The Federal Court of Canada has ruled against several groups that had launched a legal challenge over the Muskrat Falls hydroelectric project.

The Sierra Club of Canada, Grand Riverkeeper Labrador and the NunatuKavut Community Council went to court in November to challenge the legitimacy of the Muskrat project.

In particular, they argued that a federal-provincial environmental review panel did not carry out its work properly, failed to account for the impact of the megaproject, and did not consider alternative sources of energy.

But the court found that the issues at the heart of the groups' complaint were beyond the mandate of the federal-provincial panel.

"The joint review panel does not have to approve the project. It's not part of their mandate, it's an information-gathering process and they make recommendations," Natural Resources Minister Jerome Kennedy said.

Kennedy read from a part of the court's decision at the house of assembly on Thursday night, as a filibuster on Muskrat Falls continued.

Kennedy said the decision satisfies another condition for Muskrat Falls to proceed.

He added that the government cannot pause Muskrat Falls in order to wait for the outcome of every legal challenge.

The provincial government officially sanctioned Muskrat Falls on Monday, allowing Nalcor to let contracts that will lead to the construction of a dam and generating station on the Churchill River outside Happy Valley-Goose Bay.

Nalcor, Newfoundland and Labrador's Crown energy corporation, had already begun preparatory work on the Muskrat Falls site, arguing that it would lose a year of construction otherwise.

The government said earlier this fall that the 824-megawatt project had a revised budget of $7.4 billion, although minority partner Emera Inc. said the cost will likely be at least $300 million higher because of extra costs associated with the Maritime Link, or subsea cables that will carry some of the power from Newfoundland to Cape Breton.