The “dominant tide” comes in: cooperative federalism in the Reference re Greenhouse Gas Pollution Pricing Act
In the recent Reference re Greenhouse Gas Pollution Pricing Act (“GGPPA Reference”), the judges of the Supreme Court of Canada unanimously agreed that climate change is real and dangerous. Where they fundamentally disagreed was whether Parliament’s Greenhouse Gas Pollution Pricing Act (“GGPPA”)¹ — called a “constitutional Trojan horse” by the Alberta Court of Appeal over concerns that the GGPPA would trample provincial jurisdiction² — was a permissible federal response to the threat.
The disagreements among the judges revealed starkly different philosophies of federalism.
Writing for the majority, Chief Justice Wagner’s theory was one of “cooperative federalism”: the idea that federal legislation like the GGPPA can be an important “backstop” where provinces have not enacted sufficiently stringent measures in response to a danger that transcends provincial borders. But for Justices Brown and Rowe, who each wrote separate dissenting reasons, the GGPPA is an unconstitutional example of “supervisory federalism” that involves the federal government overreaching into provincial jurisdiction, and overriding the division of powers in the Constitution.³
Thanks in no small part to these competing visions of federalism, the GGPPA Reference has real implications for how Ottawa and provincial legislators will work together on boundary-crossing issues moving forward.
Constitutionality of the GGPPA
The federal government enacted the GGPPA in 2018. It is a complex piece of legislation designed to establish “minimum national standards of greenhouse gas price stringency” in an effort to reduce carbon emissions. The Reference to the Supreme Court followed three appellate court decisions on the constitutionality of the GGPPA (the Ontario and Saskatchewan appeal courts found the GGPPA was constitutional, while the Alberta Court of Appeal found it was not).
In a 6-3 split, a majority of the Supreme Court upheld the carbon-pricing legislation as a valid exercise of federal power under the “peace, order and good government” (“POGG”) clause of the Constitution Act, 1867, which is found in the opening words of section 91:
It shall be lawful for the Queen, by and with the Advice and Consent of the Senate and House of Commons, to make Laws for the Peace, Order, and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces […]
Despite its seemingly broad scope, POGG has only been successfully invoked in a handful of cases.⁴ In fact, the GGPPA Reference is the first case from Canada’s highest court in over 30 years to recognize a new matter of national concern that would justify the exercise of the federal POGG power. (Notably, the federal government relied on the “national concern” branch of POGG rather than the “emergency” branch — perhaps because any “emergency” authority would have to be time-limited, as Justice Brown pointed out.)
The majority took the opportunity to reframe the POGG national concern test. The new three-step analysis requires reviewing courts to: (1) answer a threshold question of whether the matter is truly of national concern; (2) assess the “singleness, distinctiveness, and indivisibility” of the subject-matter of the legislation; and (3) review the scale of impact on provincial jurisdiction.
Applying this test, the majority found the GGPPA addressed an area of policy-making that went beyond provincial competency – namely, the ability to set minimum national standards of greenhouse gas (“GHG”) pricing to reduce Canada-wide emissions. Emphasizing the grave impacts of any province’s reticence to put a price on emissions,⁵ the majority concluded that the ability to set national benchmarks for GHG emissions pricing falls within Parliament’s POGG national concern power.
The meaning of cooperative federalism
In the landmark Reference re Secession of Quebec, the Supreme Court explained that federalism — which means that the federal and provincial levels of government each have their own exclusive spheres of law-making authority — “was a legal response to the underlying political and cultural realities that existed at Confederation and continue to exist today.” Federalism was characterized as one of the “four fundamental and organizing principles of the Constitution.”⁶
This principle is given effect in sections 91 and 92 of the Constitution Act, 1867: section 91 sets out the areas of exclusive legislative authority assigned to Parliament (and also includes the POGG power discussed above), while section 92 lists the subjects within provincial jurisdiction.
While the Constitution technically gives the federal government the power to disallow some provincial laws, the disallowance power has not been used since 1943 and would likely provoke a constitutional (and political) crisis if relied upon today to invalidate provincial legislation.
