Jurisdictional Wrangling over Climate Policy in the Canadian Federation: Key Issues in the Provincial Constitutional Challenges to Parliament's Greenhouse Gas Pollution Pricing Act.

• Author: Chalifour, Nathalie J.

CONTENTS

Introduction 5 I. Background and Context 10 A. Carbon Pricing in Canada 12 B. Summary of Arguments in the Provincial Constitutional References 15 1. Saskatchewan's Arguments 15 2. Ontario's Arguments 17 3. Canada's Arguments 18 II. Key Issues in the Litigation 21 A. Can the Subject Matter of GHG Emissions be Justified as a Matter of National Concern Under Parliament's Authority to 21 Make Laws for 24 Peace, Order, and Good Government? 1. Are GHG Emissions a Matter of National Concern? 25 2. Are GHG Emissions Sufficiently Single, Distinct, and Indivisible? 29 3. Is the Scale of Impact on the Provinces Reconcilable 30 With the 32 Distribution of Powers in the Constitution? a. Proper Characterization of the Subject Matter 39 b. Exclusivity c. Scale of Impact of Federal Regulations on GHG Emissions 41 B. What Are the Contours of "Temporary Measures" in 42 the Context 44 of POGG's Emergency Branch, Given the Planetary and Geological Scale of Climate Change? 47 1. A Climate Emergency? 2. Is the GGPPA a Temporary Measure? 49 C. Will the Courts Clarify Their Criteria for 50 Distinguishing Between 50 Regulatory Charges and Taxes to Take Better Account of Economic 51 Instruments Such as Carbon Pricing for Constitutional Purposes? 1. Is the Carbon Price a Tax or a Regulatory Charge? 2. Is the Carbon Price Connected to a Regulatory Scheme? a. Step 1: Is There a Relevant Regulatory Scheme? d. Step 2: Is There a Relationship Between the Regulatory Charge and the Regulatory Scheme? Conclusion 55 INTRODUCTION

Debates about the division of powers in the Canadian federation are nothing new. They have been central to Canadian environmental law from its beginnings, as illustrated by the fact that several major Supreme Court of Canada jurisdictional cases have featured environmental legislation. (1) Canadian climate law is proving to be no different, (2) raising novel questions about how we should interpret jurisdiction in a way that is respectful of our federalist makeup, yet also responsive to an issue that could, as Saskatchewan Court of Appeal Chief Justice Richards said during questioning, "literally imperil the future of the planet." (3) The response to climate change not only raises challenging legal questions, but has become highly politicized in these divisive times, with some predicting the 2019 federal election will turn on its outcome. (4)

While considerable ink has been spilled on discussing how jurisdiction over greenhouse gas (GHG) emissions could be allocated in Canada, most of the analysis came before Parliament enacted the Greenhouse Gas Pollution Pricing Act (5) (GGPPA) in June 2018. (6) While this is not the first piece of federal legislation about GHGs, (7) it is one that has triggered sufficient provincial opposition to generate two legal challenges--one by Saskatchewan and one by Ontario--over whether the GGPPA is intra vires of Parliament. (8) This article builds upon the existing body of analysis on the division of powers over GHG emissions in Canada as well as the factums of the parties and intervenors in the case to examine the constitutionality of the GGPPA. This question has many dimensions, including the scope and applicability of multiple heads of powers, such as the national concern and emergency branches of the residual peace, order, and good government (POGG) power, taxation, criminal law, and the trade and commerce powers. It also raises related issues about the relevance of international commitments, Indigenous rights and the Canadian Charter of Rights and Freedoms (9) (Charter), unwritten constitutional principles of federalism and the protection of minorities, and interpretive principles such as cooperative federalism.

The carbon pricing litigation raises many other related constitutional law questions, such as the scope of the federal criminal law power to justify economic incentives, (10) the relevance of the treaty implementing power, the incorporation of Indigenous sovereignty and rights into the division of powers analysis, and the prospects for applying a normative lens of interpretation to jurisdictional disputes when those disputes threaten to undermine the fundamental rights of Canadians. (11) I do not attempt to exhaustively analyze all of these issues--the courts will have an opportunity to do this, after benefitting from the written and oral arguments of counsel representing the parties and intervenors, and research will continue alongside the litigation. My goal in this paper is to delve deeply into a subset of three key constitutional law questions that are central to the litigation. (12) How these issues are resolved will not only answer the question of whether the GGPPA is intra vires of Parliament, but also of how certain unresolved constitutional law issues will be addressed. The outcome of the challenges also has deep implications for Canada's ability to deal effectively with climate change.

