Syncrude Canada Ltd. v. Canada (Attorney General), 2016 FCA 160

• Judge: Ryer, Boivin and Rennie, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: May 30, 2016
• Jurisdiction: Canada (Federal)
• Citations: 2016 FCA 160;(2016), 483 N.R. 252 (FCA)

Syncrude Can. Ltd. v. Can. (A.G.) (2016), 483 N.R. 252 (FCA)

MLB headnote and full text

Temp. Cite: [2016] N.R. TBEd. JN.003

Syncrude Canada Ltd. (appellant) v. The Attorney General of Canada (respondent)

(A-383-14; 2016 FCA 160)

Indexed As: Syncrude Canada Ltd. v. Canada (Attorney General)

Federal Court of Appeal

Ryer, Boivin and Rennie, JJ.A.

May 30, 2016.

Summary:

The Renewable Fuels Regulations (RFR), which were promulgated under the Canadian Environmental Protection Act, required diesel fuel produced in Canada to contain at least 2% renewable fuel (s. 5(2)). Syncrude Canada Ltd. produced diesel fuel at its oil sands operations in Alberta, which it used there in its vehicles and equipment. Syncrude challenged the constitutionality of s. 5(2) as it related to Syncrude's operations.

The Federal Court, in an appeal reported at (2014), 461 F.T.R. 53, held that the RFR were intra vires the federal government as a valid exercise of Parliament's criminal law power. Syncrude appealed.

The Federal Court of Appeal dismissed the appeal.

Constitutional Law - Topic 21

General - Raising constitutional issues - General - The appellant appealed a decision that found that certain federal legislation was constitutional - On appeal, the appellant disputed a matter that it had conceded at trial - The Federal Court of Appeal held that this was of no consequence as constitutionality, as a matter of law, could not be conceded - See paragraph 72.

Constitutional Law - Topic 1715

Extent of powers conferred - Ancillary doctrine - Legislation ancillary to federal power - The Renewable Fuels Regulations (RFRs), which were promulgated under the Canadian Environmental Protection Act (CEPA), required diesel fuel produced in Canada to contain at least 2% renewable fuel (s. 5(2)) - Syncrude produced diesel fuel at its oil sands operations in Alberta, which it used there in its vehicles and equipment - Syncrude challenged the constitutionality of s. 5(2) as it related to its operations - A Federal Court judge held that the RFRs were intra vires the federal government as a valid exercise of Parliament's criminal law power - The Federal Court of Appeal agreed - Alternatively, the court concluded that "Overall, ... had it been found that the RFR was ultra vires the federal government, the intrusion of the ancillary provisions into provincial powers would not be serious enough to warrant striking it down. The regulations are enacted under broad heads of power and only intrude on other broad heads of power. While they override some aspects of provincial legislation, in most respects, they seek to complement it. Finally, Parliament has a history of legislating to protect the environment and although the provinces have some history of legislating on the issue of renewable fuels, in my view, this is insufficient to demonstrate that the intrusion into provincial powers is serious." - See paragraphs 87 to 97.

Constitutional Law - Topic 2502

Determination of validity of statutes - Aim or purpose of statute - The Renewable Fuels Regulations (RFRs), which were promulgated under the Canadian Environmental Protection Act, required diesel fuel produced in Canada to contain at least 2% renewable fuel (s. 5(2)) - Syncrude produced diesel fuel at its oil sands operations in Alberta, which it used there in its vehicles and equipment - Syncrude challenged the constitutionality of s. 5(2) as it related to its operations - Syncrude contended that the dominant purpose of the RFRs was to create a market in renewable fuels - The Federal Court of Appeal disagreed, stating that "The environment and economy are intimately connected. Indeed, it is practically impossible to disassociate the two. ... The evidence demonstrates that part of the objective of the RFRs was to encourage next-generation renewable fuels production and to create opportunities for farmers in renewable fuels. However, the evidence also demonstrates that a market demand and a market supply for renewable fuels and advanced renewable fuels technologies had to be created to achieve the overall goal of greater GHG [greenhouse gases] emissions reduction. ... [T]he consequential shifts in agriculture and the market for fuel arising from the renewable fuel requirement was not inconsistent with the dominant purpose of s. 5(2) being the reduction of GHGs, with their uncontroverted costs to the health of the human and natural environment; rather, it reinforced the dominant purpose." - See paragraphs 61 to 70 and 81.

