COURT OF APPEAL FOR ONTARIO

CITATION: Reference re Greenhouse Gas Pollution Pricing Act,
    2019 ONCA 544

DATE: 20190628

DOCKET: C65807

Strathy C.J.O., Hoy A.C.J.O., MacPherson, Sharpe
    and Huscroft JJ.A.

IN THE MATTER OF A REFERENCE to the
    Court of Appeal pursuant to section 8 of the
Courts of Justice Act
,
    R.S.O. 1990, c. C.34, by Order-in-Council 1014/2018 respecting the
    constitutionality of the
Greenhouse Gas Pollution Pricing Act
, Part 5
    of the
Budget Implementation Act, 2018, No. 1
, S.C. 2018, c. 12

Josh Hunter, Padraic Ryan and
    Thomas Lipton, for the Attorney General of Ontario

Sharlene Telles-Langdon,
    Christine Mohr, Mary Matthews and Neil Goodridge, for the Attorney General of
    Canada

William E. Gould, for the
    intervener Attorney General of New Brunswick

J. Gareth Morley, for the
    intervener Attorney General of British Columbia

P. Mitch McAdam, Q.C. and
    Alan Jacobson, for the intervener Attorney General of Saskatchewan

Stuart Wuttke and Adam S.R.
    Williamson, for the intervener Assembly of First Nations

Amir Attaran, for the
    intervener Athabasca Chipewyan First Nation

Stewart Elgie, for the
    intervener Canadas Ecofiscal Commission

Joseph F. Castrilli and
    Richard D. Lindgren, for the interveners Canadian Environmental Law
    Association, Environmental Defence, and Sisters of Providence of St. Vincent de
    Paul

Jennifer King, Michael Finley
    and Liane Langstaff, for the intervener Canadian Public Health Association

R. Bruce E. Hallsor, Q.C.,
    Christine Van Geyn and Aaron Wudrick, for the intervener Canadian Taxpayers
    Federation

David
    Robitaille, for the interveners Centre québécois du droit de lenvironnement and
    Équiterre

Randy Christensen and Joshua
    Ginsberg, for the intervener David Suzuki Foundation

Nathan Hume, for the
    intervener Intergenerational Climate Coalition

Lisa (Elisabeth) DeMarco and
    Jonathan McGillivray, for the intervener International Emissions Trading
    Association

Cynthia Westaway and Nathalie
    Chalifour, for the intervener United Chiefs and Councils of Mnidoo Mnising

Ryan Martin, for the intervener
    United Conservative Association

Heard: April 15-18, 2019

Strathy C.J.O.:

I.

Introduction

[1]

By Order in Council 1014/2018, the Lieutenant Governor in Council
    referred to this court, pursuant to s. 8 of the
Courts of Justice Act
,
    R.S.O. 1990, c. C.43, the question whether the
Greenhouse Gas Pollution
    Pricing Act
, Part 5 of the
Budget Implementation Act, 2018, No. 1
,
    S.C. 2018, c. 12 (the
Act
), is unconstitutional in whole or in part.

[2]

For the reasons that follow, it is my opinion that the
Act
is
    constitutional.

[3]

The
Act
is within Parliaments jurisdiction to legislate in
    relation to matters of national concern under the Peace, Order, and good Government
    (POGG) clause of s. 91 of the
Constitution Act, 1867
. Parliament has
    determined that atmospheric accumulation of greenhouse gases (GHGs) causes
    climate changes that pose an existential threat to human civilization and the
    global ecosystem. The impact on Canada, especially in coastal regions and in
    the north, is considered particularly acute.

[4]

The need for a collective approach to a matter of national concern, and
    the risk of non-participation by one or more provinces, permits Canada to adopt
    minimum national standards to reduce GHG emissions. The
Act
does this
    and no more. It leaves ample scope for provincial legislation in relation to
    the environment, climate change and GHGs, while narrowly constraining federal
    jurisdiction to address the risk of provincial inaction.

[5]

The charges imposed by the
Act
are themselves constitutional.
    They are regulatory in nature and connected to the purposes of the
Act
.
    They are not taxes.

II.

Background

Greenhouse Gas Emissions and Climate Change

[6]

Climate change was described in the
Paris Agreement
of 2015 as
    an urgent and potentially irreversible threat to human societies and the
    planet. It added that this requires the widest possible cooperation by all
    countries, and their participation in an effective and appropriate
    international response.

[7]

There is no dispute that global climate change is taking place and that
    human activities are the primary cause. The combustion of fossil fuels, like
    coal, natural gas and oil and its derivatives, releases GHGs into the
    atmosphere. When incoming radiation from the Sun reaches Earths surface, it is
    absorbed and converted into heat. GHGs act like the glass roof of a greenhouse,
    trapping some of this heat as it radiates back into the atmosphere, causing
    surface temperatures to increase. Carbon dioxide (CO
2
) is the most
    prevalent GHG emitted by human activities. This is why pricing for GHG
    emissions is referred to as carbon pricing, and why GHG emissions are typically
    referred to on a CO
2
equivalent basis. Other common GHGs include
    methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur
    hexafluoride, and nitrogen trifluoride.

[8]

At appropriate levels, GHGs are beneficial. They
    surround the planet like a blanket, keeping temperatures within limits at which
    humans, animals, plants and marine life can live in balance. The level of GHGs
    in the atmosphere was relatively stable for several million years. However,
    since the beginning of the industrial revolution in the 18th century, and more
    particularly since the 1950s, the level of GHGs in the atmosphere has been
    increasing at an alarming rate.
Atmospheric concentrations of CO
2
are now more than 400 parts per million, a level not reached since the
    mid-Pliocene epoch, approximately 3-5 million years ago. Concentrations of
    other GHGs have also increased dramatically.

[9]

As a result, the global average surface temperature has increased by
    approximately 1.0 degree Celsius above pre-industrial levels (i.e., prior to 1850).
    It is estimated that by 2040, the global average surface temperature will have
    increased by 1.5 degrees Celsius.

[10]

Those
    temperature increases may seem small, but the results are not. The years 2014
    to 2018 inclusive have been identified, globally, as the five hottest years ever
    recorded. Temperatures in Canada have been increasing at roughly double the
    global average rate. With the longest coastline in the world, high altitude
    areas where warming is amplified, and significant Arctic territory, Canada has
    been disproportionately impacted by global warming. In the Canadian Arctic, for
    instance, the rate of warming has been even higher than in southern parts of
    Canada, estimated at three times the global rate. It is predicted that
    temperatures in Canada will continue to increase at a rate greater than the
    rest of the world.

[11]

This
    global warming is causing climate change and its associated impacts. The
    uncontested evidence before this court shows that climate change is causing or
    exacerbating: increased frequency and severity of extreme weather events
    (including droughts, floods, wildfires, and heat waves); degradation of soil
    and water resources; thawing of permafrost; rising sea levels; ocean
    acidification; decreased agricultural productivity and famine; species loss and
    extinction; and expansion of the ranges of life-threatening vector-borne diseases,
    such as Lyme disease and West Nile virus. Recent manifestations of the impacts
    of climate change in Canada include: major wildfires in Alberta in 2016 and in
    British Columbia in 2017 and 2018; and major flood events in Ontario and Québec
    in 2017, and in British Columbia, Ontario, Québec and New Brunswick in 2018. The
    recent major flooding in Ontario, Québec and New Brunswick in 2019 was likely also
    fueled by climate change.

[12]

Climate
    change has had a particularly serious impact on some Indigenous communities in
    Canada. The impact is greater in these communities because of the traditionally
    close relationship between Indigenous peoples and the land and waters on which
    they live.

[13]

For
    example,
members of the intervener Athabasca Chipewyan First
    Nation (ACFN)  whose traditional territory extends from northeastern
    Alberta, northward into the Northwest Territories, and eastward to Hudson Bay
    depend for their survival on hunting caribou, gathering food and medicinal
    plants, and trapping and fishing. The ACFN has adduced evidence that these
    traditional, survival-based practices are threatened by climate change. A
    declining barrenland caribou population, the reduction of surface water in
    lakes and rivers, and an increased risk of wildfires, each of which is caused
    or exacerbated by climate change, threaten the ACFNs ability to maintain its
    traditional way of life.

[14]

The
    intervener the United Chiefs and Councils of Mnidoo Mnising (the UCCMM) has
    also adduced evidence on the effects of climate change on its six member
    Nations. The traditional territories of the UCCMM Nations are primarily situated
    on and around Manitoulin Island and the north shore of Georgian Bay. According
    to the affidavit of Tribal Chair Patsy Corbiere, the UCCMM Nations intimate
    relationship with their traditional lands and waters has allowed them to
    observe the impacts of climate change firsthand. Over recent decades, they have
    noted a decrease in moose populations and native whitefish stocks, less
    frequent, but more intense bouts of precipitation, shorter and thinner ice
    cover in the winter, and diminishing water quality due to increased green algae
    blooms spurred by warmer temperatures. These changes to the environment impair
    the UCCMM Nations ability to sustain themselves by observing traditional
    practices, and threaten their continued existence as a self-determining people.

[15]

Both
    nationally and globally, the economic and human costs of climate change are
    considerable. Canadas Minister of Finance has estimated that climate change
    will cost Canadas economy $5 billion per year by 2020, and up to $43 billion
    per year by 2050 if no action is taken to mitigate its effects. The World
    Health Organization has estimated that climate change is currently causing the
    deaths of 150,000 people worldwide each year. Rising sea levels threaten the
    safety and lives of tens of millions of people in vulnerable regions.

[16]

The
    United Nations Intergovernmental Panel on Climate Change recently reported that
    global net anthropogenic CO
2
emissions must be reduced by
    approximately 45 percent below 2010 levels by 2030, and must reach net zero by
    2050 in order to limit global average surface warming to 1.5 degrees Celsius
    and to avoid the significantly more deleterious impacts of climate change. Anthropogenic
    emissions are those resulting from human activities. Net zero CO
2
emissions
    are achieved when anthropogenic CO
2
emissions are balanced globally
    by CO
2
removed from the atmosphere over a specified period. Deep
    reductions in other GHG emissions will also need to occur in order to limit
    global average surface warming to 1.5 degrees Celsius.

[17]

Of particular
    concern to a federal state like Canada is that the principal effect of GHG
    emissions  climate change  often bears no relationship to the location of the
    source of the emissions. Provinces and territories that have very low
    emissions, and are far removed geographically from the source of emissions, often
    experience impacts of climate change that are grossly disproportionate to their
    individual contributions to Canadas total GHG emissions.

[18]

In 2016,
    for example, Canadas total GHG emissions, measured in tonnes of CO
2
equivalent,
    were 704 megatonnes (1 megatonne is equal to 1,000,000 tonnes, and 1 tonne is
    equal to 1,000 kilograms). The individual provincial and territorial totals
    were as follows (Record of Canada, Vol. 3, p. 979):

NL

10.8

PE

1.8

NS

15.6

NB

15.3

QC

77.3

ON

160.6

MB

20.9

SK

76.3

AB

262.9

BC

60.1

YT

0.4

NT

1.6

NU

0.7

Total

704

[19]

As
    this chart demonstrates, in 2016, the three territories collectively
    contributed 2.7 megatonnes or approximately 0.4 percent of Canadas total GHG
    emissions. The four Atlantic provinces contributed 43.5 megatonnes or
    approximately 6.2 percent of Canadas emissions. Yet these regions will
    experience the effects of climate change caused by Canadas total emissions
    the destruction of permafrost, the loss of ice cover and rising sea levels in
    particular  in a manner that is out of proportion to their regions
    contributions to atmospheric levels of GHGs.

