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Carbon pricing: What's the matter?

The Supreme Court will have its work cut out for it in an area of constitutional law that has been rarely tested, as it prepares for the upcoming hearing on the national carbon pricing scheme.

Pumjacks in the prairies

Heading into the big game, there's some disagreement about the score. Some say it's 2-1. Others say it's a more drawn-out 8-7. Whichever it is, it's heading to the Supreme Court.

That's roughly the state of play after the Alberta Court of Appeal handed down its opinion on the federal carbon pricing scheme last month.

In doing so, it defied most expectations. While two other appeals courts, in Ontario and Saskatchewan, had found Ottawa's carbon price to be constitutional, both had grappled with the applicability of the federal government's authority to legislate and regulate matters that could touch provincial jurisdiction. They also found, for a myriad of reasons, that limiting CO2 emissions, in line with Canada's international obligations, fell under the "national concern branch" of its constitutional power to govern peace, order, and good government (POGG).

However, in Saskatchewan, two dissenting justices found the government's Greenhouse Gas Pollution Pricing Act was too expansive to fit into Ottawa's limited POGG powers. "The Act pervades the life and economy of each Province it affects," the minority court wrote. The lone dissenting justice in Ontario was more generous in concluding that the Act couldn't fly under the national concern doctrine. But that didn't mean that Parliament is powerless to address climate change.

The three dissenting justices are largely on the same page. The law wasn't drafted in a manner that fits with Ottawa's national concern power.

The Alberta decision comes at the issue from a different angle. "The national concern doctrine is not a grand entrance hall into every head of provincial power," the Alberta court wrote. "It is a condition precedent to opening the door to the national concern doctrine that the subject matter not be within any of the enumerated heads of provincial powers." In other words, the national concern doctrine can never truly allow Ottawa's intrusion into the provinces' authority to govern the environment.

Justice Thomas Wakeling, concurring, went a step further in his reasons, writing: "There is not now, and there has never been, a pressing or any need for a national concern doctrine." Accepting, however, that there is such a doctrine, he argued it must be narrower than the other courts have established. "How can a local matter subject to provincial regulation be transformed into a national matter subject to permanent federal regulation just because the conditions that warrant provincial intervention replicate themselves in other provinces?" 

"This judgment takes a hard line towards the national concern branch under POGG," says Martin Olszynski, an associate professor specializing in environmental law at the University of Calgary. Olszynski is representing intervenor Progress Alberta at the Supreme Court hearing on the reference.

"They really did break new ground," he says. And the intent, as he sees it, is clear: They were writing with the Supreme Court in mind.

What's less clear, though, is how big a part the decision will play in the top court's deliberations. The Alberta decision has arrived in the late innings — only a month before the scheduled hearings at the Supreme Court. Submissions have, for the most part, been filed. It seems unlikely the court will open the door to new ones. But given the statement made by the ruling, it's hard to imagine it won't loom large over the arguments.

"On occasion, it does seem like the Alberta Court of Appeal writes its decisions for the Supreme Court of Canada rather than writing them to its citizens," says Kerri Froc, an assistant law professor at the University of New Brunswick. "As if they are the last word on the subject from the highest court in the province."

Froc says the decision harkened back to the appeals' court ruling in Vriend, where it argued that the courts would be engaging in "judicial mid-wifery" to read-in rights for homosexuals into human rights legislation.

And yet, Froc says, the other courts have been "flexing (to be charitable, distorting if one is not) conventional federalism doctrine to get to the end result."

She generally agrees with the Alberta court that Canada has muddied the waters a bit as to what, exactly, constitutes a "matter." The Constitution Act sets Ottawa's POGG powers on "all matters not coming within the classes of subjects by this Act assigned exclusively to the legislatures of the provinces." The real crux of Alberta's decision is whether that "matter" is listed as a provincial power in the constitution, or whether it is something new altogether. Canada argued the "matter" at hand is "the establishment of minimum national standards of stringency for GHG emissions pricing to reduce Canada's nationwide GHG emissions."

That position "is confusing means with the 'matter' and is much too precise," Froc says.

The Alberta court, however, contended that Ottawa cannot simply enumerate a new "matter" and argue its jurisdiction over it. "Courts ought to be cautious," it wrote, "before concluding that a matter cannot be linked to an existing head of jurisdiction and therefore qualifies as 'new.'" In effect, its point is that regulation of greenhouse gases can't be divorced from provincial ownership of management of natural resources, set out in the constitution.

