SCC’s Reference re GGPPA Decision: an important milestone, but still a long road to travel

by Cameron Somerville

On March 25th, 2021, the Supreme Court of Canada (SCC) upheld as constitutional the federal Greenhouse Gas Pollution Pricing Act (GGPPA), which sets a benchmark for pricing greenhouse gas (GHG) emissions across the country. In a 6-3 decision, the SCC established that the federal government has jurisdiction to apply the GGPPA under the Peace, Order, and Good Government powers (POGG) of the Constitution. Significantly, this sets a marker for the federal government’s ability to control greenhouse gas emissions.

“Climate change is real,” wrote Chief Justice Wagner.^[1] “It is caused by greenhouse gas emissions resulting from human activities, and it poses a grave threat to humanity’s future. The only way to address the threat of climate change is to reduce greenhouse gas emissions.”^[2]

This decision, while important, is unlikely to be the last word on carbon pricing in Canada.

Charting A New Course

The GGPPA received royal assent in 2018. The preamble to the legislation details the Act’s stated purpose: limiting the negative impacts of carbon emissions on Canadians’ well-being. Notably, it characterizes climate change as a “national problem.” The SCC has previously held legislation can use the preamble to “provide a base for assessing the gravity” of an issue of national concern.^[3]

The GGPPA has two main parts. Part 1 is administered by the Canada Revenue Agency and applies a charge to 21 types of fuel and combustible waste. Part 2 establishes a GHG emissions pricing mechanism for large industrial emitters. Provinces can choose whether to implement a carbon pollution price or implement a cap-and-trade system, that allows corporations to trade emissions allowances under an overall cap, or limit, on those emissions.

The Act only operates as a “backstop,” forcing a system on provinces that don’t already have one in place. Additionally, the Act requires the agency return 90% of the revenue as rebates to provinces and individuals, so it is not a tax.

Diverging Paths: Provincial Courts of Appeal Decisions

Alberta, Ontario, & Saskatchewan challenged the federal government’s right to set price standards for carbon-based fuels and industry-based emissions. Ontario’s and Saskatchewan’s Courts of Appeal ruled the GGPPA falls within the National Concern Doctrine of the federal government’s POGG powers. Both judgements had dissents that indicated the law would be valid if its structure were changed, placing it under the federal tax power.

The Alberta Court of Appeal was the final provincial ruling and the only court to rule the GGPPA ultra vires Parliament. The majority found the Act infringed the provincial power to manage natural resources. The Court held that the National Concern Doctrine failed, as carbon pricing does not possess the requisite degree of unity to make it indivisible, in other words that the doctrine could not be used to assign a new head of power to the federal government where the subject matter falls within the province’s exclusive jurisdiction.

The Latest Stop: Supreme Court of Canada Decision

The SCC split 6-3 in finding the Act intra vires the federal government, with three separate dissenting judgements.

Chief Justice Wagner’s Majority Reasons

The majority judgement uses the Act’s long title to frame its main thrust as not just the mitigation of climate change but mitigation through pan-Canadian GHG pricing mechanisms.^[4] They argue both Parts 1 and 2 of the GGPPA are “centrally aimed” at creating one GHG pricing scheme nationally.^[5]

The majority finds the law is “tightly focused” and that all the provinces acting together would be “incapable” of enacting legislation with equivalent effects because they could not impose a binding outcome-based standard.^[6] Therefore, the law meets the first set of requirements for the POGG national concern doctrine.

Lastly, the majority determines the impact of the legislation is reconcilable with the distribution of legislative powers. Since the law merely operates as a “backstop” within a “narrow and specific regulatory mechanism” it does not unduly infringe provincial powers.^[7] Furthermore, considering the interests climate change would harm, they find the impact on provincial heads of power is relatively limited.^[8]

They determine the GGPPA meets the criteria established in R v Crown-Zellerbach Canada Ltd. and is intra vires the Parliament of Canada.^[9]

The Dissenting Judgements

Justice Côté takes issue primarily with the power granted under the GGPPA to the Governor in Council. He argues no clause should give the executive branch the power to nullify or amend Acts of Parliament. Furthermore, when an Act grants such power, the law cannot be within the national concern doctrine as the minimum standards have not been set by Parliament but by the executive branch.^[10]

Justice Brown found the subject matter of the GGPPA was “squarely within” provincial jurisdiction and argued the Court should “condemn” the “leveraging” of climate change.^[11] He finds provincial property and civil rights stand out as “the most relevant source of legislative authority” for the GGPPA.^[12]

Finally, Justice Rowe took issue with the use of POGG in the majority’s reasons. He felt the doctrine of National Concern, and POGG more generally, should only be used as a last resort to “preserve the exhaustiveness of the division of powers.”^[13]

The Road Ahead

This decision is not the end of the story for litigation of environmental legislation and climate change protection in Canada. As Justices Brown and Rowe indicate, the on-going balancing of powers in federalism will no doubt be fodder for the next leg of the journey.

This latest ruling is only directly about carbon pricing schemes. David Suzuki said the judgement gives the federal government the “power to make a difference,” but the extent of that power remains unclear.^[14] The SCC in Friends of the Oldman River Society v Canada (Minister of Transport) ruled the “environment” cannot be assigned solely to one level of government, as the “environment” is too broad.^[15] This case is likely not the last time a court will need to balance Canada’s climate crisis and federalism issues.