[20]

Moreover,
    as a practical matter and indeed as a legislative matter, there is nothing
    these provinces and territories can do to address the emission of GHGs by their
    geographic neighbours and constitutional partners. Without a collective
    national response, all they can do is prepare for the worst.

[21]

Of
    course, the problem of climate change caused by GHG emissions is not unique to
    these provinces and territories. The entire country experiences the effects of
    climate change and every province and territory is affected by the failure of
    others to reduce their own GHG emissions. Indeed, the international community
    has recognized that the solution to climate change is not within the capacity
    of any one country and has, therefore, sought to address the issue through
    global cooperation, a topic addressed in the next section.

International Commitments to Mitigating Climate Change

[22]

In
    1992, growing international concern regarding the potential impacts of climate
    change led to the Rio Earth Summit and adoption of the
United Nations
    Framework Convention on Climate Change
(the
UNFCCC
). The objective
    of the
UNFCCC
is the stabilization of greenhouse gas concentrations
    in the atmosphere at a level that would prevent dangerous anthropogenic
    interference with the climate system. Canada ratified the
UNFCCC
in
    December 1992, and it came into force on March 21, 1994. The
UNFCCC
has been ratified by 196 other countries.

[23]

In
    December 1997, the parties to the
UNFCCC
adopted the
Kyoto
    Protocol
, which established GHG emissions reduction commitments for
    developed country parties. Canada ratified the
Kyoto Protocol
on
    December 17, 2002 and committed to reducing its GHG emissions for the years
    2008-2012 to an average of six percent below 1990 levels. Canada did not
    fulfill its commitment, and ultimately withdrew from the
Kyoto Protocol
in December 2012.

[24]

In
    December 2009, most of the parties to the
UNFCCC
adopted the
Copenhagen
    Accord
. The accord recognized that climate change is one of the greatest
    challenges of our time.
Parties to the accord recognized the
    need to hold global warming below 2 degrees Celsius above pre-industrial levels
    and to consider the need to limit it to 1.5 degrees.
Under the accord,
    Canada committed to reducing its GHG emissions by 17 percent below 2005 levels
    by 2020. Canada is currently not on track to fulfill this commitment.

[25]

In
    December 2015, the parties to the
UNFCCC
adopted the
Paris
    Agreement
. The Preamble to that agreement recognizes that climate change
    represents an urgent and potentially irreversible threat to human societies
    and the planet. Parties to the agreement committed to holding global warming to
    well below 2 degrees Celsius above pre-industrial levels and to make efforts
    to limit it to 1.5 degrees above pre-industrial levels. Canada ratified the
Paris
    Agreement
on October 5, 2016 and committed to reducing its GHG emissions by
    30 percent below 2005 levels by 2030. Canadas commitments under the
Paris
    Agreement
were part of the impetus for the
Act
.

Canadian Efforts to Address Climate Change

[26]

Following
    the adoption of the
Paris Agreement
in 2015, the Prime Minister of
    Canada met in March 2016 with all provincial and territorial Premiers to
    discuss, among other things, strategies to mitigate climate change. The First
    Ministers adopted the
Vancouver Declaration on Clean Growth and Climate
    Change
. The
Vancouver Declaration
recognized the need to mitigate
    climate change by reducing GHG emissions and included a commitment to implement
    GHG mitigation policies in order to meet or exceed Canadas commitments under
    the
Paris Agreement
. It led to the formation of a
    Federal-Provincial-Territorial Working Group on Carbon Pricing Mechanisms,
    tasked with reporting on the role and effectiveness of carbon pricing in
    meeting Canadas emissions reduction commitments.

[27]

The
    Working Group produced a
Final Report
, on a consensus basis, which
    noted that [m]any experts regard carbon pricing as a necessary policy tool for
    efficiently reducing GHG emissions. Based on this report, the federal
    government announced the
Pan-Canadian Approach to Pricing Carbon Pollution
(the

Pan-Canadian Approach
). This stated that economy-wide carbon pricing
    is the most efficient way to reduce emissions and that carbon pricing would be
    a foundational element of Canadas response to climate change. The
Pan-Canadian
    Approach
included a national benchmark for carbon pricing (the
    Benchmark). The stated goal of the Benchmark is to ensure that carbon pricing
    mechanisms of gradually increasing stringency apply in all Canadian
    jurisdictions by 2018, either in the form of an explicit price-based system
    (e.g., a carbon tax) or a cap-and-trade system. It also stated that the
    federal government would introduce backstop carbon pricing legislation to
    apply in jurisdictions that do not meet the Benchmark.

[28]

Shortly
    after announcing the
Pan-Canadian Approach
, and after extensive discussions
    with the provinces, Canada ratified the
Paris Agreement
. Canada is
    required to report and account for progress towards achieving a nationally
    determined contribution, which Canada stated at 30 percent below 2005 levels
    by 2030.

[29]

On
    December 9, 2016, eight provinces, including Ontario, and the three territories
    adopted the
Pan-Canadian Framework on Clean Growth and Climate Change
(the

Pan-Canadian Framework
), which explicitly incorporated the
    Benchmark. At that time, British Columbia, Alberta and Québec already had
    carbon pricing mechanisms, and Ontario had announced its intention to join the
    Québec/California cap-and-trade system. Manitoba subsequently adopted the
Pan-Canadian
    Framework
on February 23, 2018. Saskatchewan did not adopt it. The
Pan-Canadian
    Framework
emphasized the significant risks posed by climate change to
    human health, security and economic growth and recognized carbon pricing as one
    of the most effective, transparent, and efficient policy approaches to reduce GHG
    emissions, promote innovation and encourage individuals and industries to
    pollute less.

[30]

On March
    27, 2018, the
Act
was introduced in Parliament as part of the
Budget
    Implementation Act, 2018, No. 1
. On June 21, 2018, it received Royal
    Assent. The
Act
gives effect to the principles expressed in the
Pan-Canadian
    Framework
and fulfills the federal governments Benchmark commitment to
    introduce backstop legislation.

[31]

As
    will be explained later in these reasons, in July 2018, Ontario announced its
    withdrawal from the national carbon pricing program, revoked its cap-and-trade
    regulation and prohibited trading of emissions allowances. It introduced the
Cap
    and Trade Cancellation Act, 2018
, S.O. 2018, c. 13, and cancelled seven
    programs that the federal government had agreed to co-fund, through the Low
    Carbon Economy Fund.

[32]

Ontarios
    legislative response, and its own climate change policies, are discussed later
    in these reasons. The next section explains the substantive provisions of the
Act
and its operation.

III.

The
Greenhouse Gas Pollution Pricing Act

[33]

The
Act
s
    long title is: An Act to mitigate climate change through the pan-Canadian
    application of pricing mechanisms to a broad set of greenhouse gas emission
    sources and to make consequential amendments to other Acts. The Preamble of the
Act
includes, among other observations:

[R]ecent anthropogenic emissions of greenhouse gases are at the
    highest level in history and present an unprecedented risk to the environment,
    including its biological diversity, to human health and safety and to economic
    prosperity.

[T]he United Nations, Parliament and the scientific community
    have identified climate change as an international concern which cannot be
    contained within geographic boundaries.

[A]s recognized in the Pan-Canadian Framework  climate change
    is a national problem that requires immediate action by all governments in
    Canada as well as by industry, non-governmental organizations and individual
    Canadians.

[34]

The
Act
puts a price on carbon pollution in order to reduce GHG emissions and to
    encourage innovation and the use of clean technologies. It does so in two ways.
    First, it places a regulatory charge on carbon-based fuels. This charge is
    imposed on certain producers, distributors and importers and will increase
    annually from 2019 through to 2022. Second, it establishes a regulatory trading
    system applicable to large industrial emitters of GHGs. This is referred to as an
    Output-Based Pricing System (the OBPS). It includes limits on emissions, a
    credit to those who operate within their limit, and a charge on those who
    exceed it. Net revenues from the fuel charge and excess emissions charge are
    returned to the province of origin, or to other prescribed persons.

[35]

The
Act
does not apply in all provinces. Rather, the
Act
and its regulations
    serve as the backstop contemplated by
the
Pan-Canadian
    Framework

in those provinces that
    have not adopted sufficiently stringent carbon pricing mechanisms. Many
    provinces have enacted legislation establishing their own carbon pricing mechanisms.
    Some provinces have not and are, therefore, listed provinces and subject to
    the backstop regime. The fuel charge applies in Ontario, New Brunswick,
    Manitoba and Saskatchewan and will apply in Yukon and Nunavut. The OBPS applies
    in Ontario, New Brunswick, Manitoba, Prince Edward Island and partially in
    Saskatchewan and will also apply in Yukon and Nunavut. Canada also recently
    announced its intent to apply the fuel charge in Alberta starting on January 1,
    2020 and indicated that it will monitor any proposed changes to Albertas large
    industrial emitter system.

[36]

The
Act
has 272 sections and is divided into four parts:

·

Part 1 establishes the fuel charge;

·

Part 2 sets out the mechanism for pricing industrial GHG
    emissions by establishing the OBPS;

·

Part 3 authorizes the Governor in Council to make regulations
    providing for the application
of provincial laws concerning GHG
    emissions to federal works and undertakings,
federal lands, Indigenous
    lands and waters within a province
; and

·

Part 4 requires the Minister of the Environment to prepare and
    table before Parliament an annual report on the administration of the
Act
.

[37]

Parts
    1 and 2 of the
Act
are described below in more detail. Ontario admits
    that Parts 3 and 4 are constitutional.

Part 1: Fuel Charge

[38]

Part
    1 of the
Act
(ss. 3-168) establishes the charge on carbon-based fuels.
    Subject to a number of exceptions, the charge applies to fuels that are
    produced, delivered or used in a listed province, brought into a listed
    province from another place in Canada, or imported into Canada at a location
    in a listed province (ss. 17-39).

[39]

The
    fuel charge currently applies to some 21 fuels that emit GHGs when burned,
    including gasoline, diesel fuel and natural gas. It also applies to
    combustible waste. The fuels and the applicable rates of charge are set out
    in Schedule 2 to the
Act
. The rates for 2019 represent a price of $20
    per tonne of CO
2
equivalent emitted by the combustion of each fuel.
    The rates will increase annually by $10 per tonne, up to $50 per tonne in 2022.

[40]

While
    the fuel charge is paid by fuel producers, distributors and importers, and not
    directly by consumers, it is anticipated that the charge will be passed on to consumers.
    In the case of gasoline, the charge will generally be embedded in the price
    paid by the consumer at the pump. In Ontario, the initial fuel charge for
    gasoline, for 2019, will be 4.42 cents per litre. This will rise annually until
    it reaches 11.05 cents per litre for 2022 and thereafter.

[41]

Pursuant
    to s. 165 of the
Act
, the Minister of National Revenue must distribute
    the net amount of charges levied under Part 1 to the provinces in which they
    were paid or to other prescribed persons or classes of persons. On October 23,
    2018, Canada announced that charges levied in provinces that have voluntarily
    adopted the federal system will be returned directly to the province of origin.
    In the case of backstop jurisdictions that have not voluntarily adopted the federal
    system, approximately 90 percent of the proceeds of the fuel charge will be
    returned to residents of the province of origin as Climate Action Incentive
    payments. Canada has said that the balance will provide support to schools,
    hospitals, colleges and universities, municipalities, not-for-profit
    enterprises, Indigenous communities, and small and medium-sized businesses in
    the province of origin.

[42]

Other
    provisions in Part 1 of the
Act
address a rebate regime (ss. 42-54),
    registration and reporting requirements (ss. 55-73), the administration and
    enforcement of the fuel charge (ss. 84-164), and other miscellaneous matters
    (ss. 74-83).

