Meeting The Minimum (National) Standards: Ontario Court Of Appeal Upholds Constitutionality Of Federal Carbon Pricing Backstop

The majority of the Ontario Court of Appeal ruled on June 28, 2019 that the federal Greenhouse Gas Pollution Pricing Act (the Act or GGPPA) is constitutional. In particular, the Court of Appeal ruled that the GGPPA is within Parliament's jurisdiction to legislate in relation to matters of "national concern" under the Peace, Order and Good Government (POGG) clause of section 91 of the Constitution Act, 1867. The Court found that given the need for a collective approach to a matter of national concern, and the risk of non-participation by one or more provinces, the federal government is within its jurisdiction to adopt minimum national standards for reducing greenhouse gas (GHG) emissions. The GGPA leaves ample scope for provincial legislation in relation to climate change and GHG emissions, while narrowly constraining federal jurisdiction to address the risk of provincial inaction. The Court of Appeal also ruled that the fuel charges imposed by the GGPPA are regulatory in nature and as such, are not taxes. The Ontario decision follows the May 2019 opinion from the Saskatchewan Court of Appeal, which also upheld the constitutionality of the Act. For more information on the Saskatchewan decision, please see our earlier blog.

Staking Out the Positions

The federal carbon pricing backstop under the GGPPA consists of two components, a fuel charge (under Part 1 of the Act) and an output-based pricing system (OBPS) for large industrial emitters (under Part 2 of the Act). The Attorney General of Ontario argued that both Part 1 and Part 2 of the GGPPA are unconstitutional because the jurisdiction that Canada asserts under the Act would radically alter the constitutional balance between federal and provincial powers. Ontario also argued that the fuel charge and OBPS are unconstitutional because they cannot be supported under any federal head of power. Further, Ontario argued that the charges are not legislatively authorized as taxes and do not have a sufficient nexus to the purposes of the GGPPA to be considered valid regulatory charges. The Attorney General of Canada put forward the argument that the GGPPA is constitutional under the national concern branch of the POGG power. In particular, the "pith and substance" of the Act is the "cumulative dimensions of GHG emissions", which Canada said is a matter of national concern that the provinces are constitutionally incapable of addressing. In response to Ontario's argument that the charges themselves are invalid, Canada countered that the fuel charge and OBPS are constitutionally valid regulatory charges which advance the objects of the Act. 18 parties were involved as interveners in the...