By: Courtney Burton, Stewart Maier, and Grant Sprague
On November 20, 2024, the Province of Alberta issued an Order in Council (O.C. 31/2024), a formal government decree, to tackle ongoing constitutional questions surrounding the federal Impact Assessment Act (“IAA”). This development is crucial for understanding the balance of power between federal and provincial governments in Canada, as well as new environmental regulations that impact major projects.
The federal government had recently revised the IAA in response to an October 2023 ruling by the Supreme Court of Canada. This ruling determined that certain sections of the IAA extended beyond the federal government's jurisdiction. For a more detailed background on the IAA, see Blue Rock Law’s previous blog post here: SCC’s Ruling on the Impact Assessment Act: Implications for Alberta’s Energy Sector.
What’s the Story?
The IAA, enacted in 2019, grants additional powers to the federal government to evaluate the potential effects of major projects, such as environmental, economic and social impacts, before they are approved. The IAA includes the Physical Activities Regulations, which outline the type of projects, referred to as “designated projects” that may require federal impact assessments – this includes specific activities in areas like energy, mining, transportation, and infrastructure. However, the constitutional validity of the IAA has been ongoing since its implementation, with several provinces arguing the IAA overreaches into provincial jurisdiction and hinders resource development.
The Legal Journey
The controversy over federal environmental assessment regulations is longstanding, dating back, for example, to the construction of Alberta’s Oldman Dam and the contested application of the Federal Environmental Assessment and Review Process Guidelines Order to a wholly provincial project. In that case, the Supreme Court of Canada ruled that the federal government had the ability to examine environmental assessment matters for matters within its jurisdiction, even for provincially-led projects. Since then, those original environmental assessment guidelines evolved into the Canadian Environmental Assessment Act (“CEAA”) and now further into the IAA. The evolution of the IAA reflects a consistent process by the federal government seeking to expand its environmental assessment process beyond areas of federal jurisdiction.
Initially, Alberta referred questions about the IAA’s constitutionality to the Alberta Court of Appeal. In 2022, the Court ruled that the IAA and its accompanying regulations were unconstitutional. This decision was subsequently appealed to the Supreme Court of Canada, which on October 13, 2023, declared parts of the IAA and its regulations unconstitutional.
In response, the federal government amended the IAA through the Budget Implementation Act, 2024, which came into effect on June 20, 2024. While these amendments sought to address the constitutional flaws identified by the Supreme Court, questions persist about whether the changes adequately respect provincial autonomy while maintaining effective federal oversight.
What’s Happening Now?
Despite the amendments, the Government of Alberta is implementing another challenge to the IAA by asking the Court of Appeal of Alberta to review the constitutionality of the amended IAA and its regulations. The key issue remains whether the revised law still infringes on provincial authority or undermines provincial control over natural resources.
This ongoing legal scrutiny highlights more than the fact of a single law; it underscores the ongoing tension between federal and provincial jurisdictions over environmental assessments, resource management, and economic development.
Why This Matters
The outcome of this legal challenge will have far-reaching implications for how projects are assessed and approved in Alberta and across Canada. It could shape federal and provincial relations and influence everything from environmental protection to economic growth in resource-dependent provinces.
More significantly, the federal regime continues to create concerns for investors in Canada's natural resources sector, particularly regarding regulatory uncertainty and delays. At a time when Canada is being asked by it’s trading partners to efficiently deliver key projects in areas like potash, oil and gas (including LNG) ,and critical minerals, federal overreach is not likely to foster confidence in the Canadian system.
Stay tuned for updates as Alberta’s Court of Appeal takes up this important constitutional question. For any questions about this Order in Council or other regulatory matters, please contact Blue Rock Law LLP for assistance.