Alberta court ruling pushes back on Ottawa’s energy project assessment regimen

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Appeared in the Financial Post, May 19, 2022
Alberta court ruling pushes back on Ottawa’s energy project assessment regimen

On May 10, the Alberta Court of Appeal ruled the federal Impact Assessment Act to be an unconstitutional infringement on provincial powers. Parliament had taken a wrecking ball to the constitutional right of the citizens of Alberta, Saskatchewan and other provinces, said four of five judges on the panel in a 121-page judgment, to have their natural resources developed for their benefit. The decision championed Canada’s federal system as fundamental to the country’s existence. In so doing, depending on what happens next, it’s set up an argument for Western separation.

The Impact Assessment Act (IAA), passed in 2019 as Bill C-69, replaced the Canadian Environmental Assessment Act and the National Energy Board Act. In some respects, the new assessment statute resembles the old one. Both embody the idea that environmental assessment of energy projects and other infrastructure (including pipelines) is merely process where governments do as they deem best, ad-hoc and case-by-case, without environmental rules, standards or rights to apply. Environmental assessment provides government with broad discretion to seek the public interest—which they are empowered to conceive in their own self-image.

But C-69 differs from its predecessor in its breadth. Not only does it expand the environmental, social and economic assessment factors to include gender-based analysis and climate change accounting, it also extends the potential reach of the federal process to any project designated under its regulations including projects situated wholly within a province such as oilsands developments.

The Government of Alberta, which referred the case to the court, characterized the IAA as a Trojan horse that effectively gives Ottawa a veto over the development of provincial natural resources, over which provinces are given exclusive legislative authority in section 92A of the Constitution Act 1867, as well as “local works and undertakings” reserved to the provinces in section 92. The majority on the panel agreed, finding that the IAA constituted “a breathtaking pre-emption of provincial legislative authority.” With one key exception that I will turn to momentarily, the court’s decision was logical and well argued. One might conclude, therefore, that things have been put right in the federation. However, the story is not yet finished. The federal government, predictably, has indicated that it intends to appeal the Alberta decision to the Supreme Court of Canada.

We have seen this show before. In February 2020, the Alberta Court of Appeal found the federal carbon tax to be unconstitutional, concluding that the federal government had no right to encroach upon provincial jurisdiction merely by citing climate change and greenhouse gas emissions as a national concern. The following year, a majority at the Supreme Court of Canada overturned that conclusion, instead confirming decisions from the Ontario and Saskatchewan courts of appeal that held the carbon tax a permissible exercise of the federal government’s residual “Peace, Order, and good Government” power under section 91 of the Constitution Act 1867. According to the Supreme Court judgment, establishing a minimum national carbon tax to reduce greenhouse gas emissions constituted a “national concern” because climate change was “an existential threat to human life in Canada and around the world.” Provinces, acting alone or together, were constitutionally incapable of establishing minimum national carbon pricing standards, said the majority, and a province's failure to act would have grave consequences for extraprovincial interests.

When the IAA case arrives before it, the Supreme Court may again uphold the federal government’s encroachment upon provincial powers. Yes, a different statute is in question and the legal issues are not exactly the same, but the cases are abstractly similar. Before the Alberta court, the federal government argued that projects normally under provincial jurisdiction could produce environmental impact significant enough to amount to a national concern and therefore constitute a matter over which the federal government can legitimately exercise its authority. This echoes the argument the Supreme Court adopted in the carbon tax case—that carbon emissions represented an existential threat to the country and therefore justified federal action.

Which brings us to the stumble in the Alberta Court of Appeal judgment. Early on, this sentence appears: “Climate change constitutes an existential threat to Canada.” Ceding this ground gives oxygen to the federal case. The Alberta court, like those before it in the carbon tax decisions, treats this question as though it’s self-evidently true. But it’s nothing of the sort, and without a full evidentiary record, the court had no reason to reach this categorical conclusion and undermine its own decision.

If the Supreme Court does overturn the Alberta decision and uphold the constitutionality of the IAA, what are Western oil-rich provinces to think? The kind of control that Ottawa will have seized through the IAA is quite different from, yet reminiscent of, the National Energy Program of the 1980s. From the time Bill C-69 was introduced, the Trudeau government has signalled its hostility to fossil fuel development, its disdain for the fortunes of Western provinces built on fossil fuel production, and its disregard for the autonomy of provinces built into the 1867 Constitution.

The Constitution is a deal. If Alberta and Saskatchewan resolved to leave, could you blame them?

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