding whether to make an order under subsection (1) or (4) in respect of a project, the Governor in Council may consider any factor that the Governor in Council considers relevant, including the extent to which the project can
(a) strengthen Canada’s autonomy, resilience and security;
(b) provide economic or other benefits to Canada;
(c) have a high likelihood of successful execution;
(d) advance the interests of Indigenous peoples; and
(e) contribute to clean growth and to meeting Canada’s objectives with respect to climate change.
Once a project is so designated, clause 22 would allow the federal cabinet to disapply any statutory or regulatory provision that would otherwise apply to the project:
22 The Governor in Council may, on the recommendation of the minister responsible for an enactment, make regulations
(a) exempting one or more national interest projects from the application of any provision of that enactment or any provision of regulations made under that enactment; and
(b) varying the application of any provision referred to in paragraph (a) in relation to one or more national interest projects.
This is a remarkably broad power.The power is somewhat constrained by a variety of consultation requirements, including a requirement to consult Indigenous peoples before designating a project under clause 5 (see further Orlagh O’Kelly). Substantively, however, the power is extremely broad on its face. Any provision of Canadian environmental law, for example, can in principle be set aside in order to facilitate a project. That said, the power is delineated by the text and purpose of the rest of the proposed legislation. A gratuitous designation of a project, or the disapplication of a regulation that has nothing to do with the need to bring a project to fruition, would not be a permissible use of the power, notwithstanding its extraordinary breadth. I appreciate that any judicial review on these points would be quite deferential (see here). If Parliament were to insert a requirement that the federal cabinet have “reasonable grounds” for a designation under clause 5 or the use of the Henry VIII power in clause 22, this would be a useful safeguard that would facilitate more searching judicial review.
Comparable procedural and substantive constraints are, however, absent from Ontario’s recent Special Economic Zones Act, 2025 (Schedule 9 here). Section 2(1) permits the provincial cabinet to designate any area of the province as a special economic zone; sections 3(1) and 4(1) allow the cabinet to identify trusted proponents and designated projects within those zones. No criteria are specified for these designations. No purpose is specified either. The provincial cabinet may specify criteria but is under no obligation to do so.
In a special economic zone, the law that would otherwise apply to a project and its proponent can be disapplied:
The Lieutenant Governor in Council may, by regulation, exempt a trusted proponent or a designated project from requirements under provisions of an Act or of a regulation or other instrument under an Act, subject to conditions specified in the regulation, as those requirements would apply in a special economic zone
This is an extraordinary power. In theory, the cabinet could specify vast areas — the City of Ottawa, the Greater Toronto Area, or for that matter the entire province — as special economic zones where any provision of law could be disapplied as to a proponent and/or a project. This is presumably not the intention behind the legislation, which was sold as dismantling regulatory barriers to projects in remote areas, but the absence of any purpose clause equivalent to the one found in the federal legislation makes it difficult to divine and apply legislative intent to constrain the extremely broad powers granted. It is also worth noting that provincial legislation covers a much broader range of subjects than federal legislation: there are provincial environmental statutes, labour relations statutes, workplace health and safety statutes, for example, which could be disapplied, and much more besides, creating zones of the province where laws would not necessarily apply (except for federal legislation which the province is not competent to disapply).
As such, this piece of legislation arguably represents an abdication of legislative power by the legislative assembly. In Canada, legislatures can delegate plenary powers. But they cannot abdicate their legislative responsibilities. I have doubts about whether the ‘non abdication’ doctrine is logically coherent: a legislature can always subsequently legislate to take back any powers it supposedly abdicated. But if the doctrine means anything, this legislation is constitutionally doubtful. It allows the provincial cabinet to disapply legislation at will, based on considerations that are not set out in the text and are difficult to identify from the structure of the legislation. Put another way, it is not just a Henry VIII clause but arguably an abdication of legislative power, as the legislative assembly has entrusted the whole body of statute law (and regulations) in the province to the cabinet with nothing by way of procedural or substantive constraint.
Indeed, it could even be said to represent a new way of making law in the province, given the plenary nature of the power. Legislation may not amend the division of powers in the Constitution Act, 1867 (see e.g. Attorney General of Nova Scotia v. Attorney General of Canada, [1951] SCR 31). Creating shadow legislatures arguably amends the constitution. The Privy Council warned about this in The Initiative (Re) (1919), 48 DLR 18, at p. 25:
No doubt a body, with a power of legislation on the subjects entrusted to it so ample as that enjoyed by a Provincial Legislature in Canada, could, while preserving its own capacity intact, seek the assistance of subordinate agencies, as had been done when in Hodge v. The Queen (1883), 9 A.C. 117, the Legislature of Ontario was held entitled to entrust to a Board of Commissioners authority to enact regulations relating to taverns; but it does not follow that it can create and endow with its own capacity a new legislative power not created by the Act to which it owes its own existence.
Now, it may be that provinces can amend the way they make law as part of their authority to amend the provincial constitution (Constitution Act, 1982, s. 45). But any such amendment must be explicit (Eurig Estate (Re), [1998] 2 SCR 565, at para. 35), which is not the case here. So if the delegation in the 2025 Act is vast enough to create a “new legislative power”, it would seem to be unconstitutional.
In the current political moment in Canada, regulatory requirements stand in the way of the large-scale development projects and freer internal trade that politicians federally and provincially believe to be in the national interest. Amending large bodies of law to facilitate such projects might not be realistic. Dismantling regulatory barriers to trade, especially in services, might require enabling provisions that grant ministers significant authority to waive regulatory requirements in agreement with another province or level of government. If these are the felt necessities of the day, so be it. But, in my view, Bill C-5 represents a much better model, with its substantive and procedural constraints, than the Ontario legislation. Even Bill C-5 could be improved, by ensuring that designation decisions are, in principle, subject to robust judicial scrutiny. As for Ontario’s 2025 Act, there is a significant risk that the legislative assembly crossed the Rubicon and abdicated its powers.
This content has been updated on June 16, 2025 at 15:55.