According to Olszynski, there are a few "bright lines" set out in the Alberta decision about what constitutes a matter, and how Ottawa can legislate it. "One is definitely around the nature of the POGG power itself. Is it different, in kind, than the other heads of power?" The Alberta majority court says yes, it is, and operates "almost like a vacuum." When Ottawa exercises that power under its national concern doctrine, it must be an area that the province, by definition, cannot operate in.

That leads into another bright line: "What is the nature of this provincial inability test?" The majority Ontario court found that "the inability of one province to control the deleterious effects of [greenhouse gas emissions] emitted in others; or to require other provinces to take steps to do so, means that one province's failure to address the issue would endanger the interests of other provinces." There, "inability" and "refusal" meant roughly the same thing.

Consider, for example, how Ontario and Saskatchewan paid particular attention to the Paris climate accords, of which Canada is a party. Ontario even recognized the accord as important to Canada's international standing. The Alberta court notes that the Paris accords set goals, not measures. The most serious point about the accords isn't that Canada is party, but rather that America is not — which "is material to Alberta's deciding what is required to sustain Alberta's economy and remain competitive with the oil and gas sector internationally."

"The short shrift given to Canada's international obligations is interesting," says Froc. Previous decisions on Canada's POGG power have taken them into account "as good evidence in determining whether a matter has transcended provincial boundaries and become a matter of national concern." Even so, she argues, the Supreme Court may take up the opportunity to reconsider precisely how those international treaties interact with provincial rights.

The Alberta majority rejected the notion that a province's inability to address emissions adequately — or, its refusal to do so — is grounds enough for Ottawa to step in. The court writes: "Because the federal government believes a province's failure to act would not ensure the overall efficacy of the federal government's policy choice, the jurisdiction of all the provinces should be overridden." They argue: "This cannot be."

The third bright line, says Olszynski is "the discussion around the scale of impact on provincial jurisdiction." The majority spends some time honing in on the economic impact of the carbon pricing scheme. It even offers a sidelong glance towards "those who favour ending further oil and gas development and even shutting down the entire oil and gas industry. Chief among them would be Alberta's foreign oil and gas competitors." It goes on to conclude that the extent of the pricing system "intrudes deep into the provinces' exclusive jurisdiction over property and civil rights."

It is language that might look slightly out of place in a reference that is arcane to most readers, but it echoes closely sentiments being felt across the province right now. The same week the decision was released, B.C-based oil-and-gas company Teck Resources announced plans to shelve their $20 billion oil mine in Alberta. It also came amid cross-country protests in support of a blockade organized by Wet' suwet' en hereditary chiefs, intent on blocking a planned natural gas pipeline running through northern British Columbia. In both cases, Alberta Premier Jason Kenney has blamed Prime Minister Justin Trudeau's dithering.

In that context, the Alberta court's reasoning around federal powers paring back provincial authority, particularly when those decisions have such direct economic consequences, feels very current.

"Their whole approach has a whiff of suspicion about motivations, purposes, and constitutionality that seems to run contrary to the usual presumption of constitutionality afforded to government," Froc says.

Notwithstanding Alberta's growing alienation, Olszynski says, "you can't really establish constitutional rules or principles through the lens of any particular province."

As this case heads to the Supreme Court, there is now plenty to chew on. Two courts have found the pricing scheme constitutional; one hasn't — eight justices against seven.

Even more dizzying, though, is that there may be room to read in some arguments that didn't take centre stage in any of the rulings.

"It is a good question as to whether the court can take into account alternative means of upholding a statute, other than the basis asserted by the government itself," Froc says. "The feds here are expressly relying only on POGG, probably for political reasons (they don't want to call the [Act] a tax). However, the Saskatchewan [Court of Appeal], for instance, is making an argument that the Act is within the federal government's extremely broad taxation power under s.91(3)." If that were successful – and Froc doesn't think the argument should carry – it would fundamentally rewrite how the Act has to be applied.

Even if it doesn't work, "it definitely puts everyone involved on notice that s.91(3) is an issue here," says Froc. "I think this entitles the SCC to opine on it."

"What these cases show very clearly is a very unstable area of law," Olszynski says.