On October 9, 2026, the Court of Appeal of Alberta released its decision in Reference re Impact Assessment Act, as amended, 2026 ABCA 320 (2026 IAA Reference).1 A 4-to-1 majority held that the 2024 amendments to the federal Impact Assessment Act (IAA) failed to resolve the constitutional defects identified by the Supreme Court of Canada (SCC) in 2023.2
Key takeawys
- The Court of Appeal of Alberta ruled in the 2026 IAA Reference that the 2024 amendments to the Impact Assessment Act did not resolve constitutional issues identified by the Supreme Court.
- The majority noted that the IAA continues to give the federal government excessive power over predominantly provincial projects, raising concerns about the definition of adverse effects.
- Parliament’s attempts to narrow the IAA’s scope failed, as the definition of sustainability remained broad and operationalized beyond its intended purpose.
Background and the headline findings
In Reference re Impact Assessment Act, 2023 SCC 23 (2023 IAA Reference), a majority of the SCC struck down the “designated projects” portion of the IAA, but upheld sections 81 to 91, which deal with projects financed by federal authorities or carried out on federal lands or outside Canada.3 Parliament responded with amendments to the IAA in the Budget Implementation Act.4 Alberta maintained that the amendments failed to address the SCC’s concerns and, by Order in Council 316/2024, referred the amended IAA and the Physical Activities Regulations to the Alberta Court of Appeal (ABCA) for a second review.5 The reference asked the ABCA whether the amended IAA and the Physical Activities Regulations are unconstitutional in whole or in part, or inapplicable to the extent they impair the core of a provincial legislative power.
In the 2026 IAA Reference, the majority acknowledged that Parliament had addressed some of the SCC’s concerns, but held that the IAA’s “pith and substance” — its essential purpose and effects — had “not changed appreciably”.6 The majority found that the amendments failed to address the fundamental problem: the IAA continues to provide the federal executive branch with ultimate decision-making power over the broad effects of a primarily provincial project.7 Central to this concern was the breadth of the new definition of “adverse effects within federal jurisdiction”, which continued to capture matters beyond federal legislative authority.8
The majority found that even a potential adverse effect that is not otherwise prohibited or regulated under federal law could serve as a federal “hook” to prohibit a primarily provincial project based on broader, non-federal considerations, or subject it to federal conditions and oversight extending beyond those effects.9 For example, a potential adverse effect on fish habitat could trigger broader federal oversight even where the effect itself is not otherwise prohibited under federal law. The majority therefore concluded that the designated projects scheme remained “ultra vires, except insofar as it applies to federal undertakings”.10
Why the amendments fell short
The majority identified several reasons why the amendments fell short of constitutional requirements. Below, we highlight four of the central bases for the majority’s findings.
First, the majority began by accepting that Parliament was trying to bring the IAA within its jurisdiction, so the presumption of constitutionality applied.11 Although Parliament narrowed the IAA’s long title and purpose provision, the broad definition of “sustainability” remained unchanged and continued to inform the decision-makers’ mandate under section 6(2), extending the IAA’s purpose beyond its more narrowly worded purpose provisions.12
Second, although the amendments introduced a “non-negligible adverse effects” threshold for designation, the majority found that the federal government could still designate projects primarily regulated by the provinces based on the mere possibility of such effects.13 Designation triggers the prohibition in section 7, which prohibits activities that may cause such effects. Proponents who contravene that prohibition face fines of up to $8 million, with each day of contravention constituting a separate offence.14 The majority questioned whether the new threshold meaningfully narrowed the prohibition, observing that virtually any major project could potentially cause non-trivial adverse effects in at least one of the areas covered by the IAA.15 The majority also found the potential for indefinite delays and significant expenditures by proponents and governments remained despite the amendments.16
Third, Canada attempted to ground its constitutional authority on its powers over, among other things, fisheries, migratory birds, Indigenous peoples, and the peace, order and good governance of Canada. The majority identified significant constitutional problems with Parliament’s attempts to link a broad impact assessment regime to migratory birds and Indigenous peoples.