[43]

Finally,
    ss. 166-168 give authority to the Governor in Council to make regulations to
    carry out Part 1. Section 166 provides that for
the purpose of ensuring that the pricing of greenhouse
    gas emissions is applied broadly in Canada at levels that the Governor in
    Council considers appropriate

the Governor in
    Council may designate the listed provinces in which the fuel charge regime
    will apply, taking into account the stringency of provincial pricing
    mechanisms for greenhouse gas emissions as the primary factor.

[44]

Part
    1 of the
Act
has applied in Ontario, New Brunswick, Manitoba and
    Saskatchewan since April 1, 2019, and will apply in Yukon and Nunavut effective
    July 1, 2019: see
Regulations Amending Part 1 of Schedule 1 and Schedule 2
    to the Greenhouse Gas Pollution Pricing Act
, SOR/2019-79, ss. 1-2, 5.

Part 2: Industrial Greenhouse Gas
    Emissions

[45]

Part
    2 of the
Act
(ss. 169-261), entitled Industrial Greenhouse Gas
    Emissions sets out the mechanism for pricing industrial GHG emissions by
    emission-intense industrial facilities: the OBPS.

[46]

Section
    169 defines greenhouse gas as any of the gases set out in Schedule 3 to the
Act
,
    including CO
2
and the other GHGs referred to earlier. A covered
    facility is a facility located in a backstop jurisdiction (i.e. a province or
    area listed in Part 2 of Schedule 1) that either meets the criteria set out in
    the regulations or is designated by the Minister of the Environment. Covered
    facilities subject to the OBPS are exempt from paying the fuel charge, but are
    required to pay compensation for the portion, if any, of their GHG emissions
    that exceed their applicable emissions limit, based on a sector specific
    output-based standard.

[47]

Section
    171 requires covered facilities to register with the Minister of the
    Environment. Section 172 permits an industrial facility located in a backstop
    jurisdiction and not covered by the federal pricing regime to request voluntary
    designation as a covered facility. Pursuant to s. 173, facilities covered by
    the federal regime are subject to periodic compliance reporting requirements.

[48]

Sections
    174 to 187 set out two mechanisms for pricing industrial GHG emissions. First,
    if a facilitys emissions fall below its prescribed limit, the facility will be
    issued surplus credits called compliance units. Second, if a facilitys
    emissions exceed its prescribed limit, the facility must pay compensation for its
    excess emissions. Compensation may be made by remitting compliance units,
    paying an excess emissions charge payment to Canada, or doing a combination
    of both. The legislation contemplates the possibility of creating an emissions
    trading system for compliance units: s. 192(l).

[49]

Section
    188 (similar to s. 165 in relation to the fuel charge) empowers the Minister of
    National Revenue to distribute the revenues from excess emissions charge
    payments to the provinces in which they were paid or to other prescribed
    persons. Canada has indicated that these revenues will be used to support
    carbon-pollution reduction in the jurisdiction in which they were raised, but
    has not yet provided details.

[50]

Subsections
    189(1) and (2) (similar to ss. 166(2) and (3) in relation to the fuel charge)
    provide the Governor in Council with the authority to designate the backstop
    jurisdictions in which Part 2 will apply,
[f]or
    the purpose of ensuring that the pricing of greenhouse gas emissions is applied
    broadly in Canada at levels that the Governor in Council considers appropriate
taking into account the stringency of provincial pricing mechanisms for
    greenhouse gas emissions as the primary factor.

[51]

The
    Governor in Council also has a variety of other order and regulation-making
    powers (ss. 190-195), including the power to set GHG emission limits (s.
    192(g)).

[52]

The
    other provisions in Part 2 of the
Act
address the collection of
    information and samples (ss. 197-199), administration and enforcement (ss.
    200-231), and offences and punishment (ss. 232-252). There are also a number of
    miscellaneous provisions (ss. 253-261).

[53]

Part
    2 of the
Act
has applied in Ontario, New Brunswick, Manitoba, Prince
    Edward Island and partially in Saskatchewan since January 1, 2019, and will
    apply in Yukon and Nunavut effective July 1, 2019:
Order Amending Part 2 of
    Schedule 1 to the Greenhouse Gas Pollution Pricing Act
, SOR/2018-212, s.
    1; and
Greenhouse Gas Emissions Information Production Order
,
    SOR/2018-214, s. 107.

IV.

The Positions of the Parties

[54]

The
    Attorney General of Ontario submits that Part 1 (fuel charge) and Part 2 (OBPS)
    of the
Act
are unconstitutional. Ontario submits that Parliament is
    not entitled to regulate all activities that produce GHG emissions and that the
    jurisdiction Canada asserts under the
Act
would radically alter the
    constitutional balance between federal and provincial powers.

[55]

Ontario agrees that climate change is real, is caused by human
    activities producing GHG emissions, is having serious effects, particularly in
    the north, and requires proactive measures to address it. Ontario does not
    agree, however, that what it labels a carbon tax is the right way to do so.
    It says that Ontario will continue to take its own approach to meet the
    challenge of reducing GHG emissions.

[56]

Ontario
    points to the success of its own efforts to reduce GHG emissions, the most
    significant of which has been the closure of all five of Ontarios coal-fired
    electricity generation plants, which has reduced Ontarios annual GHG emissions
    by approximately 22 percent below 2005 levels as of 2016.

[57]

Ontarios
    environmental plan (Preserving and Protecting our Environment for Future
    Generations: A Made-in-Ontario Environment Plan), released in November 2018,
    proposes to find ways to slow down climate change and build more resilient
    communities to prepare for its effects, but it will do this in a balanced and
    responsible way, without placing additional burdens on Ontario families and
    businesses.

[58]

Ontario
    has committed to reducing its emissions by 30 percent below 2005 levels by
    2030, which aligns with Canadas target under the
Paris Agreement
. It
    will do so, for example, by updating its
Building Code
, O. Reg. 332/12,
    increasing the renewable content of gasoline, establishing emissions standards
    for large emitters, and reducing food waste and organic waste.

[59]

Ontario
    submits that the fuel charge and excess emissions charge are unconstitutional
    because they cannot be supported under any federal head of power. It further
    argues that the charges are not legislatively authorized as taxes and do not
    have a sufficient nexus to the purposes of the
Act
to be considered
    valid regulatory charges.

[60]

The
    Attorney General of Canada submits that the
Act
is constitutional
    under the national concern branch of the POGG power contained in s. 91 of the
Constitution
    Act, 1867
. The pith and substance of the
Act
is the cumulative
    dimensions of GHG emissions, which Canada says is a matter of national concern
    that the provinces are constitutionally incapable of addressing.

[61]

In Canadas
    reply factum and in oral submissions, counsel for the Attorney General of
    Canada adopted an alternative submission advanced principally by the intervener
    the David Suzuki Foundation, that the
Act
can be supported under the
    emergency branch of the POGG power. Canada also submits that it would be
    willing to accept any of the alternative heads of power suggested by the
    interveners.

[62]

In
    response to Ontarios argument that the charges themselves are constitutionally
    infirm, Canada submits that the fuel charge and the excess emissions charge are
    constitutionally valid regulatory charges which advance the objects of the
Act
.

[63]

The
    court had the benefit of submissions from 18 interveners. These included 3 provincial
    attorneys general (New Brunswick, British Columbia and Saskatchewan) and the 15
    organizations set out in the Preamble to these reasons.

[64]

The
    Attorneys General of New Brunswick and Saskatchewan and the United Conservative
    Association support Ontarios position that the
Act
is
    unconstitutional and cannot be upheld under the POGG power. Saskatchewan and
    the Canadian Taxpayers Federation also argue that the
Act
imposes
    unconstitutional taxes.

[65]

The
    Attorney General of British Columbia supports Canadas submission that Canada
    is entitled to address GHG emissions as a matter of national concern, given the
    inability of the provinces to agree upon or execute a collective response to
    the issue.

[66]

The
    remaining interveners support the constitutionality of the
Act
on
    other grounds. They argue, variously: the emergency branch of the POGG power
    (s. 91); trade and commerce (s. 91(2)); taxation (s. 91(3)); and criminal law
    (s. 91(27)). Some interveners who align themselves with Canadas jurisdiction
    support their submissions by reference to: the federal treaty-making power; a proposed
    federal treaty implementation power; respect for Indigenous and minority rights;
    federalism principles; and s. 35 of the
Constitution Act, 1982
,
    Canadas duty to consult with Indigenous people and the honour of the Crown.

V.

Analysis

[67]

The
    analytical approach to the constitutionality of legislation on federalism
    grounds is well-established. In the first step, referred to as
    characterization, the court determines the true subject matter or pith and
    substance of the challenged law. In the second step, classification, the
    court determines whether that subject matter falls within the head of power
    relied upon to support the validity of the legislation:
Reference re Pan-Canadian
    Securities Regulation
, 2018 SCC 48, at para. 86.

[68]

The
    analysis that follows begins with the first step of the federalism analysis,
    characterization, by explaining the method of analysis and applying that method
    to determine the pith and substance of the
Act
.

[69]

Next,
    the analysis addresses the classification of the
Act
, explaining the
    national concern branch of the POGG power, as described in the leading cases,
    particularly
Re: Anti-Inflation Act
, [1976] 2 S.C.R. 373, and
R.
    v. Crown Zellerbach Canada Ltd
., [1988] 1 S.C.R. 401. It then applies the
    methodology set out in those authorities to the
Act
to determine
    whether it properly falls within the national concern branch of the POGG power.

Characterization  the pith and substance of the
Act

[70]

This
    step of the analysis requires an examination of the purpose and effects of the
    law to identify its main thrust:
Reference re Securities Act
, 2011
    SCC 66, [2011] 3 S.C.R. 837, at para. 63. The purpose of a law is determined by
    examining both intrinsic evidence, such as the preamble of the law, and
    extrinsic evidence, such as the circumstances in which the law was enacted:
Rogers
    Communications Inc. v. Châteauguay (City)
, 2016 SCC 23, [2016] 1 S.C.R.
    467, at para. 36. The effects of the law include both its legal effects and the
    practical consequences of the laws application:
Reference re Firearms Act
    (Can.)
, 2000 SCC 31, [2000] 1 S.C.R. 783, at paras. 18, 24.

[71]

Professor
    Peter Hogg suggests that [t]he general idea  is that it is necessary to
    identify the dominant or most important characteristic of the challenged law:
Constitutional
    Law of Canada
, loose-leaf (revision 2018-1), 5th ed. (Toronto: Thomson
    Reuters Canada Ltd., 2007), at para. 15.5(a). He adds that the characterization
    exercise  determining the matter  can sometimes be conclusive of the laws
    classification (the class of subject into which it falls) and, therefore, its
    constitutionality. The determination of the pith and substance of the law is
    critical to the national concern analysis because it will impact whether the
    matter has the requisite singleness, distinctiveness and indivisibility
    required by the cases, or whether it is simply an agglomeration of matters
    falling within provincial jurisdiction.

[72]

In
    some cases, the pith and substance of a law has been expressed by the court in broad
    terms, such as: the control or regulation of marine pollution (
Crown
    Zellerbach
, at pp. 419-420); public safety (
Firearms Reference
,
    at para. 24); and to regulate, on an exclusive basis, all aspects of
    securities trading in Canada (
Securities Reference (2011)
, at para.
    106). However, the Supreme Court has also held that the environment is too
    broad to constitute a matter:
Friends of the Oldman River Society v. Canada
    (Minister of Transport)
, [1992] 1 S.C.R. 3, at pp. 63-64. A matter must
    not be so lacking in specificity or so pervasive that it knows no bounds:
Re:
    Anti-Inflation Act
, at p. 458. In other cases, the pith and substance has
    been defined more narrowly, for example: to control systemic risks having the
    potential to create material adverse effects on the Canadian economy (
Pan-Canadian
    Securities Reference
, at para. 87); the siting of a radiocommunication
    antenna system (
Rogers Communications
, at paras. 5, 57, 66); and replac[ing]
    the employment income of insured women whose earnings are interrupted when they
    are pregnant and providing replacement income when an interruption of
    employment occurs as a result of the birth or arrival of a child (
Reference
    re Employment Insurance Act (Can.), ss. 22 and 23
, 2005 SCC 56, [2005] 2
    S.C.R. 669, at paras. 34, 75).

