Supreme Court of Canada decides the federal Greenhouse Gas Pollution Pricing Act is constitutional

8 minute read
25 March 2021

Today, the Supreme Court of Canada released its decision in the Greenhouse Gas Pollution Pricing Act (the "GGPPA" or the "Act") references, with the majority confirming that the federal carbon pricing backstop is constitutional. The Supreme Court heard oral submissions on September 22 and 23, 2020 after the majority of the Saskatchewan and Ontario Courts of Appeal concluded the GGPPA was constitutional, while the majority of the Alberta Court of Appeal concluded it was unconstitutional. The Reference was heard by a full nine-judge panel. Six of the judges concluded the Act is constitutional.  Justice Wagner authored the majority decision. 

This is the first time since its 1997 decision in R. v. Hydro Quebec that the Supreme Court of Canada has updated its jurisprudence with respect to the "national concern" doctrine of the Constitution's Peace Order and Good Government ("POGG") power.

The majority of the SCC decided that the GGPPA sets minimum national standards of greenhouse gas ("GHG") price stringency to reduce GHG emissions, and Parliament has jurisdiction to enact this law as a matter of national concern under the POGG clause of section 91 of the Constitution. The majority held that "the effects of climate change have been and will be particularly severe and devastating in Canada," with the Canadian Arctic facing a disproportionately high risk. Justice Wagner noted that "no one province, territory or country can address the issue of climate change on its own. Addressing climate change requires collective national and international action. This is because the harmful effects of GHGs are, by their very nature, not confined by borders."  

The majority defined the matter (what the Act does and why) precisely, concluding that the true subject matter of the GPPAA is "establishing minimum national standards of GHG price stringency to reduce GHG emissions." The majority rejected broader characterizations of the Act advanced by the majorities of the Courts of Appeal of Ontario and Alberta and found that this matter, implemented by means of the backstop architecture in the Act, relates to a federal role in carbon pricing that is qualitatively different from matters of provincial concern. The GHG pricing under the Act seeks to change behaviour by internalizing the cost of climate change impacts.  This does not amount to the regulation of GHG emissions generally, and allows each province to enact its own pricing mechanism (as long as it is sufficiently stringent as determined by the federal Governor in Council). The majority held that the GGPPA is "tightly focussed" on the distinctly federal role. Further, the provinces are constitutionally incapable of establishing minimum national standards.

Justice Côté dissented in part, finding that while Parliament has the power to enact constitutionally valid legislation establishing minimum national standards of price stringency to reduce GHG emissions, the GGPPA in its current form is unconstitutional. Côté J. found that the Act gives "inordinate discretion" to the executive to set minimum standards and to amend and override the Act, with no meaningful checks on changes to the current pricing scheme.

Justices Brown and Rowe wrote separate dissenting reasons. Justice Brown held that the GGPPA cannot be supported by any source of federal authority, and the Act's subject matter falls squarely within provincial jurisdiction.  Justice Brown held that the subject matter regulated by the Act is under exclusive provincial jurisdiction. Invoking "minimum national standards" cannot transform a matter formerly under provincial jurisdiction into a matter of national concern. Justice Brown warned that the Act opens the door to federal intrusion by way of the imposition of national standards into all areas of provincial jurisdiction. Justice Rowe agreed with Justice Brown, describing the national concern doctrine as a residual power of last resort that should be limited to maters that cannot fall under other heads of jurisdiction and cannot be distributed among the provinces and Parliament to fill the constitutional gap.

The decision means that the GPPAA continues to be in force, and the federal backstop currently applies in full or in part in Ontario, New Brunswick, Manitoba, Nunavut, Yukon, Alberta, PEI and Saskatchewan. Those provinces with federally approved alternative strategies for pricing GHG emissions may also continue with their plans.

In September 2020, Ontario Minister of the Environment, Conservation and Parks Jeff Yurek announced that Ontario's Emissions Performance Standards ("EPS") program was approved by Environment Canada as an alternative to the federal OBPS. This means that the federal government will eventually stand down the OBPS under the GGPPA, allowing the EPS to fill the regulatory space. The GGPPA's federal Fuel Charge, which applies a per-litre charge on various fuels throughout their supply chains, will continue to apply in Ontario alongside Ontario's EPS. It is similarly the intent of the federal government to stand down the OBPS in New Brunswick.

Jennifer King, Michael Finley and Liane Langstaff of Gowling WLG's Environmental Group represented the intervenor Canadian Public Health Association ("CPHA") in the GGPPA references at the Supreme Court of Canada, and before the Saskatchewan and Ontario Courts of Appeal. Gowling WLG acted as an agent for a number of parties including Guy Régimbald as co-counsel for the Smart Prosperity Institute.

Gowling WLG continues to monitor changing greenhouse gas regulation and jurisprudence.

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