In 2023, the Supreme Court of Canada (SCC) concluded that much of the federal scheme under the Impact Assessment Act (IAA) was unconstitutional. In short, the SCC found that the “designated projects” portion of the federal impact assessment regime went beyond Parliament’s legislative authority and sent Parliament back to the drawing board.

Parliament responded by amending the IAA in 2024, with the amendments intended to address the constitutional issues identified by the SCC.

Alberta was not convinced, and the amended IAA was challenged again, this time before the Alberta Court of Appeal (ABCA). Alberta argued that the amendments had not cured the constitutional defects in the legislation. Canada, in turn, maintained that the problems identified by the SCC had been addressed and that the amended regime fell within federal legislative authority.

Last week, in (the second) Reference re Impact Assessment Act, the ABCA sided with Alberta, concluding that the designated projects portion of the amended IAA, together with the Physical Activities Regulations, remains unconstitutional, except insofar as it applies to federal undertakings.

What's Next?

Importantly, this was a reference proceeding (i.e., the ABCA's decision is an advisory opinion and does not itself strike down the IAA).

The question now is what Canada does with the decision. It could appeal to the SCC, return to Parliament with further amendments, or potentially do both.

But another round of amendments may not be straightforward. The federal government already amended the IAA specifically in response to the SCC's 2023 decision. The ABCA's conclusion that those amendments still do not solve the constitutional problems raises a more fundamental question: how much further can Canada narrow the regime without giving up significant federal oversight of projects that otherwise fall within provincial jurisdiction?