The Ontario Court of Appeal ruled that the federal Greenhouse Gas Pollution Pricing Act (GGPPA) is constitutionally valid.  Parliament has the authority to set minimum national standards to reduce Greenhouse Gas emissions under its “National Concern” power – a branch of the Peace, Order and Good Government (POGG) power in the Constitution.

4 of the 5 judges joined in this majority opinion. The 1 dissenting judge found that the federal law is unconstitutional because giving the federal government power to regulate Greenhouse Gas (GHG) emissions would unjustifiably intrude on provincial authority to regulate the economy.  However, the dissenting judge agreed that the federal government has the power to price carbon, but it must use its “Taxation” or “Criminal” power, not POGG.

What is the effect of the decision?

The decision confirms that the federal GGPPA is constitutionally valid.  It finds that both the federal and provincial governments have authority to legislate over greenhouse gas (GHG) emissions.  Ottawa has the power to set minimum national standards across Canada, and provinces have broad authority to legislate over the provincial aspects of carbon pricing and climate change, provided they meet the minimum standards.  (The GGPPA has an ‘equivalency clause’ – the federal law does not apply in any province that has an equivalent or stronger carbon price.  Provinces are then free to tailor their laws to meet their local circumstances, such as their mix of industries.)

How does this compare to the Saskatchewan court decision?

The Saskatchewan Court of Appeal also upheld the federal law as a matter of “National Concern” under the federal POGG power.  The main difference is that the SK court found the federal power was to set minimum standards for carbon pricing, and the ON court found the power was to set minimum standards for GHG emissions (not limiting it just to ‘pricing’). Two judges in SK dissented, finding this law invalid, but agreeing that the federal government has the power to price carbon, but under its ‘Taxation” power, not POGG.  Therefore, all 10 judges in ON and SK have agreed that the federal government has the constitutional authority to price carbon, and 7 of the 10 have held that this law is constitutional.

What are the next steps?

The Saskatchewan decision has been appealed to the Supreme Court of Canada, and a tentative hearing date of December 5 has been set. It is likely that this Ontario decision will be appealed too, and heard jointly with the SK appeal in the Supreme Court.

What is the legal basis of the decision?

Background: The Constitution sets out the various ‘heads of power’ over which the federal government (s. 91) or provincial governments (s. 92), may legislate. Those heads of power do not specifically address matters such as “pollution” or “climate change” (it was drafted in 1867), so courts must look by analogy to the other heads of power to decide if a matters falls within federal or provincial authority⁠—or if authority is shared (as was found here).

The Court found that the GGPPA falls within federal constitutional authority under the “National Concern” power – which is a branch of the Peace, Order and Good Government power in s. 91. It found that the federal government has the constitutional authority to set “minimum national standards to reduce GHG emissions”⁠—which is what this Act does. This is a matter of national concern because GHG emissions are a very serious interprovincial and international problem (Ontario had argued it is mainly a local pollution problem, like smoke), as reflected in international treaties to address the problem. Because the federal power is to set national minimum standards, it will not cause any significant intrusion on provincial authority. Provinces are free to pass their own laws addressing GHGs, as long as they meet the national minimum requirements (as is the case in health care and other areas).  Ontario could not identify any provincial law concerning GHGs that would be impeded by the federal GGPPA.

The Court did not address the other constitutional bases that were argued, because it upheld the law under National Concern / POGG.

The parties’ main legal arguments

Ontario

• The Act does not satisfy the requirements to qualify as a matter of National Concern under the Constitution. GHG emissions and climate change are mainly a ‘local matter’ subject to exclusive provincial jurisdiction. If the federal government had authority over GHGs, it would seriously intrude on provincial jurisdiction.
• Alternatively, if the Act is found to be a “tax” (as SK argued), then it does not satisfy the requirements for a valid federal “Tax” under the Constitution — in particular, because the price level was set by Cabinet, not Parliament.

 Federal government

• Parliament has the power to regulate “GHG emissions” (or the “cumulative dimension” of GHG emissions, they argue) under the National Concern power. Climate change is a global problem.
• Alternatively, if the Act is a ’tax’, it meets the requirements of the ”Tax” power in the Constitution.

Intervenors’ alternative arguments for federal authority [1]

• National Concern power:
  • The federal government has power to set “minimum national standards for pricing of GHG emissions” (as opposed to comprehensive authority over GHG emissions) [B.C. government, supported by Ecofiscal Commission]
  • The federal government has authority over “interprovincial and international pollution cased by GHG emissions”, and provinces have authority over the “intra-provincial” aspects of GHG emissions [Ecofiscal Commission]
  • The fact that Canada is part of a global treaty on GHG emissions is strong evidence that it is a matter of National Concern under the Constitution [Ecofiscal Commission]
• The Act falls within the “Criminal Law” power of the Constitution[2] (several intervenors)
• The Act falls within the Constitution’s “Trade & Commerce” power (Environmental Defence, IETA)
• The Act falls under the federal “Emergency Power” in the Constitution (David Suzuki Foundation)
• Federal authority over GHGs is essential to protect Indigenous Peoples (Indigenous intervenors)

[1] The intervenors supporting ON relied on essentially the same constitutional grounds as ON and SK.

[2] The Criminal Law power has been found to be the basis for several federal environmental laws (on toxic pollution, endangered species, and low carbon fuels).