In relation to migratory birds, the majority made a number of key findings. Among other things, the majority found that Parliament’s jurisdiction under section 132 of the Constitution Act, 1867 [17]did not extend to any activity that could affect a migratory bird in a “more than trivial way”.18 However, the ABCA declined to define the exact scope of federal jurisdiction over migratory birds without a concrete factual dispute.19
The majority also identified significant constitutional problems with the IAA’s treatment of impacts on Indigenous peoples. It held that paragraphs (e) and (f) of the definition of “adverse effects within federal jurisdiction” in section 2, which underpin the prohibition in section 7, capture non-negligible adverse effects affecting Indigenous peoples, whether or not the matter falls within federal jurisdiction.20 Relying on Grassy Narrows,21 the majority confirmed that section 91(24) of the Constitution Act, 1867 does not give Canada a veto or supervisory jurisdiction over valid exercises of provincial jurisdiction.22 The majority further noted that the former section 7(4) consent exception in the IAA has now been repealed. As a result, Indigenous communities that are proponents of a project may be subject to the section 7 prohibition even where they support the project and consider its overall benefits to outweigh its adverse effects.23
Fourth, in commenting on the IAA’s decision-making framework, the majority found that the amendments had addressed some, but not all, of the SCC’s constitutional concerns. The majority found the amendments failed to resolve concerns with the public interest decision-making framework. Under section 60(1)(b), the decision-maker must determine whether significant adverse federal effects are “justified in the public interest”, taking into account the factors in section 63, which address impacts on Indigenous peoples, Canada’s environmental and climate change commitments, and sustainability.24
Although Parliament adopted the language of “justification”, it did not adopt the “justified in the circumstances” language used in Canadian Environmental Assessment Act, 2012, which the SCC had preferred.25 More importantly, the section 63 factors continue to refer broadly to the project’s “effects”, including positive and negative effects outside federal jurisdiction.26 Canada conceded that the Minister has discretion to consider negative effects in its public interest decision, and the term effects is not limited to non-negligible adverse changes.27 The majority therefore rejected Canada’s position that only positive effects could justify adverse federal effects, finding that negative, non-federal effects could still influence the public interest determination.28
Having concluded that the designated projects scheme exceeded federal legislative authority, the ABCA, like the SCC in 2023, found it unnecessary to consider whether the doctrine of interjurisdictional immunity would also render the scheme inapplicable to matters within the core of provincial jurisdiction.29
The dissent
In his dissent, Justice Feehan outlined that he would have upheld the amended IAA. He concluded that Parliament’s amendments adequately addressed the SCC’s concerns.30 In his view, the new “justification” structure meant non-federal factors matter only when they are beneficial, and harm to sustainability therefore can no longer magnify adverse federal effects.31
What comes next
The majority concluded that the IAA’s designated projects scheme and the Physical Activities Regulations remain unconstitutional, except insofar as they apply to federal undertakings.32 The separate assessment regime under sections 81–91 of the IAA is unaffected.33 Although the IAA remains in force because the decision is an advisory opinion on a provincial reference, the ruling creates renewed constitutional uncertainty and puts pressure on the federal government to pursue an appeal to the SCC or further legislative reform.
The decision coincides with the federal government’s pursuit of broader reforms to accelerate major project approvals, including the Building Canada Act 34 and the recently tabled Bill C-3935, which proposes further amendments to the IAA. These initiatives aim to accelerate major project approvals and provide greater regulatory certainty. However, the ABCA’s decision underscores that efforts to streamline federal reviews may be undermined unless the constitutional defects in the IAA are resolved.
More than 30 years ago, the SCC upheld a federal environmental assessment framework in Oldman River[36]. That decision offers a potential path forward. Parliament could revisit the approach upheld in Oldman River by tying federal impact assessment to an existing federal decision-making responsibility, such as the issuance of a federal permit or authorization. Coupled with a project list limited to projects likely to cause significant adverse environmental effects within federal jurisdiction, this would focus federal environmental assessments on matters Parliament has constitutional authority to regulate.
To advance the federal government’s “one project, one assessment” objective, Parliament should retain and strengthen the IAA’s substitution provisions to allow provinces to lead assessments of projects primarily subject to provincial regulation, while preserving federal decision-making authority over matters within federal jurisdiction. Progress is already being made on strengthening provincial involvement in assessments through cooperation agreements between the federal government and provinces, including Alberta.37
After two constitutional setbacks, Parliament has an opportunity to rethink how federal environmental assessments are triggered, what they regulate and how they interact with provincial processes. Getting those fundamentals right is essential to delivering the regulatory certainty needed to get major projects built.
Footnotes
1. Reference re Impact Assessment Act, as amended, 2026 ABCA 320 (2026 IAA Reference).
2. 2026 IAA Reference, para. 9.
3. Ibid, paras. 2 and 9.
4. 2024, No 1.
5. November 20, 2024: Are the Impact Assessment Act, SC 2019, c 28, s 1, as amended by the Budget Implementation Act, 2024, No 1, SC 2024, c 17, and the Physical Activities Regulations, SOR/2019-285, unconstitutional in whole or in part, as being beyond the legislative authority of the Parliament of Canada under the Constitution of Canada, or inapplicable to the extent that their application would impair the core of a provincial legislative power?
6. 2026 IAA Reference, para. 80.
7. Ibid., para. 191.
8. Ibid., paras. 9 and 104.
9. Ibid., para. 187.
10. Ibid., para. 192.
11. Ibid., para. 20.
12. Ibid., para. 32.
13. Ibid., para. 41.
14. Ibid., para. 41.
15. Ibid., paras. 49 and 50.
16. Ibid., para. 71.
17. The power under the Constitution Act, 1867, which allows Parliament to enter into treaties such as the 1916 Migratory Birds Convention.
18. 2026 IAA Reference, para. 118.
19. Ibid., para 120.
20. Ibid., para. 134.
21. Grassy Narrows First Nation v. Ontario (Natural Resources), 2014 SCC 48.
22. 2026 IAA Reference, para. 136.
23. Ibid., para. 138.
24. Ibid., paras. 161, 168–169.
25. Ibid., para. 163.
26. Ibid., paras. 170–176.
27. Ibid., para. 174.
[28. Ibid., paras. 170-178.
29. Ibid., para. 196.
30. Ibid., para. 261.
31. Ibid., paras. 254 and 255.
32. Ibid., paras. 191–192, 199.
33. Ibid., para. 199.
34. Building Canada Act, SC 2025, c. 2, s. 4.
35. Bill C-39, An Act respecting certain measures to strengthen the economy, 1st Sess., 45th Parl., 2026 (first reading 21 September 2026).
36. Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3.
37. See Impact Assessment Agency of Canada, “Co-operation Agreement on Environmental and Impact Assessment” (02 April 2026).
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