Question Period Note: CARBON PRICING REFERENCES

Four cases have been filed by different provincial governments to challenge the constitutionality of the Greenhouse Gas Pollution Pricing Act. So far, the Ontario Court of Appeal and the Saskatchewan Court of Appeal have found the Act to be constitutional. The provinces appealed these decisions to the Supreme Court of Canada.

• The purpose of the Greenhouse Gas Pollution Pricing Act is to encourage Canadian’s behavioural changes, as well as to encourage the business innovation needed to reduce greenhouse gas emissions, which cause climate change.
• Evidence shows that pricing is effective in reducing greenhouse gas emissions.
• Four provinces (Saskatchewan, Ontario, Alberta and Manitoba) are challenging the constitutionality of the Act. The litigation is at varying stages in the court process.
• My position is that the Act is constitutional and constitutes a valid exercise of federal power to make laws for the Peace, Order and Good Government of Canada.
• Parliament has authority to establish minimum national standards integral to reducing nationwide greenhouse gas emissions, which is a matter of national concern.

Carbon Pricing: In June 2018, the Greenhouse Gas Pollution Pricing Act (the Act) became law.

The purpose of the Act is to establish minimum national standards of stringency for greenhouse gas (GHG) emissions pricing. It establishes a federal system applying as a backstop only, in provinces and territories requesting it or in provinces and territories that do not have a sufficiently stringent GHG pricing system. Provincial or territorial GHG pricing systems are assessed annually for stringency against a set of federal standards (the Benchmark) and the federal government then decides to apply or suspend the Act in the provinces and territories in question. For provinces such as Quebec and British Columbia, where the provincial pricing system is expected to meet the Benchmark until 2022, provincial governments are required to confirm to the federal government that the main elements of their GHG pricing system are not modified. The Act includes two complementary pricing mechanisms: 1) a charge on fossil fuels; and 2) a regulatory system prescribing emissions limits to large industrial facilities that are trade-exposed.

The Government of Canada has committed to return all direct proceeds collected under the Act through direct payments to individuals and families and investments to reduce emissions, save money, and create jobs. Individuals in provinces and territories where the charge on fossil fuel applies receive a Climate Action Incentive payment when filing their income tax and benefits return.

The Act implements a central component of the Pan-Canadian Framework on Clean Growth and Climate Change (the Pan-Canadian Framework) which is to reduce GHG emissions in Canada. The Pan-Canadian Framework includes a federal-provincial-territorial commitment to ensure carbon pricing applies in every province and territory in Canada. All provinces and territories have joined the Pan-Canadian Framework, except Saskatchewan.

Four cases have been filed in the courts by provincial governments against the Act. These cases challenge the constitutionality of the Act and they concern the division of powers between Parliament and provincial legislatures to make laws for GHG emissions. Canada’s position is that the Act is constitutionally valid pursuant to the federal power to make laws for the Peace, Order and Good Government of Canada (POGG). The litigation is at varying stages in the court process, as further explained below.

Saskatchewan Reference: On May 3, 2019, the Saskatchewan Court of Appeal released its decision. The majority of the Court held that the Act is constitutional in whole. The majority opined that Parliament has authority to pass the Act pursuant to the POGG power in section 91 of the Constitution Act, 1867. The majority further opined that the Act imposes behaviour changing regulatory charges, not taxes in the constitutional sense.

Saskatchewan appealed this decision to the Supreme Court of Canada. Seven provinces are participating in the appeal (BC, AB, SK, MB, ON, QC, NB) as parties or interveners and there are twenty-one additional intervener applications. This appeal is tentatively scheduled to be heard on March 24, 2020.

Ontario Reference: On June 28, 2019, the Ontario Court of Appeal released its decision, in which the majority concluded that the Act is constitutional in whole under the POGG power. The majority also found that the Act imposes regulatory charges, not taxes. Ontario appealed this decision to the Supreme Court of Canada. The seven provinces noted above are also participating in this appeal as are the twenty-one additional interveners referenced above.

This appeal is tentatively scheduled to be heard on March 25, 2020.

Alberta Reference: This case will be heard by the Alberta Court of Appeal on December 16-18, 2019. The legal issues are the same as in the Ontario and Saskatchewan Appeals to the Supreme Court of Canada.

Manitoba’s Application for Judicial Review: Manitoba has filed a judicial review application before the Federal Court in which it is challenging the constitutionality of the Act. The constitutional legal issues are the same as in the Ontario and Saskatchewan Appeals to the Supreme Court of Canada. It is also challenging the validity of the regulations applying the charge on fossil fuel in the province. It will be the first time that the Governor-in-Council decision-making process determining where the Act applies will be under judicial scrutiny.

A hearing date has not been scheduled. Canada filed a motion to hold the judicial review in abeyance until a decision is issued by the Supreme Court or, in the alternative, to extend the timelines. We are awaiting the Federal Court’s decision on the motion.

None