Validity Of The Renewable Fuels Regulations Under CEPA Upheld

The Federal Court of Appeal has recently rendered a decision in another judicial review involving the Canadian Environmental Protection Act (CEPA).

Syncrude, which produces diesel fuel at its tar sands operations, commenced an application challenging the validity of federal regulations made under CEPA requiring that all diesel fuel produced, imported, or sold in Canada contain a minimum of 2% renewable fuel (the Renewable Fuels Regulations). In Syncrude v Canada (Attorney General), 2016 FCA 160, the Federal Court of Appeal upheld a lower court decision to dismiss that application.

At the heart of the Syncrude challenge was the Renewable Fuels Regulations (RFRs). The RFRs were promulgated under subsection 140(1) of CEPA, which empowers Cabinet to make regulations to carry out the purpose of section 139 of the Act. Section 139 prohibits the production, importation, and sale of fuel in Canada does not meet prescribed specifications. In order to make a regulation under subsection 140(1), subsection 140(2) requires that Cabinet must first be of the opinion that the proposed regulation could make a significant contribution to the prevention of, or reduction in, air pollution resulting from fuel combustion. Breaching section 139 is an offence, subject to a fine of not less than $500,000 up to a maximum of $6,000,000 on conviction for corporations.

Syncrude challenged the validity of the RFRs as a matter both of constitutional law and administrative law.

In terms of the constitutionality of the RFRs, Syncrude alleged that the operative provision of the RFRs did not constitute a valid exercise of Parliament's criminal law power under the Constitution because it lacked a criminal law purpose.

The arguments relating to constitutionality focused on the operative provision of the RFRs—subsection 5(2)— and asserted is not aimed at reducing air pollution or climate change. Rather, it argued, that subsection 5(1) of the Regulations is either an economic measure designed to create a local market, which would fall under subsection 92(13) of the Constitution, or pertains to non-renewable natural resources, which would fall under section 92A of the Constitution. Both subsections 92(13) and 92A of the Constitution are matters solely within provincial jurisdiction.

The impugned provision provides:

Distillate pool

(2) For the purpose of section 139 of the Act, the quantity of renewable fuel, expressed as a volume in litres, calculated in accordance with...