[73]

Not
    surprisingly, the parties characterize the pith and substance of the
Act
in different ways. Ontario puts it broadly: a comprehensive regulatory scheme
    for the reduction of greenhouse gas emissions from all sources in Canada.
    Canada describes it more narrowly, as the cumulative dimensions of GHG
    emissions. During oral argument, Canada indicated that it would, if necessary,
    accept some of the characterizations proposed by the interveners, such as
    Canadas Ecofiscal Commission, which defined the matter as the control of
    extra-provincial and international pollution caused by GHG emissions.

[74]

Neither
    Ontarios nor Canadas proposed characterization is persuasive. Ontarios
    description is too broad and is designed to support its submission that the law
    effectively gives Canada sweeping authority to legislate in relation to local
    provincial matters, thereby excluding any provincial jurisdiction in relation
    to GHGs. Canadas definition is too vague and confusing, since GHGs are
    inherently cumulative and the cumulative dimensions are undefined.

[75]

The
    Preamble to the
Act
provides insight into its purpose:

Whereas there is broad scientific consensus that
anthropogenic
    greenhouse gas emissions contribute to global climate change
;

Whereas impacts of climate change, such as coastal erosion,
    thawing permafrost, increases in heat waves, droughts and flooding, and related
    risks to critical infrastructures and food security are already being felt
    throughout Canada and are impacting Canadians, in particular the Indigenous
    peoples of Canada, low-income citizens and northern, coastal and remote
    communities;

Whereas Parliament recognizes that it is
the responsibility
    of the present generation to minimize impacts of climate change on future
    generations
;

Whereas the Government of Canada is committed to achieving
    Canadas Nationally Determined Contribution  and increasing it over time
    under the Paris Agreement by
taking comprehensive action to reduce emissions
    across all sectors of the economy, accelerate clean economic growth and build
    resilience to the impacts of climate change;

Whereas it is recognized in the Pan-Canadian Framework on Clean
    Growth and Climate Change that
climate change is a national problem that
    requires immediate action by all governments in Canada as well as by industry,
    non-governmental organizations and individual Canadians
;

Whereas some provinces are developing or have implemented
    greenhouse gas emissions pricing systems;

Whereas
the absence of greenhouse gas emissions pricing in
    some provinces and a lack of stringency in some provincial greenhouse gas emissions
    pricing systems could contribute to significant deleterious effects on the
    environment
, including its biological diversity, on human health and safety
    and on economic prosperity;

And whereas
it is necessary to create a federal greenhouse
    gas emissions pricing scheme to ensure that, taking provincial greenhouse gas
    emissions pricing systems into account, greenhouse gas emissions pricing
    applies broadly in Canada
[Emphasis added.]

[76]

The
    purpose of the
Act
, as reflected in its Preamble and in Canadas international
    commitments and domestic initiatives, discussed earlier, is to reduce GHG
    emissions on a nation-wide basis. It does so by establishing national minimum
    prices for GHG emissions, through both the fuel charge and the OBPS excess
    emissions charge. Its effect is to put a price on carbon pollution, thereby
    limiting access to a scarce resource: the atmospheres capacity to absorb GHGs.
    The pricing mechanisms also incentivize behavioural changes.

[77]

The
Act
s
    purpose and effects demonstrate that the pith and substance of the
Act
can be distilled as: establishing minimum national standards to reduce
    greenhouse gas emissions. The means chosen by the
Act
is a minimum national
    standard of stringency for the pricing of GHG emissions.

Classification

[78]

The
    second step in the federalism analysis is the classification of the
Act
based on its pith and substance so characterized. Where does it come within
    the constitutional division of powers? The following brief outline of federal
    and provincial jurisdiction over the environment provides a backdrop to this
    issue.

(1)

The Environment

[79]

The
    environment was not expressly identified as a head of power in 1867. What we
    would today call environmental concerns certainly existed at Confederation:
    smoke from factories; human waste and other noxious effluent escaping from
    inadequate sewage systems and polluting water supplies; industrial waste
    causing odours and disease; and horse manure in the streets. But the framers of
    the Constitution did not think that the environment required a separate Class
    of Subject of its own. They likely anticipated that legislation pertaining to
    these matters would come within s. 92(16), which gives the provinces
    jurisdiction over all Matters of a merely local or private Nature in the
    Province. They probably also anticipated that major environmental events
    that threatened the entire Dominion, like the oft-used examples of pestilence
    or famine, would fall within Canadas POGG power.

[80]

It
    is fair to say that there is today a greater appreciation that environmental
    pollution can transcend national and international boundaries and it is no
    longer thought of as a purely local concern. It is also fair to say, as the
    Supreme Court has, that in the intervening 150 years since Confederation, the
    protection of the environment has become a matter of superordinate
    importance, and one in which all levels of government and numerous organs of
    the international community have become increasingly engaged:
R. v. Hydro-Québec
,
    [1997] 3 S.C.R. 213, at paras. 85, 123, per La Forest J. Quoting
Oldman
    River
, La Forest J. observed: The protection of the environment has
    become one of the major challenges of our time. To respond to this challenge,
    governments and international organizations have been engaged in the creation
    of a wide variety of legislative schemes and administrative structures (para.
    85).

[81]

The
    environment as such is not a matter of exclusive jurisdiction, resting with one
    or other level of government. Legislatures and the courts have treated it as an
    area of shared jurisdiction: see
Oldman River
, at pp. 63-65;
Crown
    Zellerbach
, at pp. 455-456; and
Hydro-Québec,
at para. 59. In so
    doing, they have said that courts must ensure an appropriate balance between
    federal and provincial jurisdiction in relation to the environment in order to
    be responsive to the emerging realities and to the nature of the subject
    matter sought to be regulated:
Hydro-Québec
, at para. 86, per La
    Forest J. At the same time, as Lamer C.J. and Iacobucci J. observed in their
    dissent in
Hydro-Québec
, at para. 62: Environmental protection must
    be achieved in accordance with the Constitution, not in spite of it.

[82]

This
    issue will be picked up later, in the context of the discussion of the national
    concern branch of the POGG power, relied upon by Canada.

(2)

The National Concern Branch of the POGG Power

[83]

The
    source of the POGG power is s. 91 of the
Constitution Act, 1867
, which
    provides that Parliament may 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. For greater
    Certainty, Parliament is given exclusive legislative jurisdiction with respect
    to 30 classes of subject.

[84]

Section
    92 gives the provinces exclusive legislative jurisdiction in relation to 15
    classes of subject, the last of which is [g]enerally all Matters of a merely
    local or private Nature in the Province.

[85]

Professor
    Hogg suggests that the POGG power is residuary, in the sense that it is
    confined to matters not assigned exclusively either to Parliament or to the
    provincial legislatures:
Constitutional Law of Canada
, at para. 17.1.
    He identifies three branches of that power: the gap branch (for example,
    the incorporation of federal companies and jurisdiction in relation to offshore
    mineral resources); the emergency branch (for example, war measures
    legislation); and the national concern branch.

[86]

It
    is unnecessary to trace the evolution of the national concern branch, as much
    of that work was done by Beetz J. in
Re: Anti-Inflation Act
, and by Le
    Dain J. in
Crown Zellerbach
, which both parties agree is the governing
    authority: see also Hogg,
Constitutional Law of Canada
, at para. 17.3.
    In the application of this branch of the POGG power, courts have been concerned
    to strike a balance between Canadas ability to pass laws that affect the body
    politic of the Dominion and the provinces exclusive jurisdiction to enact
    legislation under their s. 92 heads of power. This concern was reflected over a
    century ago in the 1896 decision of the Judicial Committee of the Privy Council
    in the
Local Prohibition
case (
Attorney-General for Ontario v.
    Attorney-General for the Dominion
, [1896] A.C. 348), a reference
    concerning the constitutionality of a provincial temperance scheme. The
    Judicial Committee observed, at p. 361:

Their Lordships do not doubt that
some matters, in their
    origin local and provincial, might attain such dimensions as to affect the body
    politic of the Dominion
, and to justify the Canadian Parliament in passing
    laws for their regulation or abolition in the interest of the Dominion. But
great
    caution must be observed
in distinguishing between that which is local and
    provincial, and therefore within the jurisdiction of the provincial
    legislatures, and that which has ceased to be merely local or provincial, and
    has become matter of national concern, in such sense as to bring it within the
    jurisdiction of the Parliament of Canada. [Emphasis added.]

[87]

In a
    subsequent case,
Attorney-General for Ontario v. Canada Temperance
    Federation
, [1946] A.C. 193 (P.C.), which considered the constitutionality
    of Parts I, II and III of the federal
Canada Temperance Act
, R.S.C.
    1927, c. 196, Viscount Simon set out the scope of the national concern branch
    and gave some illustrative examples, at pp. 205-206:

In their Lordships opinion,
the true test must be found in
    the real subject matter of the legislation: if it is such that it goes beyond
    local or provincial concern or interests and must from its inherent nature be
    the concern of the Dominion as a whole
(as, for example, in the
Aeronautics
case and the
Radio
case),
then it will fall within the competence
    of the Dominion Parliament as a matter affecting the peace, order and good
    government of Canada, though it may in another aspect touch on matters
    specially reserved to the provincial legislatures
. War and pestilence, no
    doubt, are instances; so, too, may be the drink or drug traffic, or the
    carrying of arms. In
Russell v. The Queen
, Sir Montague Smith gave as
    an instance of valid Dominion legislation a law which prohibited or restricted
    the sale or exposure of cattle having a contagious disease.
Nor is the
    validity of the legislation, when due to its inherent nature, affected because
    there may still be room for enactments by a provincial legislature dealing with
    an aspect of the same subject in so far as it specially affects that province
.
    [Emphasis added, footnotes omitted.]

[88]

This
    brings the analysis to the decisions of the Supreme Court of Canada in
Re:
    Anti-Inflation Act
and
Crown Zellerbach
.

(a)

Re: Anti-Inflation Act

[89]

The dissenting judgment of Beetz J. in
Re: Anti-Inflation
    Act
is an important starting point for the discussion of
    the national concern branch of the POGG power as it formed the basis of the
    test in
Crown Zellerbach
. The majority upheld
    the federal anti-inflation legislation on the basis of the emergency branch of the
    POGG power. Justice Beetz (with Grandpr
é
J. concurring) dissented and,
    therefore, found it necessary to consider the national concern branch. In his
    view, the
anti-inflation legislation did not come within
that branch. The containment and reduction of inflation was far
    too broad a matter. It threatened to upset the equilibrium of the Constitution
    by arrogating to Parliament matters that were within provincial legislative
    jurisdiction.

[90]

Justice Beetz observed that a new matter added to Parliaments
    legislative jurisdiction under the POGG power had to be defined in such a way
    that it was
not an aggregate
but had a
degree of unity
that made
    it
indivisible
, an
identity
which made it distinct

from provincial matters
and a
sufficient
consistence

to retain the bounds of form
: p. 458 (emphasis added). The scale of the new matter and the
    extent to which it permitted Parliament to touch on provincial matters had to
    be taken into consideration as well.