Constitutional Law - Topic 2502

Determination of validity of statutes - Aim or purpose of statute - [See Pollution Control - Topic 4 ].

Constitutional Law - Topic 2950

Determination of validity of statutes or acts - Pith and substance or matter - General principles - The Renewable Fuels Regulations (RFRs), which were promulgated under the Canadian Environmental Protection Act (CEPA), required diesel fuel produced in Canada to contain at least 2% renewable fuel (s. 5(2)) - Syncrude produced diesel fuel at its oil sands operations in Alberta, which it used there in its vehicles and equipment - Syncrude challenged the constitutionality of s. 5(2) as it related to its operations - A Federal Court judge held that the RFRs were intra vires the federal government as a valid exercise of Parliament's criminal law power - On appeal, Syncrude submitted that the judge erred in his approach to the analysis of the pith and substance of the impugned provision - Syncrude suggested that the correct approach was to examine the impugned provision in isolation first, and that only if the pith and substance could not be resolved in that manner, was it appropriate to examine the provision in the context of the entire scheme - Syncrude submitted that the judge erred in his constitutional analysis because he started with the purpose and object of CEPA - The Federal Court of Appeal rejected the submission - The court held that "The judge did precisely what the Supreme Court of Canada mandated - he looked at subsection 5(2) and accepted that, when read alone or without reference to its enabling statute it might be considered a matter within provincial jurisdiction. The judge then considered the purpose and effect of subsection 5(2) and how it fit into the regulatory scheme. He framed his analysis in light of the Supreme Court of Canada's direction in Ward v. Canada (Attorney General), 2002 SCC 17 ... that '[t]he question is not whether the Regulations prohibit the sale so much as why it is prohibited' (emphasis in original). The question of whether the judge was correct in his conclusion aside, there was no error in his analytical framework." - See paragraphs 31 to 37.

Constitutional Law - Topic 6441

Federal jurisdiction (s. 91) - Criminal law - General - Criminal law defined - [See Constitutional Law - Topic 6450 ].

Constitutional Law - Topic 6443

Federal jurisdiction (s. 91) - Criminal law - General - Matters criminal in nature - The Renewable Fuels Regulations (RFRs), which were promulgated under the Canadian Environmental Protection Act, required diesel fuel produced in Canada to contain at least 2% renewable fuel (s. 5(2)) - Syncrude produced diesel fuel at its oil sands operations in Alberta, which it used there in its vehicles and equipment - Syncrude challenged the constitutionality of s. 5(2) as it related to its operations - Syncrude argued, inter alia, that the RFRs could not be a valid exercise of Parliament's criminal law power given certain exemptions in the RFR regime, and that in imposing a 2% renewable fuel requirement, they did not ban outright the presence of greenhouse gases (GHGs) in fuel - The Federal Court of Appeal rejected the argument - The court held that a prohibition need not be total, and it could admit exceptions - There was no constitutional threshold of harm that had to be surpassed before the criminal law power was met, provided there was a reasonable apprehension of harm - Further, Syncrude conceded that other regulations, such as those limiting concentrations of lead and sulphur in fuel were valid - Nothing distinguished the prohibition of a certain amount of sulphur or lead in fuel from a positive requirement of a certain amount of renewable fuel in fuels - Both sought to prevent the emission of toxic substances, whether sulphur dioxide or GHGs, and both were addressed to the reduction of air pollution - See paragraphs 71 to 77.

Constitutional Law - Topic 6450

Federal jurisdiction (s. 91) - Criminal law - Elements of a criminal law statute - General - The Federal Court of Appeal stated that "In broad terms, the jurisprudence of the Supreme Court of Canada establishes a three-part test for a valid exercise of the criminal law power. A valid exercise of the criminal law power requires a) a prohibition, b) backed by a penalty, c) for a criminal purpose: AHR [Reference re Assisted Human Reproduction Act, 2010 SCC 61]. ... Supreme Court jurisprudence as far back as the Reference re Validity of Section 5 (a) Dairy Industry Act, [1949] S.C.R. 1, [1949] 1 D.L.R. 433 ... has described the nature of the criminal purpose requirement as a requirement that the law be aimed at suppressing or reducing an 'evil.' Put in more contemporary language, to have a valid criminal law purpose the law must address a public concern relating to peace, order, security, morality, health or some other purpose (AHR at para. 43), but it must stop short of pure economic regulation." - See paragraph 48.