Nonetheless, potential future challenges should in no way undermine the magnitude of this decision. The finding that a matter is one of national concern is “permanent” and confers exclusive jurisdiction on the issue to Parliament.^[16] The Supreme Court has moved the line for federal authority in environmental legislation. The question remains just how far it has moved.

Cameron Somerville is a 1L JD student at the Faculty of Law and is a member of this year’s Asper Centre Climate Justice student working group.

^{[1] Reference re Greenhouse Gas Pollution Pricing Act, 2021 SCC 11 at para 2 [re GGPPA]
[2] Ibid

[3] Reference re Anti-Inflation Act, [1976] 2 SCR 373 at para 66

[4] re GGPPA, supra note 1 at para 58

[5] Ibid at para 71

[6] Ibid at paras 179, 182

[7] Ibid at paras 199-200

[8] Ibid at para 206

[9] R v Crown-Zellerbach, [1998] 1 S.C.R. 401

[10] GGPPA SCC, supra note 2 at para 294

[11] Ibid at para 454

[12] Ibid at para 343

[13] Ibid at para 616

[14] Supreme Court decision puts Canada on right track for carbon pricing, David Suzuki Foundation at https://bit.ly/3fMSCXa

[15] Friends of the Oldman River Society v Canada (Minister of Transport), [1992] 1 S.C.R. 3 at para 93

[16] re GGPPA, supra note 1 at para 90}

by Adam LaRiviere

On February 24^th, 2020, the Alberta Court of Appeal (‘ABCA’) released its decision regarding the constitutional challenge of the Greenhouse Gas Pollution Pricing Act, SC 2018, c 12 (‘Act’). The case was decided 4-1 in favour of the Alberta government and stated that Parts 1 and 2 of the Act were unconstitutional in their entirety. This decision is the third of its kind, with the Ontario and Saskatchewan Courts of Appeal deciding in favour of the federal government 4-1 and 3-2 respectively. The Supreme Court of Canada (SCC) was set to hear appeals from Ontario and Saskatchewan on March 24^th and 25^th in order to make a final decision on the constitutionality of the Act, however due to Covid-19, the Court has postponed the hearing to June 2020.

What is the Act?

The Act came into force in June 2018, with some aspects, such as the federal fuel charge system, being applied as late as January 1^st, 2020. The Act is a direct response to the current climate crisis, and seeks to lower green house gas (GHG) emissions by imposing a minimum set of price standards for both carbon-based fuels and industry-based emissions which provinces must adhere to. This means that all Provinces and Territories are required to meet the minimum price per tonne of carbon dioxide equivalent and establish emission caps as directed by the Act.

Previous Decisions

The reasoning behind the ABCA majority’s decision in this case differed greatly from the previous challenges in Ontario and Saskatchewan. In those appeals, both majorities found that the legislation was validly enacted under the national concern doctrine of Parliament’s Peace, Order and Good Government (POGG) powers; however, it was stated that neither court considered the impact of the Act on the exclusive jurisdiction of the provinces to make laws relating to the development and management of their natural resources under s. 92(A) of the Constitution.

The ABCA’s Decision

The ABCA’s decision was largely founded on the rejection of the application of the national concern doctrine. The majority stated that this doctrine cannot be used to assign a new head of power to the federal government where the subject matter falls within the province’s exclusive jurisdiction. The subject matter of the Act was contested by the parties but the court found that, at its minimum, the Act is aimed at the regulation of GHG emissions. The court focused on the infringement of the provinces’ exclusive power to develop and manage their natural resources granted under s. 92(A). It was found that these powers, in conjunction with the provinces’ proprietary rights in their resources, afford the provinces substantial control over the development of their resources. This includes the ability to regulate resources after they have been extracted. The majority continued, stating that the legislation also falls under the provincial power over property and civil rights (s.92(13)), the power over local works and undertakings (s. 92(10)), and finally the power of direct taxation (s. 92(2)).

The majority also stated that even if they are incorrect in the above finding, the national concern branch of Parliament’s POGG powers cannot apply. They state that the subject matter of the impugned legislation is not sufficiently distinct or indivisible from provincial powers for the national concern doctrine to apply. Rather, the legislation allows the federal government to determine the degree to which the provinces must exercise their power, thus rendering it meaningless. Additionally, the powers granted to Parliament are not inherently limited in the legislation. This creates the potential for Parliament to regulate all things pertaining to the environment or climate change.

Justice Feehan wrote in dissent that he would uphold the Act. He dismissed the idea that the Act infringes the exclusive jurisdiction of the provinces on the grounds that S. 92(A) cannot limit pre-existing federal powers including the national concern branch of the POGG powers. He then stated that the subject matter of the legislation is much more narrow and concerns the need to make a behavioral change in Canada towards more efficient energy use through the use of pricing standards for GHG emissions. Consequently, he stated that this characterization of the Act is within the scope of the national concern doctrine.

Future Litigation

As mentioned, the SCC was meant to hear the appeals from Ontario and Saskatchewan, in addition to the Alberta appeal, on March 24^th and 25^th. While the decisions have been 2-1 in favour of the federal government, the Justices have been split 7-5 on this issue overall. Parliament remains confident in their position despite this lack of consensus and they feel confident that the “price of pollution is within federal jurisdiction.”

Adam LaRiviere is a 1L JD student at the Faculty of Law and is a member of the Asper Centre Climate Justice student working group this year.