The first question I address relates to the national concern branch of POGG, which is the main basis of jurisdiction claimed by the Attorney General of Canada (Canada) to justify the GGPPA. This power has been narrowly construed by the courts in the past, and the provinces have mounted a vehement objection to its use in this case, largely on the basis that it would confer exclusive and plenary powers to Parliament over GHGs and, in effect, displace provincial laws relating to GHG emissions. The Attorney General of Saskatchewan (Saskatchewan), for example, characterizes the national concern branch of POGG as explicitly conferring a ground of "exclusive jurisdiction of Parliament" that would have the effect of "displacing provincial powers altogether." (13) In oral submissions, the Attorney General of Ontario (Ontario) characterized POGG as a power with a special kind of exclusivity that is not open to the double aspect doctrine. These constitutional references provide an opportunity for the courts to clarify some misconceptions about the nature of the national concern branch of POGG that have emerged in contemplation of its applicability to environmental laws, and in response to strong dissenting language in R v Hydro-Quebec. (14) I examine the relevant jurisprudence to identify the source of confusion, and explain what I believe is the correct interpretation of this power in the context of the current challenges--an interpretation which offers solace for the federalism cautions espoused in the dissents in Hydro-Quebec and R v Crown Zellerbach Canada Ltd. (15)

The second question relates to the contours of temporary measures in the context of POGG's emergency branch. While Canada did not claim jurisdiction for the GGPPA as an emergency, some intervenors' arguments brought the issue before the courts. (16) How should courts interpret the requirement that legislation be temporary in light of the geological and planetary scale of climate change? I will consider the relevant jurisprudence to determine whether the Act could meet the temporal requirement.

Third, the constitutional challenges will require the courts to determine whether the carbon pricing mechanisms contained in the GGPPA qualify as taxes or regulatory charges. This distinction is important, because when a measure is constitutionally justified as a tax, sections 53 and 125 of the Constitution Act, 1867 (17) apply. Both provincial challenges allege the carbon price enacted by the GGPPA is a tax that does not conform to section 53, which embodies the "no taxation without representation" principle. (18) They may also claim it is a tax because this would trigger the application of section 125, which exempts provincially owned entities from paying federal taxes. (19) While the jurisprudential test for distinguishing between taxes and regulatory charges is well established, one part of the test is relatively unchartered territory, and the provinces have invited the courts to eliminate it. The courts will need to clarify how this part of the test applies to a measure like the carbon price, which has behaviour modification, versus cost-recovery, as its primary goal.

While the constitutional law questions addressed in this paper and by the courts merit discussion in and of themselves, the analysis contributes to a broader conversation about whether the Constitution is equipped to handle what many have characterized as the greatest collective action and public policy challenge of our times, while respecting our federalist makeup. (20) I conclude that it is so equipped, but only if courts are willing to allow the living constitutional tree to adapt to the very different context in which it serves Canadians today. This adaptation requires recognizing the critical role that all governments in Canada must play in addressing climate change, and interpreting the division of powers in a way that minimizes conflict and maximizes progress and cooperation. The answer to -these questions will shape not only the socio-economic context in which we live, but the very liveability of our planet.

Before turning to the first question, I will briefly provide some relevant background about what led to the GGPPA, and summarize the main arguments made by the parties in the two provincial references. (21)

1. BACKGROUND AND CONTEXT

   Creating the legal and policy infrastructure needed to address climate change within the timeframe required presents a major public policy challenge for any country. It is especially challenging in the context of Canadian federalism, since the rapid interventions needed at multiple levels and in many domains call for considerable intergovernmental coordination and cooperation in largely unchartered territory. While Canadian governments necessarily have abundant experience with intergovernmental coordination, multi-dimensional issues such as climate change have proven to be especially tricky. (22)

   Canada has been internationally committed to taking steps to mitigate GHG emissions since 1992, when it signed the...