OTTAWA, Nov 13 (Reuters) – Canada’s Supreme Court ruled on Friday that a federal law assessing the environmental impacts of major projects such as coal mines and oil sands plants is largely unconstitutional, ruling Prime Minister Justin Trudeau’s government struck a blow.
The decision is a victory for Alberta, Canada’s major fossil fuel producing province. Alberta has challenged the Impact Assessment Act (IAA), saying it gives Ottawa too much power to kill natural resource projects.
“This is a significant setback for the federal government,” said David Wright, a law professor at the University of Calgary.
“The court has said that the federal government can enact environmental assessment laws, but the federal government goes too far in most of these laws.”
The Supreme Court said the federal government had overbroadened the IAA’s scope by including and specifying projects that would normally fall under state jurisdiction.
“Congress clearly overstepped its constitutional authority in enacting this designated project plan,” Chief Justice Richard Wagner wrote in a 5-2 majority decision.
In Canada, natural resource projects are mostly provincial, but transportation and communications projects that cross provincial boundaries, such as railways and pipelines, are federal.
The court said Ottawa can still conduct assessments if the project impacts areas of federal jurisdiction, such as fisheries or species at risk.
The IAA was drafted by Prime Minister Trudeau’s Liberal government to streamline and restore confidence in the environmental approval process for major projects. It was passed by the Parliament of Canada in 2019 and is technically still in force.
“We will withdraw this and move swiftly through Parliament to pass legislation,” federal Environment Minister Stephen Guilbeault said at a news conference.
“Our immediate priority is to provide guidance to our many stakeholders and Indigenous partners to make affected projects as predictable as possible.”
The lawsuit is the latest flashpoint between the federal Liberals and Alberta’s Conservative government, where Premier Daniel Smith has repeatedly clashed with Trudeau over climate policy.
“Alberta won! Canada won!” Smith wrote on social media.
Smith said the decision strengthens Alberta’s efforts to counter other federal policies, including proposed oil and gas emissions caps and clean electricity regulations.
Industry groups also welcomed the ruling.
“We are pleased with this decision. This is a major victory for the province’s jurisdiction over the development of its own resources,” said Mike Martens, president of the Alberta Independent Contractors and Business Association.
There are currently 23 projects participating in the federal impact assessment process under the IAA. In Alberta, these include Suncor Energy’s (SU.TO) oil sands-based mine expansion plan and privately held Coalspar Mine’s Vista coal mine expansion plan.
“Given previous concerns that (the IAA) could delay, block or increase costs for energy infrastructure projects, this is an important step for Canada’s energy sector development,” said Jared Dziuba, an analyst at BMO Capital Markets. “We believe this could potentially be positive for oil and gas investors,” he said in a note. .
Reporting by Ismail Shakil and Nia Williams. Editing: David Ljunggren, Deborah Kyvrikosaios, Richard Chang, Alexander Smith, Rod Nickel
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