On March 25, 2021, the Supreme Court of Canada released its decision in Reference re Greenhouse Gas Pollution Pricing Act.[1] The central issue in this case is whether the matters addressed in the Greenhouse Gas Pollution Pricing Act (the GGPPA) are matters of sufficient national concern that they fall within federal jurisdiction.

The GGPPA is a valid federal legislation

A majority of the judges found that the GGPPA establishes minimum national standards of greenhouse gas emission (GHG) price stringency to reduce GHG emissions. The purpose of this legislation is to put a price on GHG emissions “in order to induce behavioural changes that will lead to a widespread reduction in emissions.” In the words of the Chief Justice, “[b]y putting a price on GHG emissions, governments can incentivize individuals and businesses to change their behaviour so as to make more environmentally sustainable purchasing and consumption choices, to redirect their financial investments, and to reduce their GHG emissions by substituting carbon-intensive goods for low-GHG alternatives.” [para 16]

The Court found that establishing minimum national standards of GHG price stringency to reduce GHG emissions is a matter of national concern and one that the provinces, whether acting separately or together, are incapable of addressing. The Court highlighted the backstop nature of the federal scheme, which only has effect in those provinces that do not have sufficiently stringent pricing schemes in place. The way the legislation is structured, the GHG pricing mechanism established under the Act will not come into operation at all in provinces or territories that already have a sufficiently stringent GHG pricing system.

Carbon pricing is a regulatory charge and not a “tax”

Although the charges established under the Act are sometimes colloquially referred to as a “carbon tax”, the Court found that these charges do not meet the definition of a “tax” but are instead valid regulatory charges designed to influence behaviour.

Identifying matters of “national concern”

The court held that, in order for a matter to be of sufficient “national concern” that it can properly be addressed by the federal Parliament, there are a number of criteria that must be met. They can be summarized as follows:

  • The matter addressed in the legislation must be “of sufficient concern to Canada as a whole” to warrant consideration under the national concern doctrine – this invites a common-sense inquiry into the national importance of the proposed matter.
  • If that initial threshold is met, then there are two further steps in the analysis:
  • To prevent federal “overreach” only those matters which are specific, identifiable and qualitatively different from matters of provincial concern should be found to constitute matters of national concern. [para 146]
  • Federal jurisdiction should be found to exist only where the evidence establishes provincial inability to deal with the matter. This means that the matter at issue is of a nature that the provinces cannot address either jointly or severally, because the failure of one or more provinces to cooperate would prevent the other provinces from successfully addressing it, andthat a province’s failure to deal with the matter within its own borders would have grave extraprovincial consequences. [para 146 and 151-153]

Court acknowledges “serious effects” and “heightened impacts” of climate change on Indigenous communities

The majority judges noted that climate change “has had particularly serious effects on Indigenous peoples, threatening the ability of Indigenous communities in Canada to sustain themselves and maintain their traditional ways of life.” [para 11] They also acknowledged that, “the effects of climate change are and will continue to be experienced across Canada, with heightened impacts in the Canadian Arctic, coastal regions and Indigenous territories.” [para 12] These are important acknowledgements on the part of the Court, and no doubt had some impact on their assessment that the matters addressed in the GGPPA are matters of national concern.

The Significance of this Decision

This decision is consistent with the arguments made by most of the Indigenous interveners, including the Anishinabek Nation (AN) and the United Chiefs and Councils of Mnidoo Mnising (UCCMM) who supported the ability of Parliament to adopt legislation imposing minimum national standards to protect the environment from the impacts of GHG emissions. The fact that Parliament has this authority means that it can take the steps necessary to protect the environment, which in turn will serve to protect the exercise of Aboriginal and Treaty rights recognized and affirmed under s 35 of the Constitution Act, 1982, in a way that provincial legislatures are incapable of doing.

The Supreme Court’s decision is largely an application of long-standing principles of constitutional interpretation that apply in cases involving the division of powers between the federal Parliament and provincial legislatures under sections 91 and 92 of the Constitution Act, 1867. Although the Court did not specifically make reference to s. 35 of the Constitution Act, 1982, as noted, the result is consistent with the evidence and arguments put forward on behalf of First Nation interveners.

Westaway Law Group is proud to have appeared on behalf of the Anishinabek Nation and UCCMM on this important case. Read all the arguments in the Factum of the Interveners here.

The full decision is available here.

[1] Reference re Greenhouse Gas Pollution Pricing Act, 2021 SCC 11.