You might forgive the Alberta government and business groups for taking a victory lap on Friday.
Alberta’s long-standing legal challenge of one of the Trudeau government’s most contentious energy and environmental policies scored a direct hit on Friday, sending a torpedo into the hull of the Impact Assessment Act.
With some wind now in its sails, the province now has its sights set on other targets, including the incoming federal cap on emissions from the oil and gas sector and the draft Clean Electricity Regulations (CER).
On Friday, the country’s top court ruled that much of the Impact Assessment Act (IAA), better known as Bill C-69, is unconstitutional.
It came after Alberta’s Court of Appeal concluded last year the federal legislation was offside the Constitution, which led Ottawa to send the issue to the Supreme Court of Canada for an opinion.
Passed in 2019, the federal bill was lambasted by former premier Jason Kenney as the “No More Pipelines Act.” Industry groups maintained it would create uncertainty, drive away investment and sideline major infrastructure developments.
“Environmental protection remains one of today’s most pressing challenges, and Parliament has the power to enact a scheme of environmental assessment to meet this challenge,” Chief Justice Richard Wagner wrote in the 5-2 majority decision of the court.
“But Parliament also has the duty to act within the enduring division of powers framework laid out in the Constitution.”
The court concluded the part of the act that governs projects built on federal lands, located outside Canada or financed by federal authorities is constitutional.
Yet, elements that deal with new developments deemed to be “designated projects” by the act went too far into the province’s realm.
“There is no doubt that Parliament can enact impact assessment legislation to minimize the risks that some major projects pose to the environment,” Wagner wrote.
“This scheme plainly overstepped the mark.”
The act has been a lightning rod for oilpatch discontentment toward the Liberal government’s energy and environmental policies for years.
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Ottawa contended the legislation would establish a more comprehensive project examination process than Canada had in the past, studying a development’s impact on the environment, Indigenous communities, health, and social and economic effects.
Under the Constitution, provinces have jurisdiction over resource ownership and development. As the court pointed out, “environmental management cuts across many different areas of constitutional responsibility.”
Yet, the feds overreached and encroached on areas of provincial responsibility.
“This is a game-changer,” said Calgary Chamber of Commerce CEO Deborah Yedlin.
The Canadian Association of Petroleum Producers applauded the ruling, saying it affirms the roles of each level of government in the assessment process.
The decision came down Friday as the Canadian Chamber of Commerce was holding its annual meeting in Calgary.
Canadian Chamber CEO Perrin Beatty called it an important statement by the top court, noting the business group has long been concerned the bill “was a case of overreach and felt it would impede the ability to build infrastructure.”
Beatty said it should also shine a light on the pressing need for Canada to make sure large projects can be constructed.
“The important starting point here is that we’re a nation of builders in Canada (who) can’t get anything built,” he said in an interview.
“What we’ve seen is a regulatory system in Canada which is sclerotic, and which prevents things from getting done, and that’s against everybody’s interests.”
With the court ruling, the federal government will work quickly to change the legislation through Parliament, federal Environment Minister Steven Guilbeault told reporters.
Tristan Goodman of the Explorers and Producers Association of Canada (EPAC), an intervener in the court case, believes the decision should prove helpful for future natural resource development in the country.
“This is a massively important case coming from the Supreme Court that has broad implications not just for the Impact Assessment Act, but for other aspects that the federal government is trying to regulate on,” Goodman said.
“It’s really said to the federal government, you need to stay in your lane.”
And what does this mean for the other federal policies now in Alberta’s crosshairs: the emissions cap on the country’s oil and gas industry and the Clean Electricity Regulations?
The province has been waging a battle against both, maintaining they encroach on Alberta’s jurisdiction over resource development.
“Today’s decision significantly strengthens our legal position,” Premier Danielle Smith told reporters on Friday.
“If they’re trying to pretend that they somehow still have the right to proceed with those offensive pieces of legislation that are clearly in our jurisdiction, they’re fooling themselves.”
However, the ruling will likely have a minimal effect on the emissions cap or federal electricity regulations, said Andrew Leach, a University of Alberta professor in the department of economics and the faculty of law.
The Supreme Court’s 2021 decision on the federal carbon tax — it determined the national carbon price is constitutional — and Friday’s opinion involved very different cases that were argued in different ways, and the circumstances would also be different on the CER or emissions cap, he said.
Federal authority remains in place over matters such as pipelines that cross provincial borders, or projects that affect navigable waters.
“There’s no sense in which people were lined up waiting for this legislation to fall to build a new oilsands project,” he added.
But lawyer Sean Sutherland, who represented the Business Council of Alberta as an intervener in the court case, believes the court decision will have ramifications.
Friday’s ruling “very much puts in question the constitutionality” of legislation surrounding the proposed emissions cap and clean electricity regulations, said Sutherland, a lawyer with Osler, Hoskin & Harcourt LLP.
“If you’re a provincial government, today’s a very good day for you.”
Chris Varcoe is a Calgary Herald columnist.