Alberta Court of Appeal Finds Federal Carbon Pricing Law Unconstitutional

February 25, 2020

On Monday, February 24, 2020, the Alberta Court of Appeal issued its decision in Alberta’s Reference on the constitutionality of the federal Greenhouse Gas Pollution Pricing Act (the Act), with the majority of the Court finding that the Act is unconstitutional in its entirety. Justice Feehan issued a minority dissent finding that both the Part I carbon levy and the Part 2 Output-based Performance Standard (OBPS) of the Act are constitutional. This is the third appellate provincial court decision on the Act and the first to find it constitutionally invalid. The tone and breadth of the reasoning in the Alberta decision is a marked departure from the decisions of the Saskatchewan and Ontario courts of appeal. 
 
Majority Opinion. Chief Justice Fraser, writing for Justices Hughes and Watson, took a novel approach to the analysis of the Act and the application of the national concern doctrine under the federal Parliament’s Peace Order and Good Government (POGG) power. The Chief Justice found that the “matter” of the Act is properly construed as the “regulation of greenhouse gas emissions”, and does not fall within a very narrowly construed national concern doctrine and is more appropriately within provincial jurisdiction over natural resources (section 92A), property and civil rights in the province (section 92(13)), and local works and undertakings (section 92(10)), among others. In doing so, Chief Justice Fraser effectively re-writes the test of the national concern doctrine and limits its application only to provincial matters that would fall into section 92(16) of the Constitution pertaining to residual matters of a merely local and private nature. She further characterizes the Act as a constitutional “Trojan horse”, regulating almost every aspect of the provinces’ development and management of their natural resources, all provincial industries, and every action of citizens in a province. The Chief Justice further finds that even if the narrowed national concern test is not upheld, the Act would still not be valid under the broader, traditional national concern test. In doing so, the Chief Justice espouses the position that upholding the Act under the national concern doctrine would necessarily result in diminished provincial jurisdiction to regulate greenhouse gas (GHG) emissions given the plenary and exclusive nature of the POGG power. The Court appears to suggest that federal jurisdiction over GHG emissions is best exercised through its spending power. It also appears to limit the future judicial review of decisions made under the Act as requiring the “Oracle of Delphi” to solve such mysteries. 
 
The majority opinion also includes significant obiter on Alberta’s role in the Canadian federation and its contribution to resource development and the wealth of the nation. The Chief Justice follows the approach of the Attorney General of Alberta in considering the nature of the national concern test as the basis for her consideration of the “matter”. This stands in opposition to the traditional order of first considering the “matter” and then the classification of the “matter” under the provincial and federal heads of power.
 
The Chief Justice also poses final considerations regarding the need for Canada to resolve resource, environment, and Indigenous issues in a manner that affords provincial control over resources and economic development. These statements appear to be reflective of the ongoing tensions regarding the pipeline protest and the recent Teck decision to withdraw its Frontier Oil Sands Project application.
 
Concurring Opinion. Justice Wakeling concurred with the majority in the outcome and issued a separate set of reasons. He appears to rely heavily on the natural resource powers afforded to the provinces under section 92A of the Constitution and what he views to be an unnecessary encroachment into areas of clear provincial jurisdiction. He is also of the view that the “matter” of the Act is regulating GHG emissions — and, more broadly, climate change — rather than simply setting minimum national price stringency standards for GHG emissions. Justice Wakeling also includes a fairly stark dichotomy of the choices that may need to be made under the Act, including obiter on orange juice versus carrot juice, lawnmowers, electric cars, and home heating. 
 
Dissenting Opinion. Justice Feehan takes a more traditional approach to the analysis considering first the “matter” of the Act and then moving onto its classification. He finds that, consistent with the majorities of the Saskatchewan and Ontario courts of appeal, the “matter” should be construed precisely and not generally. In doing so, he finds that the “matter” of the Act is:
 
"To effect behavioural change throughout Canada leading to increased energy efficiencies by the use of minimum national standards necessary and integral to the stringent pricing of greenhouse gas emissions."
 
This constitutes the seventh separate judicial construction of the “matter”, which will necessitate some consistent findings by the Supreme Court of Canada given the diversity of views. In finding that the Act is constitutional under the POGG national concern doctrine, Justice Feehan also weighs in on the hotly debated issue of the nature of the POGG power and its exclusive and plenary jurisdiction. In the most concise analysis on this issue to date, he finds that POGG national concern confers exclusive general jurisdiction on Parliament but does not confer plenary or concurrent jurisdiction. In this manner, he is of the view that upholding the Act under the POGG national concern doctrine does not limit provincial ability to also regulate and legislate on GHG pricing.
 
Next Steps. The Ontario and Saskatchewan appeals are scheduled to be heard by the Supreme Court of Canada ‪on March 24 and 25, 2020. This most recent Reference opinion of the Alberta Court of Appeal is now likely to be before the Supreme Court in its consideration of those appeals. However, it is unlikely that the federal government will find it necessary to launch an appeal given the merely advisory nature of this Reference decision by the Alberta Court of Appeal.
 
Please do not hesitate to contact Lisa DeMarco at lisa@demarcoallan.com to discuss the contents of this bulletin.

 

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