Kevin Landry and William Wojcik

In September 2020 the Supreme Court of Canada heard Reference re Greenhouse Gas Pollution Pricing Act, 2021 SCC 11, a case featuring appeals from Ontario, Saskatchewan, and Alberta with respect to the constitutionality of the Greenhouse Gas Pollution Pricing Act (“GGPPA”). Much of the debate focused on two parts of the GGPPA:

1. the regulatory charge on fuel imposed under Part I of the GGPPA (“Fuel Charge”); and,
2. the Output Based Pricing System (“OBPS”) imposed under Part II of the GGPPA.

See our previous article for a refresher on the Fuel Charge and the OBPS.

The decision

On March 25, 2021 the Supreme Court release their decision. A majority of six ruled that: “The GGPPA is constitutional. It sets minimum national standards of GHG price stringency to reduce GHG emissions. Parliament has jurisdiction to enact this law as a matter of national concern under the peace, order, and good government (“POGG”) clause of s. 91 of the Constitution Act 1867”.

The majority also decided that the fuel and excess emission charges under the GGPPA were sufficiently connected to the regulatory scheme of the GGPPA to be considered constitutionally valid regulatory charges that advanced the GGPPA by altering behaviour as opposed to taxes (which are limited to recovery of costs for the government, and require parliament to enact instead of just the Governor in Council).

What this decision means for those subject to the carbon tax

Aside from developing the case law surrounding POGG in a significant way (which is outside the scope of this update), the decision all but assures that carbon pricing in Canada will rise in accordance with the government’s previously published plan: A Healthy Environment and a Healthy Economy.  Expected increases are $15 per year per tonne of carbon pollution, starting in 2023, rising to a total of $170 per tonne of carbon pollution in 2030.

Background: Appellate court decisions

Ontario

In the Reference re Greenhouse Gas Pollution Pricing Act, 2019 ONCA 544 the Ontario Court of Appeal decided (with a lone dissenter) that the GGPPA was constitutional. The majority concluded that the GGPPA was permissible under the national concern branch of the POGG powers of the federal government.

Saskatchewan

In the Reference re Greenhouse Gas Pollution Pricing Act, 2019 SKCA 40 the Court of Appeal for Saskatchewan decided in a 3-2 decision that the GGPPA was constitutional and that the purpose of the GGPPA (setting a minimum price on greenhouse gas emissions nationally in order to mitigate their use) was of national concern and fell under the POGG authority of Parliament.

Alberta

In the Reference re Greenhouse Gas Pollution Pricing Act, 2020 ABCA 74 the Court of Appeal of Alberta ruled that the both the Fuel Charge and OBPS were unconstitutional in their entirety but declined to express any opinion on other parts of the GGPPA. In that case a lone dissenter found the GGPPA constitutional.

This update is intended for general information only and should not be relied upon as a substitute for consultation with a lawyer respecting the reader’s specific circumstances. Each legal or regulatory situation is different and requires review of the relevant facts and applicable law.

 If you have questions about the above, please contact the authors to discuss your needs for specific legal advice relating to the particular circumstances of your situation.

Due to the rapidly changing nature of the law, Stewart McKelvey is not responsible for informing you of future legal developments related to this update.