Divided Supreme Court finds Greenhouse Gas Pollution Pricing Act constitutional

Canada Publication March 25, 2021

In a split 6-3 decision released today, the Supreme Court of Canada found the federal Greenhouse Gas Pollution Pricing Act (“GGPPA”) to be constitutional.  The Court’s decision marks the endpoint for the primary legal challenges mounted by Saskatchewan, Ontario and Alberta, which had argued that the provinces should have the power to individually regulate greenhouse gas (“GHG”) emissions within their borders and to adopt their own strategies for meeting the challenges posed by climate change. The Court’s decision will have significant and widespread implications for future legislation, regulation and taxation of GHG emissions, as well as our country’s constitutional framework, and may open the door to future challenges to the GGPPA’s implementation – particularly given virulent dissents on the part of the Court and the Courts of Appeal below.

Majority opinion

Writing for the majority, Chief Justice Wagner held that the GGPPA was a valid exercise of Parliament’s constitutional jurisdiction under the national concern branch of the Peace Order and Good Government (“POGG”) power, an important but rarely-invoked grant of authority derived from the preamble to section 91 of the Constitution Act, 1867. The Chief Justice took this opportunity to clarify the test for the national concern branch, which had not been addressed by the Court since Crown Zellerbach over 30 years ago.

The Chief Justice characterized the subject matter of the GGPPA (its “pith and substance”) as the “establishing of minimum national standards of GHG price stringency to reduce GHG emissions.” This characterization was an endorsement of the narrow approach advanced by British Columbia and adopted by certain justices of both the Saskatchewan and Ontario Courts of Appeal. It was also a rejection of the broader approach to characterization of the GGPPA adopted by the majorities of the Alberta and Ontario Courts of Appeal, which could have led to a recognition of more sweeping federal powers over GHG emissions if found constitutional.  

Fashioning and then applying a new, three-part test for the national concern branch, the Chief Justice classified the pith and substance of the GGPPA as falling within Parliament’s POGG power when limited as such. According to the Chief Justice, (1) the subject matter of the GGPPA was of sufficient concern to the country to warrant consideration as a possible matter of national concern; (2) the subject matter of the GGPPA passed the “single, distinct and indivisibility” analysis, taking into account the provinces’ inability to address the matter as a whole through cooperation due to the risk of “carbon leakage”; and (3) the impact of the proposed subject matter of national concern was reconcilable with the constitutional division of powers in this country. The notion of “cooperative federalism”, which has animated successful provincial assertions of regulatory jurisdiction over federal undertakings, also loomed large in this analysis.

Dissenting opinions

Justices Côté, Brown and Rowe wrote separate dissenting opinions. 

Justice Côté agreed with Chief Justice Wagner’s formulation of the national concern branch analysis, but parted company with the Chief Justice’s ultimate conclusion. Justice Côté held that the significant breadth of the regulatory discretion conferred by the GGPPA on the federal Governor in Council “results in the absence of any meaningful limits on the power of the executive.” This was a concern echoed by the other dissenting judges, as well as some of the judgments below. 

Unlike Justice Côté, Justice Brown rejected the Chief Justice’s analysis entirely. In a strongly worded dissent, Justice Brown held that the majority’s decision did not “clarify” the national concern test at all, but rather abandoned and re-wrote the Court’s established jurisprudence. In Justice Brown’s words, the majority’s decision has not only “undone” the constitutional balance that it presumed to strike between the powers of the federal and provincial legislatures, but engaged in “rhetorical sleight of hand” to facilitate federal assertions of jurisdiction.

Finally, like Justice Brown, Justice Rowe dissented from the majority’s decision on a number of grounds, emphasizing that the national concern doctrine is a residual power of last resort and that Canada’s proposed doctrinal expansion of the national concern branch of POGG should have been rejected because it will provide a broad and open pathway for further incursions into what has been exclusive provincial jurisdiction.

Key takeaways and questions

The Court’s decision has brought some measure of finality to at least one aspect of the ongoing carbon-pricing debate in Canada. Despite the strong dissenting opinions from Justices Côté, Brown, and Rowe – and notwithstanding the academic discussions that will follow – consumers and industry participants now have a better understanding of the applicable legislative framework regarding GHG emissions that will apply going forward. 

Although the Court’s decision to uphold the GGPPA will shape the regulation of GHG emissions in Canada for the foreseeable future, questions regarding the constitutionality of how the Federal Government exercises its delegated powers under the GGPPA will persist. The majority held that such questions regarding the validity of particular regulations enacted under the GGPPA could be dealt with in future cases, if necessary. But as Justice Rowe observed, “Issues as to whether regulations veer too deeply into industrial policy, thus calling into question the regulations’ constitutionality, will inevitably arise.” Two issues that remain unresolved are: what other types of regulation of GHG emissions, if imposed under the federal regime, may also be constitutional given the narrow “pith and substance” analysis, and how far the industry-specific GHG targets set out in Part 2 of the GGPPA may go before they cross the constitutional boundary into industrial policy.

The authors wish to thank articling student Kyle Havart-Crans for his help in preparing this legal update.

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