Constitutional Law - Topic 6511

Federal jurisdiction (s. 91) - Criminal law - Respecting particular matters - Environmental legislation - The Federal Court of Appeal held that protection of the environment was, unequivocally, a legitimate use of the criminal law purpose - See paragraphs 49 to 51.

Constitutional Law - Topic 6511

Federal jurisdiction (s. 91) - Criminal law - Respecting particular matters - Environmental legislation - [See Constitutional Law - Topic 6443 and Pollution Control - Topic 4 ].

Pollution Control - Topic 4

General principles - General - Environmental legislation - Interpretation - Section 140(1) of the Canadian Environmental Protection Act (CEPA) provided that the Governor in Council might, on the recommendation of the Minister, make regulations for carrying out the purposes of s. 139 - Regulations might be made prescribing the concentrations or quantities of an element, component or additive in a fuel, the physical and chemical properties of fuel, the characteristics of fuel related to conditions of use and the blending of fuels - Section 140(2) required that the Governor in Council be of the opinion that the regulation could make a significant contribution to the prevention of, or reduction in, air pollution resulting from, directly or indirectly, the combustion of fuel - The Renewable Fuels Regulations (RFRs) were promulgated under s. 140(2) - Syncrude challenged their constitutionality - The Federal Court held that the RFRs were a valid exercise of Parliament's criminal law power - Syncrude appealed - Syncrude alleged, inter alia, that the provision was ultra vires the regulation-making power of s. 140 of the CEPA because the Governor in Council was required to form an opinion that the regulation would reduce air pollution, an opinion which the Governor in Council could not reasonably have held - The Federal Court of Appeal dismissed the appeal - The court rejected Syncrude's argument, inter alia, that the RFRs were ineffective in achieving their purpose - "There is no doubt as to what the regulations seek to achieve, how they operate, and their practical effect. The argument that there may be a better, more efficacious way to reduce GHGs [greenhouse gases] does not alter the conclusion. ... '[T]he purpose of legislation cannot be challenged by proposing an alternative, allegedly better, method for achieving that purpose.'" - The court rejected Syncrude's argument that because the RFRs were ineffective (an assertion which failed on the evidence), the dominant purpose must have been to establish a local market - See paragraphs 4 and 52 to 60.

Pollution Control - Topic 9402

Appeals or judicial review - Scope of appeal or review - [See Statutes - Topic 5367 ].

Practice - Topic 9015

Appeals - Restrictions on argument on appeal - Issues conceded or agreed upon by parties - [See Constitutional Law - Topic 21 ].

Statutes - Topic 5367

Operation and effect - Delegated legislation - Regulations - Validity of - Ultra vires - The Renewable Fuels Regulations (RFRs), which were promulgated under the Canadian Environmental Protection Act (CEPA), required diesel fuel produced in Canada to contain at least 2% renewable fuel (s. 5(2)) - Syncrude produced diesel fuel at its oil sands operations in Alberta, which it used there in its vehicles and equipment - Syncrude challenged the validity and applicability to it of the 2% renewable fuel requirement - Syncrude challenged the constitutionality of s. 5(2) - The Federal Court dismissed the application - Syncrude appealed - The Federal Court of Appeal stated that it would take an egregious case to strike down regulations on the basis that they were ultra vires the enabling statute - The court held that "... the question of whether subsection 5(2) of the RFRs is constitutional is reviewed on a standard of correctness. The question of whether the Governor in Council validly enacted subsection 5(2) pursuant to CEPA is assessed against the Katz standard of inconsistency with the enabling statute. Any factual findings made by the judge in the course of his analysis are reviewed on a standard of palpable and overriding error." - See paragraphs 26 to 30.

Counsel:

Bernard J. Roth and Joshua A. Jantzi, for the applicant;

Christine Ashcroft, Darcie Charlton and Maia McEachern, for the respondent.

Solicitors of Record:

Dentons Canada LLP, Calgary, Alberta, for the applicant;

William F. Pentney, Deputy Attorney General of Canada, Calgary, Alberta, for the respondent.

This appeal was heard at Calgary, Alberta, on November 3, 2015, by Ryer, Boivin and Rennie, JJ.A., of the Federal Court of Appeal. Rennie, J.A., delivered the following decision for the court at Ottawa, Ontario, on May 30, 2016.