Wrecking ball: Alberta Court of Appeal declares federal Impact Assessment Act unconstitutional

The Alberta Court of Appeal released its strongly worded opinion declaring the federal Impact Assessment Act (the IAA) unconstitutional, an existential threat to Canada and a wrecking ball to constitutional rights and the economy.

The IAA is the federal Crown’s environmental impact legislation, designed to regulate the impacts of certain physical activities. It also regulates a range of economic, social and cultural, and heritage efforts. Alberta, along with Saskatchewan, Ontario and several public interest groups, challenged the validity of the IAA.

The majority of the court concluded that Parliament overstepped its constitutional mandate. While recognizing the legitimacy of environmental concerns and the value of impact assessments, the majority determined that these factors do not justify an intrusion on provincial legislative powers.

The Constitution allocates mutually exclusive legislative powers between Parliament and the provinces. “Environment” is not a legislative power allocated exclusively to either government; it is shared. Therefore, when either government passes environmental laws it must relate to a power within that government’s constitutional jurisdiction. The court ruled the IAA was a “fatal instance of federal overreach.”

Parties’ positions 

Alberta argued the IAA is a “Trojan horse.” Under the pretext of federal jurisdiction, the IAA regulates intra-provincial activities in a way that intrudes into provincial legislative powers, including the development of natural resources, local works and undertakings. The result is an effective federal veto over intra-provincial activities and resource development. 

Several intervenors supported this position. Some argued the IAA infringes on Aboriginal and treaty rights by unduly restricting their ability to use their resources and represent their peoples.

In response, Canada argued the IAA focuses only on the adverse federal effects of projects that have the greatest potential for these effects. Canada claimed the IAA does not regulate intra-provincial projects. It merely assesses whether the project has effects that fall within federal jurisdiction—such as effects on fish and fish habitat, aquatic species or Indigenous people. It regulates those effects. Any interference with the project is incidental to regulating the adverse effects. 

Some intervenors submitted that the IAA is constitutional and urged the court to consider cooperative federalism—an approach where jurisdictions work together. They argued the IAA is a precautionary tool that safeguards federal components of the environment. Some also submitted that the IAA facilitates Indigenous participation in assessments and federal decisions respecting Aboriginal treaty rights.

The majority decision

The majority of the court applied a two-stage division of power analysis. First, the subject matter of the IAA was characterized, and then it was determined whether the matter falls within a federal power or intrudes on a provincial power.  

In characterizing the subject matter, the majority considered the purpose and effects of the IAA. The IAA enables the federal cabinet to designate intra-provincial projects by placing them on the Physical Activities Regulations. Once a project is designated, the federal government must then consider all the effects of a designated project, even where the effects are not linked to a federal legislative power. Cabinet can impose any conditions in relation to these effects or determine that a project is not in the public interest, even where adverse federal effects are not material. 

The court said this was a “breathtaking pre-emption of federal overreach.” Were the courts to uphold the validity of the IAA, “All provincial industries, almost every aspect of a province’s economy that the federal government chooses to sweep within the IAA, along with a province’s development of its natural resources, would be subject to federal regulation, including an effective federal veto.”

The majority concluded that when the IAA is applied to intra-provincial designated projects it does not fall within a federal power. Rather it falls squarely within provincial constitutional heads of power, including the development and management of natural resources, proprietary rights as owners of public land, management of public lands, local works and undertakings, property and civil rights, and local or private matters in the province.  

In the majority’s view, the IAA would centralize governance to the point that the country would cease to be a real federation. 

Dissenting opinion 

In dissent, Justice Greckol concluded that the IAA is constitutionally valid. The dissent emphasized cooperative federalism and the presumption of constitutionality—that is, if legislation can be interpreted to be constitutional, that interpretation should be presumed. 

Justice Greckol also noted some projects have provincial and federal aspects and are, therefore, subject to assessment from both levels of government. Federal assessments may review the entire project, not just the aspects that fall within federal jurisdiction. And although provinces have legislative powers over natural resources, natural resource projects are not immune from federal assessment. 

While acknowledging that federal decisions can “halt” a project, the dissent rejected Alberta’s argument that this constitutes a veto. In her view, the effect of the IAA is to strengthen federal control over adverse federal effects and facilitate cooperation between levels of government.

What next?

As this opinion is the result of a reference and therefore is not binding on the federal government, the IAA remains in force for the time being. Canada continues to assert that the IAA is constitutional. Canada also announced its intention to appeal the opinion to the Supreme Court of Canada. We will continue to follow and report on legal developments in this area.

The author wishes to thank Siobhan Quigg, articling student, for her help in preparing this legal update.