Jurisdiction:                     Canada

Type of claim:                  Anti-regulatory legislation

Summary of result:      GGPPA is constitutional, and this legislation falls under the federal government’s power over issues of national concern.

Judgment final:           Yes

Court instances:

Source of claims:           Constitution Act 1867, ss. 91 and 92

Summary of Judgment

Facts and Claims of Parties

This case involves three references, brought by the Attorneys General of British Columbia, Ontario, and Saskatchewan (“Reference Case”).

In 2018, the Canadian Parliament enacted the Greenhouse Gas Pollution Pricing Act (GGPPA) in order to address its greenhouse gas emissions targets under the 2015 Paris Agreement. The legislation included four parts:

• A fuel charge / carbon tax which affects fuel consumers. Revenues generated by this charge are returned by the federal government to the state where they originated.
• An output based pricing system / cap and trade program. This affects larger industrial actors.
• Powers for the Governor in Council to make regulations about how to apply Provincial laws that were targeted at GHG emissions to federal lands and waters within the province. This includes Indigenous reserves and recognized title lands.
• The requirement that the Minister of Environment report on the administration of the GGPPA annually to Parliament.

Under this legislation, the federal cabinet has the power to make regulations which dictate when default rules under the Act apply, and to ‘backstop’ provincial legislation where it falls short of national standards. Backstopping means that the provinces can enact their own legislation, which needs to meet a defined minimum national standard. Parts 1 and 2 of the GGPPA will only come into effect if a province does not meet the required minimum national standard. The federal cabinet dictates the type of fuels used and their prices (under Part 1), and which industrial emitters to allow and what their required performance levels are (under Part 2).

Prior to landing at the Supreme Court of Canada (SCC), Alberta, Ontario, and Saskatchewan all brought constitutional challenges against the GGPPA to their respective appeal courts. The main issue in the Reference Case concerned whether the GGPPA was constitutional based on the division of legislative powers. The Canadian constitution divides legal powers between the provincial and federal governments. Section 91 sets out federal legislative powers and section 92 sets out provincial legislative powers. Generally, the federal and provincial governments may only legislate directly over the different ‘categories’ that are listed under either s. 91 or s. 92. Specifically, the Reference Case questioned whether the federal government’s authority under s 91 of the Constitution included the ability to pass a law that puts a price on carbon.

The provinces challenged the constitutionality of Parts 1 and 2 of the GGPPA, asking their courts whether the GGPPA was unconstitutional in whole or in part. While the courts in Ontario and Saskatchewan held that the legislation was constitutional, the Alberta Court of Appeal held that it was unconstitutional. The Attorney General of BC intervened at the Alberta Court of Appeal. BC, Ontario, and Saskatchewan then appealed these decisions to the SCC.

The provinces’ main argument was that climate policies ought to be specific to the circumstances of the respective province. Under s. 92(13) of the Constitution, the provinces have authority over property and civil rights, which includes trade and industrial activities within the province, as well as property and contract law. They argued that Parts 1 and 2 of the GGPPA extended into their jurisdiction by regulating industrial activities in this way (see eg para 318).

The provinces also put forward an alternative argument, relying on s. 92(16) of the Constitution (see eg para 44), which gives the provinces authority over matters of a local or private nature. The provinces maintained that their climate policies ought to be specific to each province’s circumstances, and that Parts 1 and 2 do not allow for this.

The provinces also put forth the argument that Part 2 of the Act falls within s. 92(10), which gives the provinces authority over local works and undertakings (see eg para 346). Finally, the provinces relied on s. 92A to argue that they have authority to govern the use of their natural resources (see eg para 44).

The federal government argued that its legislative powers included the authority to enact laws that address issues of national concern, and further argued that the law was necessary to ensure that minimum pricing standards across the country were met, which was inherently necessary to addressing climate change, the matter of national concern here (para 167).

Supreme Court Decision

Under Canadian constitutional law, the purpose of a provincial or federal law must align with powers afforded to the provincial or federal government under the Constitution. For example, at issue in the Reference Case, if the primary purpose of a federal law, such as the GGPPS fulfills a provincially-held power, it will be unconstitutional.

The SCC held that the true purpose of the legislation was to “[establish] minimal national standards [for] GHG pric[ing]… to reduce GHG emissions” (para 80). This purpose fell under the federal government’s powers to create laws which deal with matters of national concern, in order to promote ‘peace, order, and good government’ (para 207). The national concern doctrine is very rarely invoked in Canada, but was found to apply in this case. The Court acknowledged that climate change is a matter of national concern, as it requires a consolidated approach from the entire country (para 188-191). The SCC also held, however, that the Act would only apply where provincial pricing schemes were not strict enough to meet climate targets (para 27).