The principle of “cooperative federalism” does not appear in the Constitution, but the courts have applied it in order to take a more flexible approach to the division of powers. The Supreme Court explained in a 2015 judgment that cooperative federalism “is used to facilitate interlocking and provincial legislative schemes and to avoid unnecessary constraints on provincial legislative action” (and federal legislative action too).⁷
This flexibility evolved from the dualistic approach to Canadian federalism favoured by the Judicial Committee of the Privy Council, which was the final decision-maker in constitutional disputes until 1949.⁸ As the majority explained in the GGPPA Reference, “early Canadian constitutional decisions by the Judicial Committee of the Privy Council applied a rigid division of federal-provincial powers as watertight compartments.”⁹ Chief Justice Wagner contrasted this approach with cooperative federalism, which “accommodates and encourages intergovernmental cooperation” — although, he emphasized, it “cannot override or modify the constitutional division of powers”:
As the Court remarked in 2011 Securities Reference, “[t]he ‘dominant tide’ of flexible federalism, however strong its pull may be, cannot sweep designated powers out to sea, nor erode the constitutional balance inherent in the Canadian federal state”: para. 62. It is in light of this conception of federalism that I approach this case.¹º
This was perhaps an interesting lens for the majority to apply, given that the provincial challenges to the GGPPA were often more combative than cooperative — and in light of the majority’s own acknowledgement that binding federal legislation was needed to solve the problem of provincial non-cooperation over greenhouse gas emissions.¹¹
However, it was important for the majority that the federal legislation was intended to be a “backstop”, meaning that the GGPPA’s fuel charge and output-based pricing mechanisms would only apply in a province or territory with measures deemed by the federal cabinet to be insufficiently strict.
Chief Justice Wagner accepted that “the federal government’s intention was not to take over the field of regulating GHG emissions, or even that of GHG pricing, but was, rather, to establish minimum national standards of GHG price stringency for GHG emissions — through a federally-imposed national direct GHG pricing backstop — without displacing provincial and territorial jurisdiction over the choice and design of pricing instruments.”¹² (Yet according to Justices Brown and Rowe, the majority’s recognition that the provinces could legislate on carbon pricing was fatal to the application of the national concern branch of POGG, which is only meant to apply to areas completely outside provincial legislative authority.)
Cooperative federalism … or supervisory federalism?
Far from a “cooperative federalism” that respects provincial jurisdiction, Justices Brown and Rowe accused the majority of adopting a hierarchical form of “supervisory federalism”, letting the federal government rule over the provinces and territories even in areas within their legislative competence. As Justice Rowe commented, the federal-provincial relationship is supposed to be “one of coordination between equal partners, not subordination.”
Justice Brown put it this way: “The very idea of recognizing federal jurisdiction to legislate ‘minimum national standards’ of matters falling within provincial jurisdiction is corrosive of Canadian federalism.”¹³
Both judges were concerned that the majority’s reasons would allow the federal government to set “minimum national standards” in other areas under provincial jurisdiction, like health care administration, public education, and natural resources management.
A way forward for cooperative federalism
From a division of powers perspective, the GGPPA’s redeeming quality was the flexibility it afforded provinces in legislating their own carbon pricing standards, provided they met Ottawa’s benchmarks. This was cooperative federalism in action, the majority found (much to the consternation of Justices Brown and Rowe in dissent). The majority endorsed the modern view of cooperative federalism that avoids the Constitution being used as a technical roadblock to preclude concurrent regulation over matters of shared jurisdiction like the environment.
Moving forward, federal legislation containing baselines that encourage, and in some cases coerce, coordinated regulation may become the norm for matters that threaten human health and safety at a national or even global level, whether this be climate change or public health crises like the COVID-19 pandemic. Following the GGPPA Reference, such legislation will have a better chance of being found constitutional.
A new tide of cooperative federalism has come in. Here’s hoping it will bolster, and not erode, Canada’s constitutional balance.
¹ See also “Canadian carbon tax is here to stay: Supreme Court rules Greenhouse Gas Pollution Pricing Act constitutional” by Stewart McKelvey lawyer Kevin Landry and articled clerk William Wojcik.
² Reference re Greenhouse Gas Pollution Pricing Act, 2020 ABCA 74 at para 22.
³ Justice Côté’s partially dissenting reasons were focused on a different constitutional concern: that the Act improperly delegated authority to the executive branch of government.
⁴ Johannesson v Municipality of West St Paul (1951),  1 SCR 292; Ontario Hydro v Ontario (Labour Relations Board),  3 SCR 327; R v Crown Zellerbach Canada Ltd.,  1 SCR 401; Munro v National Capital Commission,  SCR 663.
⁵ GGPPA Reference at para 185.
⁶ Reference re Secession of Quebec,  at paras 32 and 43.
⁷ Quebec (Attorney General) v Canada (Attorney General), 2015 SCC 14 at para 17.
⁸ Reference re Securities Act, 2011 SCC 66.
⁹ GGPPA Reference at para 50.
¹º GGPPA Reference at para 50.
¹¹ GGPPA Reference at paras 183-186.
¹² GGPPA Reference at para 65.
¹³ GGPPA Reference at para 394.
The Canada Revenue Agency (“CRA”) announced helpful administrative positions concerning the new rules under the Fifth Protocol to the Canada-US Income Tax Convention, 1980 which will come into effect on January 1, 2010. The CRA…Read More
Withholding tax and other issues under the Fifth Protocol The Fifth Protocol to the Canada-US Tax Convention, 1980 introduced significant changes which may affect the use of most unlimited companies and other so-called ULCs. These…Read More