Saskatchewan Court of Appeal Makes Carbon Tax Decision

The Court of Appeal for Saskatchewan has released its opinion regarding the constitutionality of the Greenhouse Gas Pollution Pricing Act, SC 2018, c 12 s. 187 (the “Act), the Government of Canada’s federal carbon tax regime.

The 5 member panel of the Court of Appeal, which heard the case as a reference case initiated by the Attorney General of Saskatchewan, split 3-2 on the question of whether the Act was unconstitutional in whole or in part.

The majority of 3 justices determined that the Act was not unconstitutional, concluding that the Act fell with the “national concern” branch of the Government of Canada’s power to make laws for the peace, order, and good government of Canada found in the preamble to s. 91 of the Constitution Act, 1867 (the “POGG power”).

Canada had argued that the POGG power gave it jurisdiction over all GHG emissions in Canada. Saskatchewan and multiple interveners argued that giving the federal government jurisdiction over all GHG emissions would upset the balance of federalism in Canada by giving Canada plenary or exclusive jurisdiction to regulate all aspects of GHG emissions in Canada, and that this would intrude on matters that were in the exclusive jurisdiction of the provinces.

While the majority found that the Act was validly enacted by the federal government using the POGG power, the majority rejected Canada’s arguments that the POGG power gave the federal government general jurisdiction over all GHG emissions in Canada. The majority was concerned that this would upset the fundamental distribution of legislative power under the Constitution. The majority concluded that the POGG power should be narrowly interpreted, and limited the federal government’s jurisdiction relating to GHG emissions to “the establishment of minimum national standards of price stringency for GHG emissions”.

The minority decision determined that GHG emissions lacked sufficient singleness, distinctiveness, and indivisibility from matters of provincial jurisdiction to allow GHG emissions to fall within the legal definition of a matter of national concern. They also determined that the impact of the Act on matters of provincial jurisdiction would have an irreconcilable impact on the fundamental distribution of powers between the federal and provincial governments under the Constitution. In the minority’s view, Part 1 of the Act, the retail charge on fuels such as gasoline, natural gas, diesel, propane, fuel oil, and methanol charged to consumers is unconstitutional.

The Saskatchewan Court of Appeal’s decision is likely not the final answer to the question of the Act’s constitutionality. Premier Scott Moe has already indicated that Saskatchewan intends to appeal this decision to the Supreme Court of Canada.

In addition, oral arguments in a similar reference case initiated by the Attorney General for Ontario in the Court of Appeal for Ontario were heard the week of April 16, 2019, and the parties are waiting for the Court to release its opinion regarding the constitutionality of the Act. On April 24, 2019, the Government of Manitoba filed its own challenge to the constitutionality of the Act in the Federal Court of Canada.

Given the number of ongoing challenges to the Act, it is expected that the question of whether the Act is constitutional or not will make its way to the Supreme Court of Canada for a final determination.