Second Look, Same Result: Alberta Court of Appeal Rejects Amended Impact Assessment Act

In Reference re Impact Assessment Act, as amended, 2026 ABCA 320, issued October 9, 2026, four judges of the Alberta Court of Appeal concluded that the designated projects scheme under the federal Impact Assessment Act (“IAA”) and the related Physical Activities Regulations (“Regulations”) remain unconstitutional, except insofar as they apply to federal undertakings. The majority held that Parliament’s 2024 amendments did not sufficiently confine federal decision-making to matters within federal legislative authority. Dissenting, Justice Feehan would have upheld the amended scheme.

Background to the Second Reference

The IAA and Regulations came into force in 2019, replacing the Canadian Environmental Assessment Act, 2012. In 2022, a four-judge majority of the Alberta Court of Appeal concluded that the original designated projects scheme was unconstitutional (see our previous article). In Reference re Impact Assessment Act, 2023 SCC 23, a five-judge majority of the Supreme Court of Canada likewise concluded that the scheme exceeded federal legislative authority because it was not sufficiently focused on federal effects (see our previous article). The Supreme Court upheld the separate scheme in sections 81–91 concerning certain projects on federal lands or outside Canada.

Parliament amended the IAA in 2024 to address the Supreme Court’s concerns. Alberta’s Lieutenant Governor in Council then referred the amended legislation to the Court of Appeal for a further opinion on its constitutionality. The separate scheme in sections 81–91 was not challenged in this second reference.

Why the Majority Found the Amendments Insufficient

Environmental protection is not a separate head of legislative power under the Constitution Act, 1867. Both Parliament and the provincial legislatures may enact environmental legislation, provided that it falls within their respective constitutional authority.

Alberta relied on provincial authority over local works and undertakings, property and civil rights, and local matters under section 92 of the Constitution Act, 1867, together with the ownership, development and management of provincial natural resource powers in section 92A to argue that the amended IAA and Regulations were unconstitutional for legislating on areas of provincial jurisdiction. It argued that the amended designated projects scheme continued to permit federal regulation of projects as a whole, rather than only their federal aspects. The Government of Canada argued that they addressed all the issues that the Supreme Court identified in their previous decision such that the amended version fit in federal jurisdiction. 

The IAA’s designated projects scheme identifies certain major projects that require federal environmental assessment to proceed. The projects to which it applies are specified in the Regulations and include certain types of activities related to transport, mines and metal mills, renewable energy, water projects, and oil, gas and other fossil fuels, among others. The legislative scheme provides a framework for the federal government to assess and regulate designated projects. It places restrictions around how these projects can proceed by imposing planning and screening phases to determine if an environmental impact assessment is necessary, then an impact assessment phase, and a decision phase. Designation brings a project into the planning and screening process; it does not automatically require a full impact assessment.  The Impact Assessment Agency of Canada (the “Agency”) first decides whether an assessment is required.  If one proceeds, the assessment report informs the final decision-making process.

A key amendment addressed the Supreme Court’s concern that the definition of “effects within federal jurisdiction” captured even trivial or non-adverse changes. Parliament replaced that definition with “adverse effects within federal jurisdiction”, generally limiting the listed effects to non-negligible adverse changes or impacts. The amendments limited the Agency’s ability to require an assessment to projects that may cause those effects within federal jurisdiction or direct or incidental adverse effects. At the final decision-making stage, the decision-maker must consider mitigation and determine whether those effects are likely to be, to some extent, significant. If so, the decision-maker must determine whether they are justified in the public interest.

The majority acknowledged that Parliament had addressed some earlier concerns. For example, the revised fisheries wording sufficiently linked the regulated conduct to actual or potential harm. The new screening limitation also addressed the earlier structural problem, but only to the extent that the underlying definition remained within federal legislative authority.  

The majority identified two continuing constitutional defects:

  • The definition of “adverse effects within federal jurisdiction” remained overbroad. Describing an effect as an “adverse effect within federal jurisdiction” did not establish that it fell within Parliament’s constitutional authority.  The majority identified continuing concerns with, among other things, the provisions addressing migratory birds and effects on Indigenous peoples.
  • Non-federal concerns could still drive the final decision. The majority concluded that the public interest framework continued to permit broader project effects (i.e., non-federal concerns) to determine whether a primarily provincial project could proceed, rather than confining the decision to its adverse federal effects.

The distinction between assessment and decision-making was critical. The majority accepted that a federal assessment may gather information about a broad range of effects, including non-federal effects. The constitutional concern was how that information could be used at the decision-making stage. In the majority’s view, the amended scheme still allowed federal effects to become a gateway to regulating a primarily provincial project as a whole. It therefore concluded that the designated projects scheme and related Regulations remained unconstitutional, except insofar as they apply to federal undertakings.  

Why Justice Feehan Disagreed

Justice Feehan would have upheld the amended scheme. In his view, the amendments confined the key decisions to adverse effects within federal jurisdiction and changed the role of the public interest factors. The principal disagreement concerned the role of the amended public interest factors. Justice Feehan concluded the broader project benefits could justify significant adverse federal effects, but broader non-federal harms could not provide an additional basis for rejecting the project. Considering positive and negative effects to identify a net benefit did not change that limitation.  The majority disagreed that the amended wording sufficiently constrained the decision-maker.

Justice Feehan also concluded that the provisions concerning migratory birds were supported by Parliament’s authority under section 132 of the Constitution Act, 1867 to implement imperial treaty obligations. He discussed the national concern branch of the peace, order and good government power as an alternative basis for jurisdiction, but found it unnecessary to decide that issue finally.

Because the majority found the scheme constitutionally invalid, it did not decide Alberta’s alternative argument based on interjurisdictional immunity. That doctrine requires intrusion on, and impairment of, the protected core of an exclusive head of power. Justice Feehan addressed and rejected the argument, concluding that Alberta had not sufficiently identified the provisions and activities at issue and that the proposed core of provincial authority was too broad and unsupported by precedent.

What the Opinion Means for Proponents

The opinion reinforces the distinction between assessing a project’s broader effects and using those effects to determine whether a primarily provincial project should proceed. The majority accepted that Parliament had narrowed the scheme, but concluded that the amendments did not sufficiently preserve that distinction at the final decision-making stage.

For proponents, the opinion adds uncertainty concerning the scope of federal assessment and approval requirements.  It is a reference opinion on the legislation’s constitutionality and is thus technically advisory only. It is not an order resolving a particular project’s obligations, and should not be treated as a project-specific exemption from existing requirements or conditions. As such, the terms of the IAA are still technically in force and the Government of Canada may chose to enforce its provisions, at least until Parliament repeals or amends it. However, and practically speaking, the opinion does provide insight on how a court challenge of the provisions of the IAA and the Regulations would look if a true dispute was litigated over the constitutionality of the IAA provisions. In other words, the  implications of this decision will depend on the project, its assessment status, and subsequent judicial or legislative developments.

Section 36 of the Supreme Court Act provides an appeal as of right from this provincial reference opinion, rather than through the usual leave process. Any appeal would provide a further opportunity to clarify the constitutional limits of federal impact assessment. As such, the determinations in this decision may be subject to a possible appeal to the Supreme Court and their subsequent decision on the constitutionality of the new IAA provisions.

McLennan Ross will provide an update should this matter be referred and decided by the Supreme Court.