Reference re Greenhouse Gas Pollution Pricing Act
On 25 March 2021, the Supreme Court of Canada ruled as part of a reference question that the federal government's mandated carbon pricing tax is constitutional. The case was heard as a result of the Alberta, Ontario, and Saskatchewan government's asking their respective courts of appeal for an opinion on the law. The cases were appealed and heard together as part of the Supreme Court of Canada Hearing.
In 2018, as a response to the global climate crisis, Canada's parliament passed the Greenhouse Gas Pollution Pricing Act. This bill contains four parts, two of which were were challenged in the ruling. They establish:
- A fuel tax applied to consumers, producers, and distributors for carbon-based fuels; and
- A generalized pricing mechanism for Greenhouse Gasses (GHG) at large industrial facilities.
Natural resource extraction and consumer taxes both fall under provincial jurisdiction as per the Canadian Constitution Act. The provincial governments of Alberta, Ontario, and Saskatchewan all raised an argument of constitutionality at their respective appeal-level courts. Collectively, they argued that the bill oversteps the federal government's jurisdiction. They argued this bill will set a dangerous precedent allowing the federal government to legislate on provincial matters . The bill itself does not directly impose a federal tax on carbon consumption. Provinces are free to set their own minimum standards on carbon pricing; however, if those standards fall short of the federal Greenhouse Gas Pollution Pricing Act then the federal mandate would apply.
Both courts of appeal for Saskatchewan and Ontario held the bill was constitutional. Alberta's court of appeal ruled 4-1 that the bill violated federal jurisdiction and was not constitutional. All three cases were appealed, and the Supreme Court agreed to hear the reference case together. A reference case is a submission by a government to a court for an advisory opinion on the matter. Reference decisions are not legally binding; however, no reference decision has ever been ignored in Canada's history.
Relevant Law and Principles
The goal of federalism in Canada is to reconcile diversity with unity. Section 91 and 92 of the Constitution Act describe Canada's division of powers. Broad powers are given to the provincial governments to encourage diversity while issues of national importance are reserved to the federal government to ensure unity. Section 91 of the Constitution specifically allows for the parliament of Canada to enact laws for the "Peace, Oder, and Good Government" of the country. Peace, Order, and Good Government (POGG), has become a principle of its own in Canadian jurisprudence. Its broad nature has been practically interpreted by the courts to give federal government authority in four areas: residual; emergency; national concern; and federal paramountcy.
The Supreme Court ruled 6-3 that Alberta's appeal should be allowed, and Ontario and Saskatchewan's appeals should be dismissed. Three judges dissented as part of the nine judge panel. In the ruling, the Supreme Court acknowledged that this bill is infringing on the jurisdiction on the provinces, a common issue in climate change litigation as discussed in Obstacles to Climate Litigation. However, they argued that this infringement is not only justified but also necessary. Justice XX wrote that the climate crisis is an issue of national importance with grave consequences. Failure to act in a swift manner with a universal plan would unfairly burden the most vulnerable communities in Canada. Furthermore, without a federal "backstop", so the law is called, there is a tangible risk of some provinces subordinate others through unilateral and insufficient measures.
The ruling argues that the bill does not pose a risk of setting an overly broad precedent on federal powers. Justice Wagner writes that the infringement is "qualified and limited", only going as far as necessary and not further. The bill is specific to carbon based regulatory measures, and only applies when provincial standards are lacking. Nevertheless, Justice Brown dissented, suggested that this decision may lead to similar rulings in other matters historically legislated by provincial governments such as health care, education, and prisons. Justice Cote agreed with the constitutionality of the limitations placed on provincial governments; however, she argued that the bill places too much power in the hands of parliament and should be disallowed for this reason.
The Supreme Court ruling sets a strong example that climate change is an issue of national concern. Moreover, the argument that Peace, Order, and Good Government applies to climate warming has not been said before. The ruling not only helps cement a central piece of Canada's climate strategy, but also sets the example that limitations on constitutional jurisdiction may be justifiably infringed upon in the context of the climate emergency in order to maintain POGG in Canada.