[91]

The containment and reduction of inflation did
    not pass muster (p. 458):

It is an aggregate of several subjects some of which form a
    substantial part of provincial jurisdiction. It is totally lacking in
    specificity. It is so pervasive that it knows no bounds. Its recognition as a
    federal head of power would render most provincial powers nugatory.

[92]

Although
    Beetz J. was in dissent, his views on the national concern branch of the POGG power
    attracted the support of a majority of judges: see p. 437. His views were,
    therefore, influential in
Crown Zellerbach
, decided 12 years later.

(b)

Crown Zellerbach

[93]

In
Crown
    Zellerbach
, the issue before the Supreme Court was whether s. 4(1) of the
    federal
Ocean Dumping Control Act
, S.C. 1974-75-76, c. 55, was
    constitutional in its application to the dumping of waste in waters, other than
    fresh waters, within the boundaries of British Columbia.
Crown
    Zellerbach Canada Limited, a logging company, was charged with two counts of
    contravening s. 4(1) of the statute, which prohibited the dumping of any
    substance at sea (defined as including the internal waters of Canada, other
    than fresh waters) without a permit. There was no evidence that Crown
    Zellerbachs dumping had any effect on either navigation or marine life, thus
    precluding reliance on either the federal navigation and shipping power (s.
    91(10)) or the fisheries power (s. 91(12)). An appeal from the dismissal of the
    charges by a provincial court judge was dismissed by the British Columbia Court
    of Appeal, which held that the statute was
ultra vires
.

[94]

On appeal to the Supreme Court, Canadas submission was that in the
    exercise of its jurisdiction over ocean pollution it was entitled to prohibit
    the dumping of any substance, whether a pollutant or not, in all areas of the
    sea, including areas within the internal limits of the province.

[95]

The Supreme Court (Dickson C.J., McIntyre, Wilson and Le Dain JJ.;
    Beetz, Lamer and La Forest JJ. dissenting) allowed the appeal. It was not
    disputed that Parliament could regulate dumping in waters outside the
    territorial limits of a province, or that it could regulate dumping in
    provincial waters to prevent pollution harmful to fisheries. It was also
    conceded that Parliament could regulate dumping in provincial waters of
    substances that could be shown to cause pollution of extra-provincial waters.
    What was challenged, however, was Parliaments jurisdiction to control dumping
    in provincial waters of substances that were not shown to have a pollutant
    effect in extra-provincial waters: p. 417. Canadas central argument was that
    the matter of the prevention of ocean or marine pollution was a matter of
    national concern: p. 418.

[96]

The majority found that [m]arine pollution, because of its
    predominantly extra-provincial as well as international character and
    implications, is clearly a matter of concern to Canada as a whole: p. 436.
This,
    however, did not end the analysis of whether the matter fell within the
    national concern branch. Rather,
the question was whether the
    control of pollution by the dumping of substances in marine waters, including
    provincial marine waters, is a
single
,
indivisible
matter,
distinct
from the control of pollution by the dumping of substances in other provincial
    waters: p. 436 (emphasis added).
More specifically, because the
Ocean
    Dumping Control Act
distinguished between the pollution of fresh water and
    the pollution of salt water, the question was whether this distinction was
    sufficient
to make the control of marine pollution by the
    dumping of substances a single, indivisible matter to bring it within the POGG
    power.

[97]

Justice
    Le Dain, writing for the majority, traced the evolution of the national concern
    branch in the
Local Prohibition
case and
Canada Temperance
    Federation
, through the subsequent cases of
Johannesson v.
    Municipality of West St. Paul
, [1952] 1 S.C.R. 292 (aeronautics);
Munro
    v. National Capital Commission
, [1966] S.C.R. 663 (development,
    conservation and improvement of the National Capital Region);
Re:
    Anti-Inflation Act
(containment and reduction of inflation);
R. v.
    Hauser
, [1979] 1 S.C.R. 984 (control of narcotic drugs);
Labatt
    Breweries of Canada Ltd. v. Attorney General of Canada
, [1980] 1 S.C.R.
    914 (provisions of the
Food and Drugs Act
, R.S.C. 1970, c. F-27, and
    associated regulations);
Schneider v. The Queen
, [1982] 2 S.C.R. 112
    (medical treatment of heroin addicts); and
R. v. Wetmore
, [1983] 2
    S.C.R. 284 (provisions of the
Food and Drugs Act
).

[98]

From
    this survey, Le Dain J. expressed the following conclusions about the national
    concern doctrine, which he considered to be firmly established (pp. 431-432):

1.

The national
    concern doctrine is separate and distinct from the national emergency doctrine
    of the peace, order and good government power, which is chiefly distinguishable
    by the fact that it provides a constitutional basis for what is necessarily
    legislation of a temporary nature;

2.

The national
    concern doctrine applies to both new matters which did not exist at
    Confederation and to matters which, although originally matters of a local or
    private nature in a province, have since, in the absence of national emergency,
    become matters of national concern;

3.

For a matter to
    qualify as a matter of national concern in either sense it must have a
    singleness, distinctiveness and indivisibility that clearly distinguishes it
    from matters of provincial concern and a scale of impact on provincial
    jurisdiction that is reconcilable with the fundamental distribution of
    legislative power under the Constitution;

4.

In determining
    whether a matter has attained the required degree of singleness,
    distinctiveness and indivisibility that clearly distinguishes it from matters
    of provincial concern it is relevant to consider what would be the effect on
    extra-provincial interests of a provincial failure to deal effectively with the
    control or regulation of the intra-provincial aspects of the matter.

[99]

The consideration
    identified in the fourth paragraph has sometimes been referred to as the
    provincial inability component of the test. Professor Hogg has described it
    as follows in a paragraph that has been cited in several of the Supreme Courts
    decisions on the subject (
Constitutional Law of Canada
, para.
    17.3(b)):

It seems, therefore, that the most important element of
    national concern is a need for one national law which cannot realistically be
    satisfied by cooperative provincial action because the failure of one province
    to cooperate would carry with it adverse consequences for the residents of
    other provinces. A subject-matter of legislation which has this characteristic
    has the necessary national concern to justify invocation of the p.o.g.g. power.

[100]

The
    majority noted that marine pollution was recognized by the
Convention
    on the Prevention of Marine Pollution by Dumping of Wastes and other Matter
as a distinct and separate form of water pollution having its own
    characteristics and scientific considerations: p. 436. Although the convention
    was concerned with dumping in the territorial sea and the open sea and not
    internal waters, the difficulty in drawing a dividing line in practice, and not
    simply the possibility that pollution could move from the internal waters to
    the territorial sea, explained the essential indivisibility of the matter: p.
    437.
The
distinction between salt water and fresh water
    gave s. 4(1) of the
Ocean Dumping Control Act
ascertainable and reasonable limits in its impact on provincial jurisdiction.

[101]

Justice
    La Forest, in dissent, with whom Beetz and Lamer JJ. concurred, was particularly
    concerned by the fact that what is sought to be regulated in the present case
    is an activity wholly within the province, taking place on provincially owned
    land  and there is no evidence that the substance made subject to the
    prohibition in s. 4(1) is either deleterious in any way or has any impact
    beyond the limits of the province: p. 444. He acknowledged, however, at pp. 445-446,
    that Parliament could, under the POGG power, legislate to prevent activities in
    one province from polluting another province:

In legislating under its general power for the
    control of pollution in areas of the ocean falling outside provincial
    jurisdiction, the federal Parliament is not confined to regulating activities
    taking place within those areas. It may take steps to prevent activities in a
    province, such as dumping substances in provincial waters that pollute or have
    the potential to pollute the sea outside the province. Indeed, the exercise of
    such jurisdiction, it would seem to me, is not limited to coastal and internal
    waters but extends to the control of deposits in fresh water that have the
    effect of polluting outside a province. Reference may be made here to
Interprovincial
    Co-operatives Ltd. v. The Queen
, [1976] 1 S.C.R. 477,
    where a majority of this Court upheld the view that the federal Parliament had
    exclusive legislative jurisdiction to deal with a problem that resulted from
    the depositing of a pollutant in a river in one province that had injurious
    effects in another province. This is but an application of the doctrine of
    national dimensions triggering the operation of the peace, order and good
    government clause.

[102]

To
    summarize the principles that emerge from
Crown Zellerbach
, the court
    considers first whether the matter has a singleness, distinctiveness and
    indivisibility that clearly distinguishes it from matters of provincial concern.
    In this regard, the court considers the effect on extra-provincial interests of
    a provincial failure to regulate the matter. Second, the court considers
    whether the scale of impact of the federal legislation is reconcilable with the
    constitutional distribution of legislative power.

(c)

Application of
Crown Zellerbach

[103]

This brings me to the
    application of the principles expressed in
Crown Zellerbach
.

(i)

New Matter

[104]

Establishing minimum
    national standards to reduce GHG emissions is a new matter that was not
    recognized at Confederation. The record demonstrates that global warming and
    climate change and, in particular, the role played by anthropogenic GHG
    emissions in those processes, were not widely understood by the scientific
    community until well after Confederation. The existential threat to human
    civilization posed by anthropogenic climate change was discovered even more
    recently. Accordingly, it cannot be said that establishing minimum national
    standards to reduce GHG emissions, as distinct from efforts to reduce local air
    pollution, was a matter in existence in 1867.

[105]

Nevertheless, whether it
    is regarded as a new matter that did not exist at Confederation or as a matter
    that, originally of a local or private nature, has become a matter of national
    concern, the need for minimum national standards to reduce GHG emissions is a
    matter of national concern in the commonly-understood sense, given the
    consequences of climate change.

[106]

In considering
    whether, the matter is both national and a concern in the constitutional
    sense, it is appropriate to consider two contextual factors. First, the
Act
was enacted, as its Preamble demonstrates, to give effect to Canadas
    international obligations. While it has been held that Parliament cannot implement
    treaties or international agreements that fall outside its constitutional
    powers (
Attorney-General for Canada v. Attorney-General for Ontario
,
    [1937] A.C. 326 (P.C.), at pp. 351-354), the fact that a challenged law is
    related to Canadas international obligations is pertinent to its importance to
    Canada as a whole: see
Crown Zellerbach
, at pp. 436-437; and Hogg,
Constitutional
    Law of Canada
, at para. 11.5(c). The existence of a treaty or
    international agreement in relation to the matter also speaks to its
    singularity and distinctiveness.

[107]

Second, the
Act
is the product of extensive efforts  efforts originally endorsed by almost all
    provinces, including Ontario  to develop a pan-Canadian approach to reducing
    GHG emissions and mitigating climate change. This, too, reflects the fact that
    minimum national standards to reduce GHG emissions are of concern to Canada as
    a whole. The failure of those efforts reflects the reality that one or more
    dissenting provinces can defeat a national solution to a matter of national
    concern.

[108]

Munro v. National
    Capital Commission
offers a parallel. Prior to the enactment of the
National
    Capital Act
, 1958 (Can.), c. 37, Canada had attempted to regulate the
    zoning of lands in the National Capital Region by cooperation between a federal
    Commission established by Parliament and the local municipalities. It was only
    after the failure of extensive efforts to effect the desired result that
    Parliament gave the National Capital Commission the authority to regulate
    zoning in the National Capital Region: see p. 667. In the case before us,
    Canadas unsuccessful efforts to achieve a national cooperative solution, which
    was supported at one time by most provinces, is a factor to be considered in
    assessing the national nature of the concern.

[109]

A further, but
    unrelated, preliminary observation is warranted. The courts task on this
    reference is to pronounce on the constitutionality of the
Act
. The
    issue is not whether GHG emissions pricing is good or bad policy, or whether
    Canada has chosen the correct policy to address climate change. Nor is it about
    whether the policy will be effective in accomplishing its objectives. The sole
    issue for us is legislative competence:
Securities Reference (2011)
, at
    para. 90; and
Firearms Reference
, at para. 18. [P]olicy considerations
    and practical effects are irrelevant to the question:
Pan-Canadian Securities
    Reference
, at para. 82.

