Jurisdictional Gridlock: Environmental Law, Municipal Authority, and the CN Logistics Hub

By: Laura J. McPhee

The Canadian National Railway’s proposed Milton Logistics Hub has become one of the most high-profile legal and regulatory battles in recent years between federal infrastructure interests and local environmental and health concerns. What began as a $250 million supply chain enhancement project in Milton, Ontario, evolved into a multi-year saga that has tested the reach of the federal government’s approval powers, the scope of municipal authority, and the application of the Impact Assessment Act (IAA).

Project Overview

CN’s Milton Logistics Hub is intended to be a major truck-rail intermodal facility—transferring shipping containers between trains and trucks to meet growing demand in the Greater Toronto and Hamilton Area. The facility is designed to handle approximately 800 trucks per day and operate 24/7. CN estimates that the hub will generate over 1,000 indirect jobs and 130 on-site jobs, making it an important commercial development with significant economic potential.

However, its proximity to residential areas—including schools, long-term care homes, and hospitals—has generated fierce opposition from Halton Region, the Town of Milton, and local residents concerned about air quality and health risks.

The project underwent a federal impact assessment under the Canadian Environmental Assessment Act, 2012, which later transitioned to the IAA in 2019. In January 2021, the federal Cabinet approved the project subject to 325 conditions. This followed a 2020 Review Panel report that acknowledged significant adverse environmental effects, particularly regarding human health. Notwithstanding these concerns, the federal Cabinet relied on the broader economic justification to approve the project.

Judicial Review

Federal Court Ruling (March 2024)

Halton Region and the Town of Milton sought judicial review of the federal Cabinet’s decision. In a significant victory for environmental oversight, the Federal Court ruled that the federal approval was flawed and unreasonable, citing a failure to adequately consider the adverse effects on human health. The Court quashed the approval and ordered Cabinet to revisit the decision in light of these deficiencies.

Federal Court of Appeal (October 2024)

CN appealed, and in October 2024, the Federal Court of Appeal overturned the lower court’s decision. While the Court acknowledged the health concerns, it held that the Cabinet had complied with its statutory obligations under the IAA. The judgment underscored the wide discretion afforded to Cabinet in balancing competing interests during the impact assessment process.

Supreme Court of Canada (May 2025)

Halton sought leave to appeal to the Supreme Court of Canada, which declined to hear the case. The Supreme Court’s refusal to grant leave doesn’t come with a written explanation—that’s standard procedure—but the impact is loud and clear: Halton’s legal challenge is over at the top level. The courts will not intervene further in how federal authorities weighed national infrastructure interests against local planning and public health concerns.

But, the legal battle may well not be over for CN just yet…

Legal and Policy Implications

Beyond federal approval, there are a number of critical legal and policy dynamics that have broad implications for infrastructure development across Canada. This case highlights the discretionary nature of federal decision-making under the IAA, the limited scope of judicial review when Cabinet approvals are challenged, and the enduring authority of municipal and provincial governments to regulate projects, even those with federal approval. Together, these elements illustrate the complex interplay between different levels of government in project regulation and the legal uncertainties that proponents must navigate when pursuing major developments.

Scope of the Impact Assessment Act

This case highlights the interpretive flexibility of the IAA in allowing the Cabinet to approve projects despite known, significant environmental and health impacts. While the Act requires that such effects be “considered,” it does not compel decision-makers to refuse approval on that basis.

The Federal Court’s initial ruling suggested a stricter standard of accountability, but the Federal Court of Appeal restored a more deferential approach, emphasizing the Cabinet’s broad discretion.

Implication: Proponents of future infrastructure projects may view the IAA as permitting approvals even where harm is acknowledged, provided the process appears procedurally robust. Opponents may find it increasingly difficult to challenge such decisions unless there is a clear breach of statutory process or bias.

Judicial Review and Political Decision-Making

The courts’ reluctance to interfere with Cabinet’s balancing of interests—economic vs. environmental—confirms a high threshold for setting aside impact approvals. Judicial review remains available, but success depends on showing procedural unfairness, legal errors, or irrational reasoning.

Implication: Future litigants challenging federal approvals will need strong evidence of material omissions or failures in the assessment process. Merely disagreeing with the outcome is not enough.

Federal–Municipal Conflict and Local Authority

Canada’s constitutional structure divides powers among federal, provincial, and municipal governments. While railways fall under federal jurisdiction as works and undertakings that cross provincial boundaries (Constitution Act, 1867, s. 92(10)(a)), municipalities retain broad regulatory control over land use, development approvals, environmental protection, and local infrastructure under provincial enabling legislation (e.g., Ontario’s Planning Act, Environmental Protection Act, and Municipal Act).

