In a decision sure to have a significant impact on the province’s oil and gas industry, Alberta’s top court has ruled that the federal Impact Assessment Act, implemented in 2019, is an unconstitutional exercise of power. The law grants federal oversight over a host of projects and mandates a lengthy, multi-phase assessment of any work which may have an impact on environmental or Indigenous land issues. The province of Alberta challenged the law on the basis that the scope far exceeds federal powers as set out in the Constitution Act, 1982

Background of the Federal Impact Assessment Act

The Act received royal assent in 2019 and prescribed a list of designated projects within Canada or on federal land outside of Canada that will require an impact assessment to be carried out to determine the potential impact of the project before it begins with respect to several factors, with a focus on environmental concerns, sustainability, and the preservation of Indigenous lands and culture. The purpose of an assessment is to analyze the project from several angles and identify a number of factors, including:

  • The purpose of the project;
  • Whether there are economically feasible alternatives to the project;
  • The potential changes to the environment that could be caused by the project, both positive and negative;
  • Potential measures that could be taken during the project to mitigate negative consequences; and
  • The impact the project could have on Indigenous groups, with input from Indigenous leaders, when possible or applicable.

Assessments will either be carried out directly by the Impact Assessment Agency of Canada or by a panel of experts appointed by the Agency, along with consultations with members of the public, other subject-matter experts, and affected Indigenous groups. The process is divided into five steps, as follows:

  1. Planning – an initial consultation period to plan the assessment, including input from the public and Indigenous groups. This phase may take up to 180 days. 
  2. Impact Statement – wherein the proponent of the project is given guidelines and specific study requirements, which must be included in the proponent’s impact statement. This process may take up to three years.
  3. Impact Assessment – The Agency or Review Panel examines the impact statement to analyze the potential positive and negative impacts of the project and develops an impact report. This process may take up to 300 days if conducted by the Agency or up to 600 days if conducted by a Review Panel. 
  4. Decision-making – After considering the impact report and Crown consultations, the Minister or Governor in Council will issue a decision on whether the potential adverse effects of the project are in the public interest. If the project is permitted to go forward, conditions to mitigate these adverse effects may be imposed. This phase may take up to 30 days if completed by the Agency, or up to 60 days if completed by the Governor in Council. 
  5. Post Decision – The Agency will ensure ongoing compliance with the decision and will be granted access to key documentation throughout the project’s completion. Public and Indigenous groups may continue to participate in ongoing monitoring and provide input. This phase continues for the duration of the project. 

Oil & Gas Projects subject to the Impact Assessment Act

In terms of the potential impact on the oil and gas industry, in particular, various oil & gas projects are subject to the Impact Assessment Act, including:

  • The construction, operation, expansion, decommissioning, or abandonment of a fossil fuel-fired power generating facility
  • The construction, operation, expansion, decommissioning, or abandonment of a new in situ oil sands extraction facility
  • Projects relating to the construction, operation, decommissioning, or abandonment of an offshore facility for the production of oil or gas, or an oil refinery

Given that the process can take well over five years, depending on which entity oversees the assessment, a mandatory impact assessment can potentially create significant delays in these projects.

Federal Government Fatally Overstepped its Authority, Alberta Court of Appeal Rules

In Reference Re Impact Assessment Act, the Alberta Court of Appeal found that the federal government had “fatally” overstepped its authority by subjecting a broad swath of projects to the Act. The province had gone so far as to advance the argument that the Act served as a “trojan horse”, to enable federal intrusion into issues that fell within core areas of provincial jurisdiction. 

While acknowledging that the environment is a serious concern, it is not an issue that is solely in the hands of the federal government to regulate. Further, the majority of the Court held that granting the federal government the exclusive discretion to regulate intra-provincial projects “intrudes fatally into provincial jurisdiction and the provinces’ proprietary rights as owners of their public lands and natural resources”.

The Court went on to suggest that “[i]f the federal government believes otherwise, it should make the case for an increase in its jurisdiction to the Canadian public”.

Federal Government Intends to Appeal the Decision

In a dissenting opinion, Justice Sheila Greckol noted that the Act impacts projects that “that may have effects in federal jurisdiction — on fish and fish habitat, aquatic species, migratory birds, on federal lands or federally funded projects, between provinces, outside Canada and with respect to Indigenous peoples”. She further rejected the trojan horse argument, stating that it only “fuels suspicion and pits one level of government against the other”.

Responding to the decision, Prime Minister Trudeau has announced an intention to appeal the decision to the Supreme Court of Canada. According to David Wright, a University of Calgary law professor,  it is unlikely that the country’s top court will uphold the ABCA’s decision. In either case, the appeals process is likely to take another 18-24 months before a decision is made at the federal level. 

For Trusted Legal Advice relating to Oil and Gas, Contact the Knowledgeable Lawyers at DBH LLP in Calgary

As members of Calgary’s legal community and proud residents of Alberta, the team of staff and lawyers at DBH Law are deeply familiar with the nuances of the oil and gas industry and how it applies to people living and working here. Our extensive experience representing clients in the oil and gas industry has given us the tools to help our clients with their unique needs. Please contact us online or by phone at 403.252.9937 to find out how we may be able to help you.