(ii)

Singleness, Distinctiveness and Indivisibility

[110]

The requirement of
Crown
    Zellerbach
that a matter be single, distinct and indivisible is designed
    to limit the national concern branch to discrete matters with contained
    boundaries. It is aimed at preventing provincial jurisdiction from being
    overwhelmed with broad characterization of areas of national concern, such as
    environmental protection, inflation or preservation of national identity:
    see
Crown Zellerbach
, at pp. 452-453, per La Forest J., citing Gerald
    Le Dain, Sir Lyman Duff and the Constitution (1974) 12 Osgoode Hall L.J. 261,
    at p. 293; and Hogg,
Constitutional Law of Canada
, at para. 17.3(c).

[111]

In
Hydro-Québec
,
    the minority described the test as a demanding one (para. 67):

The test for singleness, distinctiveness and indivisibility is
    a demanding one. Because of the high potential risk to the Constitutions
    division of powers presented by the broad notion of national concern, it is
    crucial that one be able to specify precisely what it is over which the law
    purports to claim jurisdiction. Otherwise, national concern could rapidly
    expand to absorb all areas of provincial authority. As Le Dain J. noted in
Crown
    Zellerbach
once a subject matter is qualified of national concern, Parliament
    has an exclusive jurisdiction of a plenary nature to legislate in relation to
    that matter, including its intra-provincial aspects.

[112]

Nonetheless, La Forest
    J., writing for the majority in
Hydro-Québec
, acknowledged, at para. 115:
    A discrete area of environmental legislative power can fall within [the
    national concern] doctrine, provided it meets the criteria  set forth in
Crown
    Zellerbach
.

[113]

Counsel for the
    Attorney General of British Columbia proposes a useful summary of the
    singleness, distinctiveness and indivisibility requirements: (1) singleness
    requires that the matter be characterized as specifically and narrowly as
    possible, at the lowest level of abstraction consistent with the fundamental
    purpose and effect of the statute; (2) distinctiveness requires that the matter
    be one beyond the practical or legal capacity of the provinces because of the
    constitutional limitation on their jurisdiction to matters in the Province;
    and (3) indivisibility means that the matter must not be an aggregate of
    matters within provincial competence, but must have its own integrity  this
    normally occurs where the failure of one province to take action primarily
    affects extra-provincial interests, including the interests of other provinces,
    other countries and Indigenous and treaty rights. This summary is a helpful
    guide.

[114]

Establishing minimum
    national standards to reduce GHG emissions meets these requirements. GHGs are a
    distinct form of pollution, identified with precision in Schedule 3 to the
Act
.
    They have known and chemically distinct scientific characteristics. They
    combine in the atmosphere to become persistent and indivisible in their
    contribution to anthropogenic climate change. They have no concern for
    provincial or national boundaries. Emitted anywhere, they cause climate change
    everywhere, with potentially catastrophic effects on the natural environment
    and on all forms of life. They are exactly the type of pollutant that both the
    majority and the minority in
Crown Zellerbach
contemplated would fall
    within the national concern branch of the POGG power.

[115]

It bears noting that
    the
Act
establishes only a
minimum
national standard  a
    minimum standard of stringency for the pricing of GHG emissions. It leaves it
    open to the individual provinces to legislate more stringent standards, it
    permits other provinces to adopt the federal minimum standard as their own and
    it applies the minimum standard to provinces that fail to do either.

[116]

The international and
    interprovincial impacts of GHG emissions inform not only the national nature
    of the concern, but the singleness, distinctiveness and indivisibility of the
    matter of establishing minimum national standards to reduce GHG emissions. Like
    the production, use and application of atomic energy, which was considered in
Ontario
    Hydro v. Ontario (Labour Relations Board)
, [1993] 3 S.C.R. 327, the matter
    of establishing minimum national standards to reduce GHG emissions is predominantly
    extra-provincial and international in character and implications, and possesses
    sufficiently distinct and separate characteristics to make it subject to
    Parliaments residual power:
Ontario Hydro
, at p. 379. Moreover, like
    the strategic and security aspects of atomic energy, the connection between
    minimum national standards to reduce GHG emissions and global climate change
    bespeak[s] its national character and uniqueness:
Ontario Hydro
, at p.
    379.

[117]

The application of the
    provincial inability test leaves no doubt that establishing minimum national
    standards to reduce GHG emissions is a single, distinct and indivisible matter.
    While a province can pass laws in relation to GHGs emitted within its own
    boundaries, its laws cannot affect GHGs emitted by polluters in other provinces
     emissions that cause climate change across all provinces and territories. However
    stringent a provinces GHG emissions reduction measures, they cannot, on their
    own, reduce Canadas net emissions. To use the example mentioned earlier in
    these reasons, the territories and the Atlantic provinces can do nothing,
    practically or legislatively, to address the approximately 93.2 percent of national
    GHG emissions that are produced by the rest of Canada.

[118]

The matter is itself
    indivisible. No one province acting alone or group of provinces acting together
    can establish minimum national standards to reduce GHG emissions. Their efforts
    can be undermined by the action
or by the inaction
of other provinces.
    Thus, the reduction of GHG emissions cannot be dealt with in a piecemeal
    manner. It must be addressed as a single matter to ensure its efficacy. The
    establishment of minimum national standards does precisely that.

[119]

The inability of one
    province to control the deleterious effects of GHGs emitted in others, or to
    require other provinces to take steps to do so, means that one provinces
    failure to address the issue would endanger the interests of other provinces:
cf.
    Schneider v. The Queen
, at p. 131. This speaks to the singleness,
    distinctiveness and indivisibility of the matter.

[120]

The evidence
    establishes that a cooperative national carbon pricing system would be undermined
    by carbon leakage in jurisdictions that do not adopt appropriately stringent
    carbon pricing measures. This is the quintessential case in which the failure
    of a province to cooperate would undermine the actions of other provinces, and
    would place unfair burdens on other provinces, potentially subverting a cooperative
    national scheme.

[121]

As Professor Hogg
    notes, the most important element of national concern is a need for one
    national law which cannot realistically be satisfied by cooperative provincial
    action because the failure of one province to cooperate would carry with it
    adverse consequences for the residents of other provinces:
Constitutional
    Law of Canada
, at para. 17.3(b). Moreover, as Le Dain J. observed in
Crown
    Zellerbach
, at p. 434: It is because of the interrelatedness of the
    intra-provincial and extra-provincial aspects of the matter that it requires a
    single or uniform legislative treatment.

[122]

In
Hydro-Québec
,
    where only the minority opinion materially considered the national concern
    branch, it was suggested that the provincial inability test could have played
    an important role, had the legislation been restricted to a discrete set of
    chemicals, like polychlorinated biphenyls (PCBs). The minority observed, at
    para. 76, that its views might have been different had the scope of the act not
    encompassed substances whose effects were only temporary and localized:

If the impugned provisions of the Act were indeed restricted
    to chemical substances, like PCBs, whose effects are diffuse, persistent and
    serious, then a
prima facie
case could
    be made out as to the grave consequences of any one province failing to
    regulate effectively their emissions into the environment
. However, the s.
    11(
a
) threshold of immediate or long-term harmful effect on the
    environment also encompasses substances whose effects may only be temporary or
    local. Therefore, the notion of toxic substances as defined in the Act is
    inherently divisible. Those substances whose harmful effects are only temporary
    and localized would appear to be well within provincial ability to regulate. To
    the extent that Part II of the Act includes the regulation of toxic substances
    that may only affect the particular province within which they originate, the
    appellant bears a heavy burden to demonstrate that provinces themselves would
    be incapable of regulating such toxic emissions. It has not discharged this
    burden before this Court. [Emphasis added.]

[123]

The distinction
    between the substances referred to in
Hydro-Québec
and GHGs is
    self-evident. GHGs are neither temporary nor localized in their effects. Their
    harmful effects are diffuse, persistent and serious and of virtually infinite
    duration. Unlike the substances at issue in
Hydro-Québec
, GHGs are not
    inherently divisible. On the contrary, they cause climate change by combining
    together to become indistinguishable in the atmosphere.

[124]

Establishing minimum
    national standards to reduce GHG emissions meets the requirements of
    singleness, distinctiveness and indivisibility articulated in
Crown
    Zellerbach
.

[125]

I turn to the second inquiry
    mandated by
Crown Zellerbach
.

(iii)

The Scale of Impact on Provincial Jurisdiction

[126]

It will be recalled
    that Le Dain J. in
Crown Zellerbach
stated that a matter of national
    concern must have not only singleness, distinctiveness and indivisibility, but
    also a scale of impact on provincial jurisdiction that is reconcilable with the
    fundamental distribution of legislative power under the Constitution.

[127]

Although not expressed
    in precisely these terms, this aspect of the test for matters of national
    concern is a recognition of federalism as an applicable constitutional
    principle, which, as the Supreme Court said in
Securities Reference (2011)
,
    at para. 61, demands respect for the constitutional division of powers and the
    maintenance of a constitutional balance between federal and provincial powers.
    As counsel for the Attorney General of British Columbia put it, assigning the
    matter to the federal Parliament must not disrupt the fundamental distribution
    of power that characterizes Canadian federalism.

[128]

Relying on the
    observations of Beetz J. in
Re: Anti-Inflation Act
, at pp. 443-445 and
    458-459, Ontario says that Canadas assertion of jurisdiction in relation to
    the cumulative dimensions of GHG emissions would trench upon and severely
    limit provincial autonomy and would displace broad swaths of exclusive
    provincial jurisdiction.

[129]

I would not accept
    this submission, for several reasons.

[130]

First, it results from
    a mischaracterization of the
Act
. Properly characterized as set out
    above, the
Act
deals only with the establishment of
minimum
national
    standards to reduce GHG emissions. It operates on a nation-wide basis and leaves
    scope for provincial standards that meet or exceed that minimum. It also leaves
    ample provincial legislative opportunity for other aspects of GHG regulation,
    including laws aimed at the causes and effects of GHG emissions within the
    province. As was the case in
Pan-Canadian Securities Reference
, the proper
    characterization of the
Act
demonstrates its narrow objective and
    constrains its operation to an aspect of a threat to Canada as a whole.

[131]

Second, the
    characterization of the
Act
and its classification as falling within
    the national concern branch of the POGG power do not have the effect of drawing
    all regulation of GHG emissions into federal jurisdiction. On the contrary,
    federal jurisdiction in this field is narrowly constrained to address the risk
    of provincial inaction regarding a problem that requires cooperative action.

[132]

The
Act
recognizes and respects the jurisdiction of individual provinces to enact their
    own legislation in relation to GHG emissions, including the ability of
    provinces to legislate fuel charges, to set emissions limits and to participate
    in output based pricing systems, provided that they are sufficiently stringent.
    A number of provinces have done so.

[133]

Confining Canadas
    jurisdiction to the establishment of minimum national standards to reduce GHG
    emissions does not result in a massive transfer of broad swaths of provincial
    jurisdiction to Canada, as Ontario claims. The constitutionality of future
    federal legislation, if any, in relation to this matter will be assessed
    according to traditional constitutional principles, including whether in pith
    and substance the legislation is in relation to the matter of national concern
    recognized in these reasons or in relation to a matter of provincial
    jurisdiction. A relevant consideration will be the degree to which the legislation
    appears to intrude on areas of provincial jurisdiction.

