Alberta is well positioned to become a regional and global hub for data centres, including AI data centres, due to its geography, natural resources, power capacity, and infrastructure. Recognizing this potential, the Government of Alberta has previously announced an AI Data Centres Strategy.
The development of data centres is largely focused on rural sites and most proposed development locations are on lands that are classified as "controlled land" under the Foreign Ownership of Land Regulations (the "FOLR"). As we have previously summarized, the FOLR prohibit a "foreign controlled corporation" from directly or indirectly owning an interest in "controlled land" in Alberta, subject to various exemptions. Consequently, many foreign-controlled developers seeking to acquire “controlled land” for the purposes of a data centre will need to first satisfy or obtain an exemption under the FOLR before proceeding.
Several specific exemptions may be available to a foreign-controlled corporation, depending on the nature and scale of the proposed data centre project, including:
- for small-scale projects, a general exemption allowing the acquisition of up to two parcels of controlled land with an aggregate area of less than 20 acres;
- for leasehold interests, an exemption allowing a lease for a term of 20 years or less, provided there is no possibility of further extension; and
- under Subsection 8(1)(c) of the FOLR, a general exemption allowing the acquisition of an interest in controlled land “for the purpose of establishing an industrial, processing, manufacturing, commercial or transportation facility,” provided the area does not exceed 80 acres for any separate facility.
The determination of whether a specific exemption is applicable and the general administration of the FOLR is conducted by the Alberta Foreign Ownership of Land Administration Office ("FOLA").
If no specific exemption is applicable, the FOLR also provides that the Lieutenant Governor in Council has the authority to grant an order in council excluding any person from the application of the FOLR.
In practice, given many data centre developments involve fee simple interests exceeding 20 acres, foreign-controlled developers will typically be limited to two viable options:
- Where the development does not exceed 80 acres, developers may rely on the general exemption under Subsection 8(1)(c).
- For larger projects or those that do not qualify for the 8(1)(c) Exemption, developers may apply to the Lieutenant Governor in Council for an exclusion from the FOLR.
The general process for each is as follows:
Subsection 8(1)(c) Exemption
To rely on this exemption, the following conditions must be satisfied:
- The interest must be taken for the “purpose of establishing” a facility. FOLA generally interprets this narrowly, limiting the exemption to the construction phase. This interpretation may restrict the use of the exemption when transferring a completed facility between foreign-controlled corporations, including transfers to future subsidiaries or affiliates.
- The development must qualify as “an industrial, processing, manufacturing, commercial or transportation facility.” Data centres, including AI data centres, are expected to meet this standard in most instances.
- The development (not just the controlled land) must not exceed 80 acres.
The process for claiming an exemption requires that the instrument filed to register the interest in land be accompanied by a statutory declaration in the prescribed form. This declaration must specify the exemption being relied on and include supporting information requested by FOLA to demonstrate compliance with the claimed FOLR exemption.
Order in Council
When none of the statutory exemptions apply, a foreign-controlled corporation may apply for an order in council. This mechanism allows Cabinet and the Lieutenant Governor in Council to grant a discretionary exemption from the FOLR. The application process requires the completion of a prescribed form, which must include comprehensive information about the proposed development, the applicant, and the anticipated economic benefits to Alberta. The form is submitted to FOLA, which reviews the application for completeness and compliance with the FOLR. If FOLA is satisfied with the application, it is brought before Cabinet and ultimately the Lieutenant Governor in Council.
This process is typically significantly slower and requires more extensive disclosure than relying upon a specific exemption set out in the FOLR. Applicants should anticipate a timeline of four months or more from the date of submission before an order in council is brought before Cabinet.
If issued, the versatility and scope of the exemption is dependent upon the wording of the final order in council and how it frames the exempted use as well as the exempted foreign-controlled corporation (and their successors, assigns or related entities).
Given the substantial economic benefits that data centre developments bring to Alberta, applications for such projects are expected to be viewed favourably. While the exemption process under Subsection 8(1)(c) is often straightforward, obtaining an order in council introduces additional complexity, requiring a formal application, rigorous disclosure, and extended review timelines.
The Lawson Lundell team has extensive experience advising Canadian and foreign-controlled corporations on navigating Alberta’s foreign ownership of land framework. We regularly assist clients with structuring considerations and obtaining Orders in Council. If you have any questions about the impact of the FOLR on a project or development, please contact James Scott or Devin Itterman.
This article is for informational purposes only and does not constitute legal advice.