On the Path to the Supreme Court - Alberta Court of Appeal Rules Federal Carbon Pricing Legislation Unconstitutional

| 8 minutes

On February 24, 2020, the Alberta Court of Appeal released its highly anticipated reference decision (2020 ABCA 74) on the Federal Greenhouse Gas Pollution Pricing Act (the Act). The Act was passed by Parliament in 2018 and imposes a levy on various fossil fuels and sets greenhouse gas (GHG) limits on large industrial emitters such as mines and petroleum processing facilities.

Focusing on what it characterized as Canada’s unique federalist framework, the majority found the Act a deep intrusion into the provinces’ exclusive jurisdiction under a number of provincial heads of power including property and civil rights and the power to manage natural resources.

This decision comes in the midst of a number of polarizing events, including the withdrawal of Teck Resources’ application for approval of the Frontier oil sands project and rail blockades in support of the Wet’suwet’en hereditary chiefs continuing across Canada. Against this backdrop, the ABCA was careful to note that its decision was not “a referendum on the phenomenon of climate change [or] about the undisputed need for governments throughout the world to move quickly to reduce GHG emissions, including through changes in societal behaviour”.

In June, 2019, the Government of Alberta referred the Act to the Court to determine if it is unconstitutional. This is not the first time the question has been raised by a provincial government. Both the Saskatchewan Court of Appeal (2019 SKCA 40) and the Ontario Court of Appeal (2019 ONCA 544) recently ruled on the same question (as discussed in a previous post). Both cases were split decisions, and in both cases the constitutionality of the Act was upheld. The root for the Ontario and Saskatchewan decisions was a finding that the Act and the federal carbon pricing was constitutionally valid under the Federal Government’s national concern branch of the “peace, order and good government” (POGG) power contained in Section 91 of the Constitution Act, 1867.

The Saskatchewan and Ontario reference decisions have both been appealed by the provinces’ respective governments to the Supreme Court of Canada (SCC) and the Alberta decision will undoubtedly follow.

Arguments

Alberta argued that the Act is entirely unconstitutional and is not saved by the Federal Government’s POGG power. Canada argued that the Act is constitutionally valid under the national concern doctrine, a branch of Parliament’s POGG power.

The governments of Saskatchewan, Ontario and New Brunswick, and Saskatchewan Power Corporation and SaskEnergy Incorporated all intervened in support of Alberta’s position. The government of British Columbia, Assembly of First Nations and Athabasca Chipewyan First Nation, on the other hand, took positions close to that of the Federal Government.

The Majority Decision

The majority’s reasons begin by carefully underlining the reality of anthropogenic climate change and the pressing need for an effective response. The decision also emphasizes that it is beyond the courts’ remit to assess which policy or level of government might best address this immense challenge. However, in the view of the majority, “[p]rovincial powers ought not to be swept aside irrespective of how laudable or expedient a federal objective may be”.

Relying on the established principle that Parliament’s POGG power only applies where the “matter” does not fall within one of the heads of power assigned exclusively to the provinces, the majority concluded that the Act’s regulation of GHG emissions exceeded the ambit of any federal head of power and fell within heads of power assigned exclusively to the provinces including under sections 92A (non-renewable natural resources, forestry and electricity), 92(2) (direct taxation within the province to raise revenue for provincial purposes), 92(10) (local works and undertakings), 92(13) (property and civil rights) of the Constitution Act, 1867. The majority even went as far as to evocatively characterize the Act as “a constitutional Trojan horse” which will lead to a broad intrusion of federal regulations into exclusive provincial heads of power.

Of note is the majority’s review of the principles of federalism and historical review of the development of the Constitution and in particular, the prairie provinces’ efforts to secure constitutional recognition of ownership of their natural resources, culminating in the negotiation and inclusion of section 92A in the Constitution Act, 1867 (as amended in 1982). Based upon a historical review of climate change efforts across Canada, the majority makes a number of observations:

  • Alberta was the first province to release a comprehensive climate change plan, was the first province to require large emitters to report emissions, has acted and continues to act to reduce GHG emissions;
  • a strong linkage exists between environmental choices with respect to GHG emissions and the development and management of a province’s natural resources and its economy; and
  • the Act pervades the life and economy of each province and potentially hinders a Province’s ability to implement its own local policy and response to GHG emissions tailored to each province’s economy.

Although intervenors raised alternative grounds for the constitutionality of the Act (e.g. Parliament’s criminal law power, and trade and commerce power), the Federal Government sought to ground the Act’s constitutionality only in the national concern branch of the POGG power.

Having broadly sketched out its assessment of the Act and resulting conclusions, the Court applied the two-step test for a division of powers analysis: the court must first determine the Act’s “matter” – also referred to as its “pith and substance” – and then ascertain under which constitutional head(s) of power it lies. The majority finds that the Act’s “matter” is, at a minimum, regulation of GHG emissions, and that this “falls squarely under specific heads of provincial powers”.

