UPDATE 4-Canada's top court backs Alberta challenge to Trudeau environment law
(Adds details from Alberta premier statement, energy analyst quote)
By Nia Williams and Ismail Shakil
OTTAWA, Oct 13 (Reuters) - Canada's Supreme Court dealt a blow to Prime Minister Justin Trudeau's government on Friday by ruling that a federal law assessing how major projects such as coal mines and oil sands plants impact the environment is largely unconstitutional.
The decision is a victory for Alberta, Canada's main fossil fuel-producing province, which challenged the Impact Assessment Act (IAA), saying it gave 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 the federal government can enact environmental assessment legislation but the way they went about it, for most of this law, goes too far."
The Supreme Court said the federal government had made the scope of the IAA too broad by including, or designating, projects that would typically fall under provincial jurisdiction.
"Parliament has plainly overstepped its constitutional competence in enacting this designated projects scheme," Chief Justice Richard Wagner wrote in the 5-2 majority ruling.
In Canada, natural resource projects mostly fall under provincial jurisdiction, while transport and communications projects that cross provincial boundaries, such as railways or pipelines, are federal.
The court said Ottawa can still carry out assessments when projects impact areas of federal authority like fisheries or species at risk.
The IAA was drafted by Trudeau's Liberal government in a bid to streamline and restore trust in the environmental approval process for major projects. It was passed by the Canadian parliament in 2019 and technically remains in place.
"We will now take this back and work quickly to improve the legislation through Parliament," federal Environment Minister Steven Guilbeault told a news conference.
"Our immediate priority will be to provide guidance to our many stakeholders and Indigenous partners to ensure as much predictability as possible for projects affected."
The court case is the latest flashpoint between the federal Liberals and Alberta's conservative government, whose Premier Danielle Smith has clashed repeatedly with Trudeau over climate policies.
"Alberta wins! Canada wins!" Smith wrote on social media.
The decision strengthens Alberta's efforts to push back against other federal policies, such as a proposed oil and gas emissions cap and clean electricity regulations, Smith said.
Industry associations also welcomed the ruling.
"We are delighted with the decision. This is a big win for provincial jurisdiction over development of its own resources," said Mike Martens, president of the Independent Contractors and Businesses Association Alberta.
There are currently 23 projects in the federal impact assessment process under the IAA. In Alberta, they include Suncor Energy's plan to expand its oil sands Base Mine, and privately held Coalspur Mine Ltd's Vista coal mine expansion.
"We believe this is potentially positive for Canadian energy sector development and oil and gas investors, given previous concerns that the (IAA) could delay, prevent or increase the cost of energy infrastructure projects," BMO Capital Markets analyst Jared Dziuba said in a note. (Reporting by Ismail Shakil and Nia Williams; Editing by David Ljunggren, Deborah Kyvrikosaios, Richard Chang, Alexander Smith and Rod Nickel)
