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The Supreme Court of Canada released a monumental decision last week upholding Canada’s national carbon pricing law. In a 6-3 split ruling, the court declared the Greenhouse Gas Pollution Pricing Act (GGPPA) a valid exercise of the federal government’s jurisdictional authority under the Canadian Constitution.
Passed in 2018, the GGPPA established a legal framework for pricing emissions requiring each province to devise a provincial emission pricing system satisfying minimum federal standards. Non-compliant provinces are subject to a federal backstop program with two components: a surcharge on fossil fuels (known as the fuel charge) and a cap and trade-style industrial emission pricing program (known as the Output-Based Pricing System). Where the backstop program is in effect, funds collected as part of the program are returned to the applicable provinces, with a portion of collected funds being paid directly back to citizens in the form of Climate Action Incentive rebates.
Conservative governments in Saskatchewan, Ontario, and Alberta challenged the law alleging its broad application unconstitutionally intruded upon provincial jurisdiction. Their challenges resulted in decisions by the Ontario and Saskatchewan Courts of Appeal upholding the law as constitutional. The Alberta Court of Appeal, however, found the law unconstitutional. From there, the matter moved to the Supreme Court of Canada.
To understand the Supreme Court of Canada’s decision to uphold the GGPPA, it’s important to know that the Canadian Constitution is not a single, well-organized document as in the case of the US Constitution, but rather, a collection of written and unwritten laws.
The British North America Act, 1867 (now officially the Constitution Act, 1867) is the most foundational part of Canada’s Constitution, delineating the split between federal and provincial jurisdiction. This is accomplished in the form of what are essentially two lists setting out each level of government’s areas of authority. But each level of government also has a “residual power”; a sort of catch-all power applicable to matters that don’t fit neatly into those areas of authority explicitly enumerated.
The residual federal power flows from the “Peace, Order, and good Government” provision of the Constitution Act, 1867, so it is often referred to as the “POGG power”. The residual provincial power flows from a provision stating that provinces have power over matters of “a merely local or private Nature in the Province.”
Defending the constitutionality of the GGPPA, the federal government said climate change was a “national concern”. This, they argued, justified expansive federal authority pursuant to the POGG power, as it was necessary to address a critical issue individual provinces could not practically confront.
The Supreme Court of Canada’s majority agreed with this argument. In the decision, the court walked through several legal tests applicable to federal laws intended to address national concerns, finding in each case that the GGPPA satisfied the requirements, particularly considering the compliance flexibility the law provides provinces.
As the decision noted, the law’s objective is not to commandeer provincial authority, but rather, to set a national standard. Provincial authority is only disturbed to the extent a province refuses to abide by that national standard. Six of the court’s nine justices found this in line with the constitutional jurisdiction limitations.
The three dissenting justices’ opinions can be broken down into two camps, with Justice Côté taking issue with the GGPPA’s broad allowance of executive rulemaking, and Justices Brown and Rowe finding the law’s national scope unjustified by the POGG power.
Justice Côté’s dissent found the GGPPA to be a potentially valid exercise of federal power with respect to jurisdiction, but declared it nonetheless unconstitutional for a separate reason. Namely that, in her view, the Act effectively grants the executive branch power to amend the law.
Like most legislation, the GGPPA sets out a broad legislative framework. Within that legislative framework government regulators can create specific rules. Justice Côté, however, felt that in the GGPPA’s case the law gives regulators too much power, overstepping into legal territory reserved to parliament. The majority, however, did not agree with this assessment, finding the law’s delegation of executive authority to be within constitutional bounds.
By contrast, Justices Brown and Rowe’s view of when federal authority could be justified under the POGG power entirely contradicted the majority view. In both their dissenting opinions, the justices expressed that the POGG power was a residual power “of last resort”, rather than a power capable of subsuming provincial authority where it might be identified (such as, in this case, the regulation of local industry, which is typically a provincial power). Furthermore, the justices were not willing to find that the impracticality of a provincially-led system of emission regulation warranted an overriding federal POGG power.