[134]

Third, the
Act
strikes an appropriate balance between Parliament and provincial legislatures,
    having regard to the critical importance of the issue of climate change caused
    by GHG emissions, the need to address it by collective action, both nationally
    and internationally, and the practical inability of even a majority of the
    provinces to address it collectively: see
Hydro-Québec
.

[135]

While the principle of
    cooperative federalism cannot validate an unconstitutional law, it does support
    the concurrent operation of statutes enacted by governments at both levels. The
Act
encourages just that, making room for the operation of provincial
    carbon pricing legislation of sufficient stringency: see
Rogers
    Communications
, at paras. 38, 93. Cooperative federalism, in which
    Parliament addresses a matter of national concern and the provinces address the
    aspects of the issue that fall within their enumerated powers, can also serve
    as an interpretative aid. As the Supreme Court noted in
Pan-Canadian
    Securities Reference
, at para. 17, courts should favour a harmonious
    reading of statutes so as to permit their concurrent operation:

Cooperative federalism is an interpretative aid that is used
    when interpreting constitutional texts to consider how different
    interpretations impact the balance between federal and provincial interests (
R.
    v. Comeau
, 2018 SCC 15, para. 78). Where possible, courts should favour a
    harmonious reading of statutes enacted by the federal and provincial
    governments which allows for them to operate concurrently (
Rogers
    Communications Inc. v. Chateauguay (City)
, 2016 SCC 23, [2016] 1 S.C.R.
    467, at para. 38). This principle is based on the presumption that Parliament
    intends its laws to co-exist with provincial laws (
Alberta (Attorney
    General) v. Moloney
, 2015 SCC 51, [2015] 3 S.C.R. 327, at para. 27).

[136]

A harmonious reading
    of the
Act
, which itself confines its operation to the creation of a
    national minimum pricing scheme to address a national and international
    concern, permits it to operate concurrently with provincial laws applicable to
    the environment in general, and to the reduction of GHG emissions in
    particular.

[137]

Finally, Ontario does
    not suggest that the
Act
is in conflict with any existing Ontario
    legislation or with any measures Ontario proposes to undertake to reduce GHG
    emissions and mitigate climate change. Nor do either of the attorneys general
    who support Ontario suggest that the
Act
conflicts with their present
    or contemplated future legislation. This is a good indication that the
Act
leaves generous room for provincial jurisdiction in relation to these matters
    and that the
Act
simply does what the provinces are constitutionally
    unable to do.

[138]

As explained above,
    the environment is an area of shared constitutional responsibility. The
Act
is Parliaments response to the reality and importance of climate change while securing
    the basic balance between the two levels of government envisioned by the
    Constitution:
Hydro-Québec
, at para. 86, per La Forest J.

(d)

Conclusion on National Concern

[139]

For these reasons, I conclude
    that the
Act
is constitutionally valid under the national concern
    branch of the POGG power contained in s. 91 of the
Constitution Act, 1867
.

[140]

In view of this
    conclusion, it is unnecessary to consider whether the
Act
falls under other
    heads of jurisdiction proposed by Canada and some of the interveners.

[141]

I turn now to
    Ontarios alternative submission.

Constitutionality of the Fuel Charge and the Excess Emissions Charge

[142]

Ontarios second submission
    consists of two independent arguments relating to ss. 91(3) and 53 of the
Constitution
    Act, 1867
.

[143]

Section 91(3) of the
Constitution
    Act, 1867
, gives Parliament jurisdiction to enact laws for the [t]he
    raising of Money by any Mode or System of Taxation. Section 53 provides:
    Bills for appropriating any Part of the Public Revenue, or for imposing any
    Tax or Impost, shall originate in the House of Commons.

[144]

The latter section, while
    seemingly unexceptional, has historical roots in the English
Bill of Rights
of 1689, 1 Will. & Mary, sess. 2, c. 2, art. 4. It was explained in
Eurig
    Estate (Re)
, [1998] 2 S.C.R. 565, and
620 Connaught Ltd. v. Canada
    (Attorney General)
, 2008 SCC 7, [2008] 1 S.C.R. 131, as codifying the
    principle of no taxation without representation and ensuring not only that
    the executive branch is subject to the rule of law, but also that the executive
    branch must call the legislative branch into session to raise taxes (and vote
    supply):
620 Connaught
, at paras. 4-5, quoting P.W. Hogg & P.J.
    Monahan,
Liability of the Crown
, 3rd ed. (Scarborough, Ont.: Carswell,
    2000), at p. 246; and
Eurig Estate
, at para. 30.

[145]

The law differentiates
    between taxes and regulatory charges. Both typically have some common features:
    see
Lawson v. Interior Tree Fruit and Vegetable Committee of Direction
,
    [1931] S.C.R. 357;
Eurig Estate
; and
Westbank First Nation v.
    British Columbia Hydro and Power Authority
, [1999] 3 S.C.R. 134. The
    distinguishing feature is the primary purpose of the levy. If it is imposed
    primarily for a regulatory purpose, or as necessarily incidental to a broader
    regulatory scheme, it is a regulatory charge. If it is imposed primarily to
    raise revenues for general fiscal purposes, it is a tax. Since some levies have
    aspects of both a tax and a regulatory charge, the court must look to the
    levys primary purpose, as opposed to its incidental effects, in order to
    determine its true nature: see
Westbank
, at para. 30;
620
    Connaught
, at paras. 16-18; and Hogg,
Constitutional Law of Canada
,
    at para. 31.10(b).

[146]

The principle
    expressed in s. 53, that taxes must be imposed by a taxing statute originating
    in the House of Commons, means that taxes cannot be imposed by a regulatory
    statute unless expressly authorized as such.

(1)

Ontarios First Argument: The Charges do not fall under s. 91(3)

[147]

Ontarios first
    submission is that the
Act
is a regulatory statute, it was never
    intended to impose a tax, and Canada, therefore, cannot rely on its taxation
    power as a constitutional basis for the charges under the
Act
.

[148]

I agree with Ontario
    that, given its pith and substance, the
Act
does not fall under the
    federal taxation power enumerated in s. 91(3). As noted, the
Act
falls
    under the national concern branch of the POGG power.

[149]

Although I would find the
Act
valid under the POGG power, Ontarios second argument must be
    addressed  whether the charges imposed by the
Act
nevertheless offend
    s. 53.

(2)

Ontarios Second Argument: The Charges have no Nexus to the Purposes of
    the
Act

[150]

Ontarios second
    submission is that the charges imposed under the
Act
are unconstitutional
    regulatory charges because they have no nexus to the purposes of the
Act
 a requirement Ontario says is imposed by s. 53.

[151]

The
Act
creates
    a regulatory scheme as described in
Westbank
, at paras. 24-29. Ontario
    acknowledges this. But that is not enough.
Westbank
requires a second
    step to distinguish between a regulatory charge and a tax  the government levy
    must be connected to or adhesive to the regulatory scheme itself. As put by
    Gonthier J., at para. 44, this connection will exist when the revenues are
    tied to the costs of the regulatory scheme,
or where the charges themselves
    have a regulatory purpose, such as the regulation of certain behaviour
 (emphasis
    added).

[152]

Ontario submits that
    there is no nexus between the fuel charge and the excess emissions charge on
    the one hand and the regulatory purposes of the
Act
on the other
    because: (1) the revenues generated by the charges are not linked to the cost
    of administration of the regulatory scheme; and (2) those revenues will not be spent
    in connection with the purposes of the
Act
.

[153]

Canada responds that
    the charges imposed by the
Act
are intended to create a financial
    incentive for businesses and individuals to change their behaviour in order to
    reduce GHG emissions and to encourage the development and use of cleaner fuels
    or alternatives. Canada says that the requirement for a nexus between the
    charges and the regulatory scheme does not mean that the revenues raised by the
    charges must be tied to the cost of administration or used to further the
    purposes of the scheme. The behaviour-changing nature of the charges themselves
    can provide that nexus.

[154]

I agree that behaviour
    modification is one of the purposes of the charges. This has been recognized as
    an appropriate purpose for a regulatory scheme:
Westbank
, at paras.
    29, 44; and
620 Connaught
, at paras. 20, 27. While it is true, as
    Canada observes, that there is no Supreme Court authority stating that the
    behaviour-changing nature of charges themselves cannot provide a sufficient
    nexus, the Supreme Court in
620 Connaught
expressly left for another
    day the question of [w]hether the costs of the regulatory scheme are a limit
    on the fee revenue generated, where the purpose of the regulatory charge is to
    proscribe, prohibit or lend preference to certain conduct: para. 48. But for
    this statement, one might have thought that the observation of Gonthier J. in
Westbank
at para. 44, quoted and emphasized above, meant that the nexus to the
    regulatory purpose could be met by the charges themselves  for example, where
    the purpose of the charges is the regulation of certain behaviour.

[155]

The issue was
    addressed by the Federal Court of Appeal in
Canadian Association of
    Broadcasters v. Canada
, 2008 FCA 157, [2009] 1 F.C.R. 3, leave to appeal
    granted, [2008] S.C.C.A. No. 423, appeal discontinued on October 7, 2009. It was
    argued that broadcasting licence fees imposed by the Canadian Radio-television
    and Telecommunications Commission were a tax, because the revenues generated by
    the fees exceeded the costs of the regulatory scheme. The Federal Court of
    Appeal concluded that
Westbank
does not require that there be a
    reasonable nexus between the revenue generated by a levy and the cost of the
    regulatory scheme. Justice Ryer, who gave the principal judgment, pointed out
    at para. 49 that, in
Westbank
, Gonthier J. had stated that the
    requisite nexus would exist where the levy had a regulatory purpose. He
    continued: It follows, in my view, that where a regulatory purpose for a levy
    has been established, the requisite nexus between that levy and the regulatory
    scheme in which it arises will nevertheless exist even if the quantum of the
    revenues raised by that levy exceeds the costs of the regulatory scheme in
    which that levy arises.

[156]

Justice Ryer found in
    any event that the fees were tied to the costs of the regulatory scheme
    (using the language of
Westbank
, at para. 44) because the costs of the
    Canadian broadcasting system, including federal appropriations to the Canadian
    Broadcasting Corporation, were well in excess of the revenues generated by the fees:
    paras. 66-67, 79, 83. However, in the event he was wrong in that conclusion, he
    went on to consider whether the fees would constitute regulatory charges if
    they were otherwise connected to the regulatory scheme: para. 86.

[157]

Referring to
Re:
    Exported Natural Gas Tax
, [1982] 1 S.C.R. 1004, Ryer J.A. observed that a
    levy will be connected to a regulatory scheme, and will be a regulatory charge,
    if it has a regulatory purpose. In
Natural Gas
, the majority observed,
    at p. 1070: If, on the other hand, the federal government imposes a levy
    primarily for regulatory purposes, or as necessarily incidental to a broader
    regulatory scheme  then the levy is not in pith and substance taxation. Justice
    Ryer concluded that the fees at issue serve a regulatory purpose by ensuring
    that licensees are required to make payments for the privilege of operating in
    an industry that is protected by the regulatory scheme from the rigours of
    full-blown competition: para. 94. The fees served a regulatory purpose, were
    therefore connected to the regulatory scheme and were in pith and substance
    regulatory charges, not taxes.

[158]

Justice Létourneau
    gave brief concurring reasons, expressing the view that no nexus is required
    between the amount of the levy and the costs of the scheme where a regulatory
    purpose exists and the charge is levied for a benefit or privilege. Justice Pelletier,
    also concurring, expressed the view that s. 53 does not invalidate as a tax
    legislation that requires the payment of a charge or fee for a form of licence
     at para. 109:

Section 53 is about democratic accountability. Its function is
    to ensure that only those who are politically accountable to the electorate are
    authorized to impose a compulsory levy on that electorate. It does not offend
    any notion of no taxation without representation for a government to make
    available to those who are prepared to pay for it, a property, a commercial
    right or a licence to do something which can only lawfully be done by a licence
    holder. While such transactions are capable of raising issues of accountability
    for public property, there is no issue of
democratic
accountability
    where citizens acquire property or commercial rights from the government in
    exchange for money. [Emphasis in original.]

