On October 9, 2026, a 4-1 majority of the Alberta Court of Appeal (ABCA) concluded that the federal Impact Assessment Act (IAA), as amended in 2024, and its Regulations remain "unconstitutional, except insofar as they apply to federal undertakings".
In Reference re Impact Assessment Act, as amended, 2026 ABCA 320, the ABCA majority held that although Parliament took steps to respond to the Supreme Court of Canada's (SCC) 2023 opinion, the IAA as amended continues to reach beyond federal jurisdiction. The decision offers important guidance on the limits of federal oversight for proponents of major resource and infrastructure projects.
Background
In 2019, Parliament enacted the IAA, creating a new federal regime for assessing the potential effects of major projects in Canada. Shortly thereafter, Alberta commenced reference proceedings at the ABCA challenging the constitutionality of the original IAA. In 2022, the ABCA determined by a 4-1 majority that the IAA was unconstitutional. In December 2023, a majority (5-2) of the SCC reached the same conclusion, finding that the "designated projects scheme" of the original IAA was unconstitutional (for more on the SCC decision, see our previous blog post here).
In June 2024, Parliament amended the IAA in response to the SCC's opinion. On November 19, 2024, Alberta referred the amended IAA back to the ABCA. Ontario, Saskatchewan and nine non-governmental organizations intervened, and a five-judge panel heard the reference from February 24 to 26, 2026.
The authors, along with Alberta Justice, represented the Attorney General of Alberta and appeared before the ABCA in February.
The Court of Appeal's Decision
The majority indicated that its analysis was informed by the concerns identified by the SCC and the changes made to the IAA. In this respect, the majority found that, while Parliament has taken steps to address the SCC's concerns:
…certain aspects of the "designated projects" portion of the IAA scheme continue to undermine that portion of the legislation. Most importantly, the subject areas outlined in the definition of "adverse effects within federal jurisdiction" exceed the scope of federal heads of power, and the decision-making power continues to allow regulation of a project qua project based on non-federal concerns…
Pith and Substance Remains Unchanged
Despite Parliament's amendments, a majority of the ABCA determined that the amended IAA's pith and substance have not appreciably changed: it remains legislation to assess and regulate designated projects with a view to mitigating or preventing their potential adverse environmental, health, social and economic impacts.
The majority observed that the IAA's definitions of "sustainability" and "effects", in particular, still contemplate assessment of broad positive and negative consequences, and the scheme continues to grant the federal executive broad discretion to place holds on, and regulate, designated projects, including projects primarily regulated by the provinces.
Definitional Changes Fall Short
The majority observed that Parliament's amendments to introduce a "non-negligible" threshold to the IAA's definition of "adverse effects within federal jurisdiction" did little to narrow the scope of the IAA. The majority found that, as defined, several of the "adverse effects within federal jurisdiction", including matters affecting migratory birds and Indigenous peoples, went beyond the scope of federal heads of power, and that it remained difficult to envision a major project that would not cause at least one of the defined effects.
Concerns with the Public Interest Framework Persist
The majority further held that the public interest decision-making framework under sections 60 to 64 remains a fundamental problem of the IAA. Particularly, the amendments failed to address the SCC's concerns that the IAA improperly serves as a gateway for the federal government to regulate a project qua project based on non-federal concerns.
Severing Section 7 Would Not Save the IAA
Canada argued in the alternative that if the ABCA found the designated projects scheme to be invalid, it could sever s 7, which imposes prohibitions on project activities pending the public interest decision, to render the IAA constitutional. The Court disagreed, holding that severing s 7 would not address the additional prohibitions under s 8 relating to federal authorities' powers, the overbreadth in the definition of "adverse effects within federal jurisdiction", or the fundamental constitutional problem identified in ss 60, 63 and 64 that continues to raise the prospect of federal regulation of project qua project.
Takeaway
The ABCA opinion is the third time that the Designated Projects scheme under the IAA has been held to be constitutionally invalid. Should you have any questions about how the Court's opinion may affect your business or project, please do not hesitate to contact a member of our Energy group.
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