The majority judgment also emphasizes the effects of the Act, including possibly unforeseen effects. As worded, the Act confers broad powers upon the Federal government to make province-specific regulations on virtually anything, including things specifically carved out for the provinces by the Constitution Act, 1867. While the majority notes that it does not suggest the Act to be an attempt to usurp the constitutional powers of the provinces, it nevertheless intrudes on provincial powers. In the Court’s view, “this Act is not limited to carbon pricing on fuels. To the contrary. Given the absence of restrictions on what might be included, it authorizes coverage and pricing of any substance, material or thing known to mankind. In summary, the Act provides for a standardless sweep of authority in favour of the Executive” [emphasis in original].

With respect to the national concern branch of the POGG power, the majority concludes that the Act meets neither the branch’s “singleness, distinctiveness, and indivisibility” nor its “provincial inability” criteria. Having found, moreover, that the broad discretionary powers accorded to the Federal Government by the Act in order to regulate GHGs would have an expansive and deleterious impact on the constitutional division of powers the majority notes that “[t]he scale of impact on provincial jurisdiction is irreconcilable with the fundamental distribution of legislative power under the Constitution”.

In a concurring opinion, Wakeling, JA agrees that the Act is a step too far into the provinces’ constitutional realm, and that it cannot be saved by the national concern doctrine, or by any other branch of Canada’s residual POGG power. Although he frames his analysis differently from the majority, Wakeling, JA concludes that the Act is unconstitutional, and that “[i]n the absence of a valid environmental emergency, the federal and provincial governments must work together to produce and implement strategies that will dramatically reduce Canada’s greenhouse gas levels to the degree Canada indicated was achievable in the Paris Agreement”.

The Dissent

In dissent, Feehan, JA agrees in large measure with the majority opinions of the Saskatchewan Court of Appeal and the Ontario Court of Appeal in their respective reference decisions on the same question. He takes a significantly different view of the Act than the majority, beginning with its purpose, which he considers narrowly to be ensuring “a minimum floor to be met by provincial carbon pricing schemes; that is, the economy-wide target of reducing greenhouse gas emissions by stringency pricing methods to 30% below 2005 levels by 2030”. He also emphasizes that the Constitution is a living tree and both the Federal Government and Provincial Legislatures must have jurisdictional room to act in relation to the environment with respect to a new matter that did not exist at the time of Confederation and is of national concern.

Feehan, JA finds the Act to be constitutionally valid under the national concern branch of the Federal Government’s POGG power. He also canvasses several other constitutional doctrines, some of which are rejected (the emergency branch of the POGG power and the Federal taxation power), while others are incorporated into his final opinion (the double aspect doctrine, co-operative federalism, the effects of international agreements, the need for certainty, and the living tree doctrine). Feehan, JA notes that the intervenor parties Assembly of First Nations and the Athabasca Chipewyan First Nation advocated for finding constitutionality based on the honour of the Crown and associated obligations to First Nations peoples, arguments which he declined to incorporate into his judgment.

What’s Next?

Given the Act’s uncertain constitutional validity, coupled with its heightened political sensitivity, potentially broad economic impact, and significant implications for the division of powers, it was always expected to be ruled upon by the SCC. It is anticipated that the Federal Government will appeal the Alberta decision and that the appeals from the three provincial references will be consolidated before the SCC. The SCC ruling will be significant not only for the greenhouse gas debate, but for Canada’s broader constitutional framework. The national concern doctrine has been utilized rarely since it was first invoked over a century ago. It is significant that the Federal Government sought only to ground the Act in this particular branch of the POGG power (when other avenues were available). The SCC ruling will have important, and far-reaching, ramifications for the scope of Parliament’s power in the Canadian federal system.

As we wait for the SCC’s conclusion on the constitutionality of the Act, another recent legislative development to watch is Alberta’s newly announced Bill 1, the Critical Infrastructure Defence Act (Bill 1). Bill 1 is aimed at protecting essential infrastructure from damage or interference caused by blockades, protests or similar activities. Attempting to build on existing trespassing laws to create offences, this Bill will legally define essential infrastructure (including public and private property, and potentially encompassing some federal works and undertakings). With the introduction of Bill 1, and its potential to directly conflict with several sections of the Charter of Rights of Freedoms, as well as the Federal Government’s criminal law power, Alberta’s constitutional battles seem far from over.

Alberta Court of Appeal greenhouse gas (GHG) Greenhouse Gas Pollution Pricing Act fossil fuels

Authors

Subscribe

Stay Connected

Get the latest posts from this blog

Please enter a valid email address