This creates a complex legal interface — and at times, a jurisdictional collision course — between federally regulated entities (like CN Rail) and local governments (like Halton Region and the Town of Milton).

Even with federal approval, local governments can still exert influence. While municipal governments cannot block federally approved and regulated projects, they do have some power to influence them. For example, the municipalities could require compliance with site plan control under the Planning Act, including landscaping, noise attenuation, and lighting, deny or delay road access permits or upgrades for truck traffic, or enforce construction noise bylaws, working hour limits, and community impact assessments (among others).

Even if CN relied on the doctrine of interjurisdictional immunity to assert that local bylaws could not impair the core of its federally regulated undertaking, the legal process to challenge local requirements can delay construction and increase costs, especially where the line between valid municipal regulation and unconstitutional interference is blurry.

The Milton case underscores the importance of multi-jurisdictional compliance, especially where local land use planning, environmental permitting, or construction bylaws intersect with federally regulated projects.

Implication: Developers cannot rely solely on federal approvals. Navigating local governance frameworks will remain essential, and unresolved jurisdictional tensions may result in delay or added cost.

What can Alberta Businesses and Project Proponents Learn from the CN Milton case?

Alberta developers—particularly those involved in energy, transportation, or large-scale industrial projects—can draw several practical and strategic lessons from the CN Milton Logistics Hub case, even though it unfolded in Ontario.

1. Federal Approval ≠ Total Immunity: Even if a project falls under federal jurisdiction (e.g., pipelines, railways, interprovincial infrastructure), that does not exempt developers from provincial and municipal regulation.

2. Municipalities Have Tools to Delay or Shape Projects: Municipal governments can influence—even without outright veto—by withholding development or road use permits, enforcing bylaws related to noise, dust, and working hours, requiring site servicing agreements or stormwater and environmental controls, among others.

3. Procedural Compliance Must Be Substantive: CN complied with the procedural steps of federal impact assessment, but was still challenged on substantive human health impacts. For Alberta projects subject to the IAA, be prepared to justify how public health, Indigenous concerns, and cumulative effects are addressed, not just acknowledged.

4. Jurisdictional Complexity Requires Early Legal Mapping: This case illustrates how easily projects can become entangled in multi-level regulatory conflict. Developers must identify jurisdictional overlaps early and map out coordination between federal, provincial and municipal authorities. This is especially true where federal undertakings cross provincial lands or water, or provincial approvals interact with federal authorizations (e.g., under the Canadian Environmental Protection Act, Fisheries Act, or Species at Risk Act).

5. Delay is as Dangerous as Denial: The Milton Hub was approved in 2021, but litigation and jurisdictional wrangling stretched well into 2025. For developers, the financial and reputational costs of delay can be as damaging as denial. In Alberta, especially for time-sensitive energy or infrastructure builds, invest in front-end due diligence and stakeholder relations to avoid being mired in protracted legal challenges later.

6. Local Opposition Can Escalate to National Headlines: Local resistance, particularly when grounded in health, environmental, or Indigenous rights, can escalate projects into national legal or political issues. That brings scrutiny from NGOs, regulators, media, and funders. Alberta developers should treat early community consultation and social license as strategic imperatives, not regulatory formalities.

   
   

Summary for Alberta Developers:

Risk	Milton Case Lesson	Alberta Application
Jurisdictional conflict	Federal approval doesn’t trump municipal authority	Map out all required approvals under MGA, EPA, and local bylaws
Project delays	Litigation extended project timeline by years	Plan for delay risk in budgeting and scheduling
Public health & emissions	Ignoring local health risks weakened Cabinet’s rationale	Be proactive in air, noise, and emissions modelling
Procedural rigor	Cabinet’s discretion is broad—but not unlimited	Ensure IAA submissions are defensible and substantive
Local engagement	Municipalities wield real influence even without veto	Engage councils and residents early to mitigate opposition

Conclusion

While CN has cleared the major federal hurdles, its real-world implementation may still be shaped by local rules, political pressure, and public resistance. For those involved in large-scale development, the CN Milton case underscores that even federally approved infrastructure projects are not insulated from local resistance, provincial oversight, or legal challenge. In today’s regulatory landscape, success requires not only federal authorization but also the navigation of municipal jurisdiction, political scrutiny, and public accountability.