By Julius Melnitzer | May 3, 2022
More than 14 months after hearing Alberta’s challenge to the federal government’s Impact Assessment Act, the province’s court of appeal has yet to render a decision, leaving industry players on “pins and needles” over a ruling that could have a major impact on the regulation of Alberta energy projects and the constitutional division of powers related to environmental and resource regulation.
In its 2020-21 annual report, Alberta’s Ministry of Justice and Solicitor General had predicted that the Alberta Court of Appeal (ACA) ruling was expected in the fall of 2021, but that deadline has long passed.
“The length of time the court is taking could well signal that it’s divided on the issue,” said Matti Lemmens, a commercial litigation partner in Borden Ladner Gervais LLP’s Calgary office.
The Impact Assessment Act (IAA), which received royal assent in 2019 and which critics have dubbed the “No More Pipelines Act,” established an Impact Assessment Agency for new projects with criteria for approval that include an energy investment project’s climate change, social and gender parity implications. The legislation also requires regulators to consider the cumulative effect of a project when combined with other projects.
“The factors required to be considered under an assessment go significantly beyond strictly environmental factors, and include factors of an economic and social character,” Alberta states in its court documents.
Alberta maintains that the provinces have jurisdiction over exploration, development and management and that these are essential powers that underscore Alberta’s ownership of its resources.
As well, Alberta argues that the IAA duplicates provincial initiatives and broadens federal assessments beyond matters clearly within federal jurisdiction (such as fisheries, migratory birds and navigable waterways) to projects formerly assessed only by the province.
Most significantly, perhaps, federal reviews would apply not only to traditional mining but also to in-situ developments, a method of oil sand production that uses drilling and steam to produce the extra-heavy oil known as bitumen.
The upshot, Alberta claims, is that the IAA gives Ottawa, rather than the provinces, the last word on whether a wide range of energy developments are in the public interest, thereby unlawfully extending federal oversight into provincial realms.
“If the entirety of the IAA is valid, the federal government has the final power to decide what projects are and are not allowed, even when the project and its effects occur solely within the province and there is no extra-provincial aspect,” Lemmens said.
As it turns out, the ACA was the only one of three provincial high courts to rule that the Greenhouse Gas Pollution Pricing Act (GHPPA) was unconstitutional. Both the Ontario and Saskatchewan courts of appeal upheld the law, as did the Supreme Court of Canada (SCC) in a 6-3 ruling in March 2021.
The SCC decision fortified the backbone of the Liberals’ climate change policy, invoking the “peace, order and good government” power to give the federal government authority to legislate on mitigating climate change by pricing carbon emissions.
“In effect, the SCC said that GHG emissions into the air were extra-provincial, and therefore the federal government was not overreaching into provincial jurisdiction,” Lemmens said.
But Martin Olszynski, a professor of law at the University of Calgary, says uncertainties remain.
“There is some ambiguity in the doctrine enunciated by the Supreme Court,” he said. “Does the ruling only permit minimum pricing or does it allow the feds to regulate anything simply on the basis that it generates GHGs? What is the scope of the considerations that the feds can take into account and does that include purely local matters?”
On this analysis, there are two difficulties with the IAA: firstly, some of the criteria, such as gender parity and social implications, have little to do with mitigating climate change; secondly, projects such as in-situ development and pipelines that are entirely within Alberta might well fall under the province’s constitutional power to regulate property and civil rights.
“Given that the Constitution protects provincial jurisdiction over resource development in the province, Albertans would definitely consider federal oversight of in-Alberta pipelines and in-situ developments as intrusive on property and civil rights,” Lemmens said.
As Olszynski sees it, the ACA could stop short of declaring unconstitutional the IAA or specific portions of the law: the court could resort to the doctrine known as “reading down,” which would involve interpreting the legislation by shrinking its reach to remove its unconstitutional applications or effects.
“The question is whether the court can uphold the constitutionality of the law and structure its interpretation in a way that constrains the feds’ decision-making authority so that it doesn’t intrude on provincial jurisdiction,” Olszynski explains. “Given the lack of clarity in the carbon-pricing case, it’s possible the Alberta Court of Appeal could do that in a way that doesn’t offend the existing jurisprudence.”
Lemmens, however, believes that reading down will be difficult.
“Virtually any industry involved in environmental assessment causes some pollution,” she said.
Still, Olszynski believes that the ACA was not impressed with the IAA.
“I listened in on the hearing and got the sense that the court felt the IAA intruded into Alberta’s space,” he said.
That may be why the court is taking so long to release its decision.
“If they’re going to declare the law invalid, they want to do a thorough job because there’s lots of jurisprudence to contend with,” Olszynski said. “The feds will almost certainly appeal their decision to the SCC.”
Meanwhile, the energy sector remains in limbo.
“We’re all on pins and needles,” Lemmens said.
Julius Melnitzer is a Toronto-based legal affairs writer, ghostwriter, writing coach and media trainer. Readers can reach him at [email protected] or https://legalwriter.net/contact.