Graham Reeder — Gowling WLG, Toronto, graham.reeder@gowlingwlg.com
Abstract
Ontario’s Bill 5 introduces a significant shift in provincial environmental and development law, most notably through the Special Economic Zones Act, 2025 (SEZA). This article examines SEZA’s legal structure, emphasizing its delegation of broad discretionary authority to cabinet to exempt projects from statutes, regulations, and municipal bylaws. It analyzes the resulting implications for environmental governance, regulatory certainty, public accountability, and Indigenous consultation. Alongside parallel reforms to Ontario’s environmental legislation, SEZA reflects a broader reorientation in Ontario away from statutory safeguards and toward executive discretion.
Article
Ontario’s Protect Ontario by Unleashing Our Economy Act, 2025, S.O. 2025, c. 4 (Bill 5), which received royal assent on June 5, 2025, is a broad omnibus statute that restructured multiple areas of provincial law related to development, infrastructure, energy, mining, and environmental regulation. Touted as Ontario’s response to attacks on Canada’s economic sovereignty from President Trump, Bill 5 amends or repeals a number of existing statutes, including the Environmental Assessment Act, Mining Act, and Endangered Species Act. However, one of the Bill’s most consequential legal innovations is the enactment of the Special Economic Zones Act, 2025 (SEZA). SEZA introduces a new regulatory mechanism to designate projects or proponents as exempt from certain environmental governance requirements within designated areas in Ontario.
From a legal perspective, SEZA is notable because of the broad authority it delegates to the cabinet. It represents a shift away from rules-based statutory constraints toward discretionary, executive-driven decision-making. SEZA establishes a framework under which the Lieutenant Governor in Council, and in some cases the responsible minister, may designate geographically defined areas of the province as “special economic zones” through regulation. Prescribed criteria must be met, which are defined broadly in Ontario Regulation 373/25. Within those zones, the government may also designate specific projects as “designated projects” and identify “trusted proponents” authorized to carry them out. The purpose of these designations is to authorize cabinet to exempt projects or proponents from provincial statutes, regulations, and municipal bylaws, in whole or in part.
The scope of this exemption power is unusually broad. SEZA does not limit exemptions to specific statutes or regulatory regimes. Nor does it prescribe mandatory considerations, such as environmental protection, cumulative effects, or ecological thresholds, that must be addressed before exemptions are granted. Instead, the content and limits of exemptions are left to regulation and, ultimately, to cabinet discretion. From a legal design standpoint, this places significant weight on the regulatory process as the primary safeguard for environmental protection, shifting away from more concrete statutory parameters.
The potential environmental implications of this framework are substantial. Ontario’s environmental protection laws rely on legislation such as the Environmental Assessment Act, the Endangered Species Act (now replaced by the Species Conservation Act, 2025), and various planning and conservation statutes. SEZA allows cabinet to grant exemptions which exempt or modify all of these statutory protections within designated zones.
Environmental regulation is not automatically suspended within a special economic zone. The applicable regulation must specifically exempt any environmental or other legal requirements. In practice, this may create variability and uncertainty. Regulation that would otherwise apply uniformly across the province may differ from zone to zone, depending on how exemptions are drafted and enforced. For regulators, proponents, and affected communities, this represents a departure from a predictable, statute-based environmental framework.
Importantly, SEZA is more open-ended enabling legislation. Its real-world effects will depend on how future governments choose to use it. Regulations released in late 2025 establish criteria intended to limit zone size and tie designations to clear economic objectives. Whether those criteria meaningfully constrain environmental risk will depend on their application in specific cases and on the transparency of regulatory decision-making. Despite earlier announcements that SEZA would be used to speed up mining and related development in the Ring of Fire, the government has announced that the first special economic zone will be declared at the Billy Bishop airport in downtown Toronto in order to take ownership of the city-owned lands, expand capacity and allow for jet aircraft.
The concentration of decision-making authority under SEZA’s legislative design also raises questions about oversight and accountability. Legislative amendments are subject to debate, committee review, and recorded votes. Regulations, by contrast, are enacted by cabinet without the same level of public or legislative scrutiny. While regulations may be challenged in court if they exceed statutory authority or violate constitutional constraints, the threshold for judicial intervention is high. Courts generally defer to cabinet where the enabling statute confers broad discretion, as is the case here. The Environmental Registry of Ontario, a procedural safeguard that ensures that the public is given adequate notice and opportunity to comment on proposals, decisions, and events that could affect the environment established under the Environmental Bill of Rights, 1993, can also be sidestepped through designation and regulation.
In addition, many areas potentially subject to special economic zone designation may overlap with territories where Indigenous rights and treaty obligations are engaged. While the duty to consult is constitutionally protected and cannot be eliminated by provincial legislation, the practical mechanisms through which consultation occurs are often embedded in statutory and regulatory processes. If those processes are modified or streamlined through exemptions, the adequacy of consultation may become a matter of dispute, with legal consequences for both the Crown and project proponents.
Beyond SEZA, other Schedules in Bill 5 restructure Ontario’s environmental legislation. The repeal of the Endangered Species Act and its replacement with the Species Conservation Act, 2025 narrows certain definitions, most notably the definition of “habitat”, and alters the balance between development and species protection. These changes, together with SEZA, suggest a cumulative re-orientation of environmental law toward flexibility and administrative discretion in Ontario.
Ultimately, SEZA does not resolve longstanding tensions between development and environmental protection. Rather it removes key decision-making from the legislature and reassigns those powers to cabinet in the enactment of regulations. This model may deliver the efficiency and adaptability that the province is hoping to achieve, but it also places increased pressure on executive accountability, regulatory clarity, and judicial review as mechanisms for safeguarding environmental interests. How that reframing affects Ontario’s environment will be determined by how the powers given to cabinet are exercised over time, although it has already been challenged in court.
Democracy Watch, Environmental Defence Canada, Wildlands League and Friends of the Earth Canada brought an application to the Ontario Superior Court of Justice in March seeking declarations that SEZA violates section 92 of the Constitution Act, 1867 and that it is of no force and effect. The application asserts that SEZA is an unconstrained grant of power to the executive branch that goes beyond what courts have accepted as lawful delegation and constitutes an abdication of the legislative role.