Business cheers as federal environmental impact law struck down by court

CALGARY — Business groups and energy companies celebrated a decision Friday by the Supreme Court of Canada that ruled Ottawa's impact assessment law for major project approvals is largely unconstitutional.

The loudest cheering came from Alberta, where industry leaders saw the 2019 legislation as a roadblock to development of oil and gas infrastructure and other energy-related projects.

The federal Impact Assessment Act, formerly known as Bill C-69, lays out the process for assessing the environmental impacts of major project development in this country and lists activities that would trigger a federal review.

But the broader business community saw it as heavy-handed, and the legislation was so reviled in the oil-and-gas-producing province of Alberta that it was common to hear people there refer to it as the "No More Pipelines Act."

“I know this has boosted the positive feelings of Alberta business leaders. I’ve heard from a number of them already this morning,” said Scott Crockatt, spokesman for the Business Council of Alberta, whose membership includes some of the province's most prominent CEOs.

"The bottom line is that this is being greeted as really good news by a lot of businesses in Alberta, and across the country.”

In the ruling Friday, five out of seven judges said the Impact Assessment Act is largely unconstitutional, because it seeks to regulate activities that fall within provincial jurisdiction.

But the Supreme Court's decision doesn't strike down the law or remove the federal government's authority to regulate projects through environmental assessment — instead, it essentially invites the federal government to tighten up the act to ensure it doesn't step on provincial authority.

Crockatt said in an interview while large projects that cross provincial boundaries — such as transmission lines or pipelines — will still be subject to federal assessment, the ruling Friday will make a real difference for projects being proposed within the boundaries of one province.

"If you were considering, say, a petrochemical facility specifically within Alberta, with this decision today, you’re feeling you have quite a bit more ability to advance it. It’s an overwhelming positive," he said.

Some environmentalists expressed disappointment with Friday's ruling. The non-profit organization Environmental Defence issued a statement to say that environmental issues are "clearly of national concern."

"Federal oversight is crucial, given that environmental issues are not contained within provincial borders," said program director Keith Brooks in the statement.

"And it’s especially crucial when provinces aren’t taking environmental responsibility seriously or, as the case may be, are outright hostile toward environmental protection."

But Dennis McConaghy, a former executive vice-president at TransCanada Corp., now TC Energy, said the energy sector has argued vigorously for years that the Impact Assessment Act was a politicized piece of legislation aimed at supporting the federal government's climate change goals by restricting the growth of the oil and gas sector.

"What I think was a fairly transparent agenda that animated the development of C-69 was upended this morning," McConaghy said in an interview.

"It was basically a bunch of subjective standards that made it almost impossible for a certain kind of project to be approved. And by that I mean, obviously, in the realm of hydrocarbon development."

A report from the Canada West Foundation published earlier this year found that of the 25 projects submitted under the federal Impact Assessment Act since 2019, almost all remain in the first two phases of a four-part approvals process.

But while businesses say those lengthy approval time frames get in the way of development, the reality is that industry leaders were unhappy with Canada's regulatory system long before the current legislation.

For much of the past decade, Canada's energy sector has complained of lengthy permitting timelines and regulatory uncertainty slowing down everything from major oil pipeline projects to the development of a liquefied natural gas industry in this country.

The same Canada West Foundation report found that under the Canadian Environment Assessment Act of 2012, which preceded the Impact Assessment Act, it took almost 3.5 years on average for projects to either receive approval or be terminated.

In a statement Friday, Canadian pipeline giant Enbridge Inc. said it has been watching the legal wrangling over the law with great interest. The company has said that Canada must improve its regulatory system if it is to have a chance at building the billions of dollars' worth of new infrastructure that will be required to meet its net-zero emissions goals.

"We have argued throughout the process for regulatory clarity and efficiency, so project proponents can make informed investment decisions on resource development," Enbridge spokesman Todd Nogier said.

"It is more critical now than ever that governments at all levels recognize that the status quo isn’t working."

TC Energy Corp. also released a statement, saying "an efficient and effective regulatory review process that assesses impacts while attracting investment and creating jobs is critical for Canada."

The Canadian Association of Petroleum Producers said Friday it applauded the "clear decision" from the Supreme Court, adding "the provinces are best positioned to review and regulate resource development projects within their own borders."

In a statement, Alberta Premier Danielle Smith said the federal impact assessment legislation has been responsible for the loss of tens of billions in investment and thousands of jobs across many provinces and economic sectors.

The Independent Contractors and Businesses Association — the largest construction association in Canada with chapters in Alberta and B.C. — said the act created uncertainty for project proponents, which had the effect of driving away investment and killing jobs.

In a statement, the ICBA said it was "thrilled" by the ruling, calling it an "unequivocal victory for Canada's economy and workers."

This report by The Canadian Press was first published Oct. 13, 2023.