[159]

I agree with the Federal
    Court of Appeal. Regulatory charges need not reflect the cost of administration
    of the scheme. This is consistent with the Supreme Courts observations in
620
    Connaught
, at para. 20:

By contrast [to user fees], regulatory charges are not imposed
    for the provision of specific services or facilities. They are normally imposed
    in relation to rights or privileges awarded or granted by the government. The
    funds collected under the regulatory scheme are used to finance the scheme or
    to alter individual behaviour. The fee may be set simply to defray the costs of
    the regulatory scheme. Or the fee may be set at a level designed to proscribe,
    prohibit or lend preference to a behaviour.

[160]

Contrary to Ontarios
    submissions, the fees levied under a regulatory scheme are not required to be cost
    recovery mechanisms.
620 Connaught
expressly contemplates that funds
    collected under the scheme may be used to alter behaviour.

[161]

I would also reject
    Ontarios submission that revenue raised by a regulatory charge must be used to
    further the purposes of the regulatory scheme. There is no authority for that
    proposition and indeed there is appellate authority against it.

[162]

Moreover, even if it
    is necessary to show that the revenues raised are used for the purposes of the
Act
,
    this has been established. The funds are returned to provinces, taxpayers and
    institutions to reward them for their participation in a program that benefits
    the provinces and the entire country. This promotes and rewards behaviour
    modification, encourages shifts to cleaner fuels, and fosters innovation, all
    of which are purposes identified in the Preamble of the
Act
.

[163]

I conclude that the
    fuel charge and the excess emissions charge under the
Act
are
    constitutional regulatory charges.

VI.

Disposition

[164]

I would answer the
    question referred by the Lieutenant Governor in Council as follows:

Question: Is the
Greenhouse Gas Pollution Pricing Act
,
    Part 5 of the
Budget Implementation Act, 2018, No. 1
, S.C. 2018, c. 12,
    unconstitutional in whole or in part?

Answer: No. The
Act
is constitutional.

G.R. Strathy C.J.O.

I agree. J.C.
    MacPherson J.A.

I agree. Robert J.
    Sharpe J.A.

Hoy A.C.J.O. (concurring):

[165]

I agree with the Chief
    Justice that the
Greenhouse Gas Pollution Pricing Act
, Part 5 of the
Budget
    Implementation Act, 2018, No. 1
, S.C. 2018, c. 12 (the
Act
) is
    constitutional under the national concern branch of the Peace, Order, and good
    Government (POGG) power contained in s. 91 of the
Constitution Act, 1867
.
    However, I do not agree with him that the true subject matter or pith and substance
    of the
Act
is properly distilled as: establishing minimum national
    standards to reduce greenhouse gas emissions.

[166]

In my opinion, that
    description is too broad and does not capture the true substance of the
Act
.
    Further, it risks an unnecessarily broad impingement on provincial
    jurisdiction. As I will explain, I conclude that the pith and substance of the
Act
is: establishing minimum national greenhouse gas emissions pricing standards
    to reduce greenhouse gas emissions.

[167]

My conclusion finds
    support both in statements made during the parliamentary debates of the
    legislation and in the
Act
itself. My characterization of the pith and
    substance of the
Act
is cast at a level of abstraction that is both
    legally permissible and legally desirable.

[168]

Statements during the
    parliamentary debates of the legislation provide some indication of the purpose
    of the
Act
. For example, the Hon. Catherine McKenna (Minister of
    Environment and Climate Change) indicated in the House of Commons that pricing
    pollution was essential to a credible climate plan:

Central to any credible climate plan is a
price on pollution
.
    That is exactly why we are working in partnership with the provinces and
    territories to price carbon.

Without a doubt, pricing carbon pollution is making a major
    contribution to helping Canada meet its climate targets under the Paris
    Agreement. [
House of Commons Debates
, 42nd Parl., 1st Sess., Vol. 148,
    No. 289 (1 May 2018), at p. 18982; emphasis added.]

[169]

Jonathan Wilkinson
    (Parliamentary Secretary to the Minister of Environment and Climate Change)
    echoed these comments, explaining that the government was committed to setting
    a minimum price on carbon:

To ensure that a national pollution pricing system can be
    implemented across the country
, the government promised to set
a
    regulated federal floor price on carbon
. This system will apply to any
    province or territory that requests it or that does not create its own
    pollution pricing system that meets federal criteria.

Madam Speaker, the focus of the pricing of carbon pollution is
    to actually incent choices that drive people toward more efficient use of
    hydrocarbon resources so that we will reduce our GHG emissions over time. It is
    an important piece of a broader approach to addressing climate change and to
    achieving our Paris targets. [
House of Commons Debates
, 42nd Parl.,
    1st Sess., Vol. 148, No. 294 (8 May 2018), at p. 19237-38; emphasis added.]

[170]

Before the House of
    Commons Standing Committee on Finance, Judy Meltzer (Director General, Carbon
    Pricing Bureau, Department of the Environment) observed that the federal carbon
    pricing backstop system would help reduce greenhouse gas (GHG) emissions by
    applying a carbon price throughout Canada:

The introduction of the proposed greenhouse gas pollution
    pricing act is a step in the development of
a federal carbon pricing
    backstop system.
The key purpose of the act is
to help reduce greenhouse
    gas emissions by ensuring that a carbon price applies broadly throughout Canada
,
    with increasing stringency over time. It provides the legal framework for the
    federal backstop system[.] [House of Commons, Standing Committee on Finance,
Evidence
,
    42nd Parl., 1st Sess., No. 146 (25 April 2018), at p. 6; emphasis added.]

[171]

Similarly, John Moffet
    (Associate Assistant Deputy Minister, Environmental Protection Branch,
    Department of the Environment) told the Committee that the legislation was
    aimed at ensuring that carbon pricing applies throughout the country:

[T]he governments goal was
to ensure that carbon pricing
    applied
throughout Canada so that a price signal was sent to a broad range
    of activities, to ensure coherence and as much efficiency as possible, and to
    send a signal to other countries and businesses planning to invest in Canada
    that Canada was committed to carbon pricing. [House of Commons, Standing
    Committee on Finance,
Evidence
, 42nd Parl., 1st Sess., No. 148 (1 May
    2018), at p. 5; emphasis added.]

[T]he goal of this legislation is to change behaviour, reduce
    emissions  and make a contribution, but not be the sole contributor to
    attaining the target. [House of Commons, Standing Committee on Finance,
Evidence
,
    42nd Parl., 1st Sess., No. 152 (8 May 2018), at p. 8.]

[172]

Further, the
Act
is entitled the
Greenhouse Gas Pollution Pricing Act
. The
Act
s
    long title is: An Act to mitigate climate change through the pan-Canadian
    application of pricing mechanisms to a broad set of greenhouse gas emission
    sources and to make consequential amendments to other Acts.

[173]

Pricing is part of
    both the long and short titles of the
Act
.

[174]

The Preamble to the
Act
also provides insight into the
Act
s purpose. As the Chief Justice
    notes in para. 75 of his reasons, after adverting to the scientific consensus
    that anthropogenic GHG emissions contribute to global climate change and the
    fact that climate change is a national problem that requires immediate action
    by all levels of government, the Preamble of the
Act
states the
    following:

Whereas the absence of
greenhouse gas emissions pricing
in some provinces and a lack of stringency in some
provincial greenhouse gas
    emissions pricing systems
could contribute to significant deleterious
    effects on the environment, including its biological diversity, on human health
    and safety and on economic prosperity;

And whereas it is necessary to create a
federal greenhouse
    gas emissions pricing scheme
to ensure that, taking
provincial
    greenhouse gas emissions pricing systems
into account, greenhouse gas
    emissions pricing applies broadly in Canada[.] [Emphasis added.]

[175]

Together, the
    statements made during the parliamentary debates, the
Act
s titles,
    and its Preamble clearly indicate that the purpose of the
Act
is to
    put a minimum national price on anthropogenic GHG emissions. The intended
    effect of the
Act
is to thereby modify behaviour and reduce
    anthropogenic GHG emissions on a national basis. In my view, the pith and
    substance of the
Act
is establishing minimum national greenhouse gas
    emissions pricing standards to reduce greenhouse gas emissions.

[176]

As stated above, my
    characterization of the
Act
is cast at a level of abstraction that is
    both legally permissible and legally desirable.

[177]

Without citing
    authority, both Canada and Ontario caution that characterizing the pith and
    substance of the
Act
with reference to GHG emissions pricing
    impermissibly incorporates Parliaments chosen means of addressing what they
    say is the purpose of the
Act,
reducing GHG emissions, into the
    matter. It was in the interests of both parties to resist a narrow
    characterization. Canada seeks the broadest constitutionally permissible
    characterization of the pith and substance of the
Act
in order to
    ensure future, court-endorsed legislative flexibility to reduce GHG emissions
    through the POGG power by any means. As for Ontario, as the Chief Justice
    observes, at para. 74 of his reasons, its broad characterization of the pith
    and substance of the
Act
supports its submission that the
Act
will result in Canada acquiring such sweeping authority to legislate in
    relation to local matters that it is not constitutionally sustainable.

[178]

In three cases, the
    Supreme Court has cautioned that when determining the pith and substance of a
    law for the purpose of determining which order of government can legislate,
    care should be taken not to confuse the purpose of a law with the means chosen
    to achieve it:
Ward v. Canada (Attorney General)
, 2002 SCC 17, [2002]
    1 S.C.R. 569, at para. 25;
Quebec (Attorney General) v. Canada (Attorney
    General)
, 2015 SCC 14, [2015] 1 S.C.R. 693, at para. 29;
Goodwin v.
    British Columbia (Superintendent of Motor Vehicles)
, 2015 SCC 46, [2015] 3
    S.C.R. 250, at para. 24.

[179]

However, I do not read
    these cases as going so far as to say that the characterization of the pith and
    substance of a law cannot include
any
reference to means. Indeed, the
    principle that legislative purpose and means may diverge and so must be
    considered separately during the characterization exercise has no bearing on
    whether the means chosen may affect or form part of the pith and substance of a
    law. As the parliamentary debate of this
Act
reveals, the choice of
    means may be so central to the legislative objective that the main thrust of
    the law, properly understood, is to achieve a result
in a particular way
.

[180]

The narrow definition
    of the pith and substance of laws in some cases arguably belies Canada and
    Ontarios position. For example, in
Reference re Employment Insurance Act
    (Can.), ss. 22 and 23
, 2005 SCC 56, [2005] 2 S.C.R. 669, the Supreme Court
    defined the pith and substance of impugned provisions for maternity and
    parental benefits as replac[ing] the employment income of insured women whose
    earnings are interrupted when they are pregnant and providing replacement
    income when an interruption of employment occurs as a result of the birth or
    arrival of a child: at paras. 34, 75.

[181]

Moreover, none of
    these cases cautioning that care be taken not to confuse the purpose of a law
    with the means chosen to achieve it involved determining whether the law at
    issue properly fell within the national concern branch of the POGG power.
    Rather, they considered whether a law should be classified under an existing,
    enumerated head of federal power under s. 91 or under a head of provincial
    power under s. 92. In such an exercise, over-emphasis on the means by which the
    purpose of the impugned legislation is to be effected might skew the classification.
    That is a very different exercise than defining a new matter for the purpose of
    determining whether it can be added to Parliaments legislative jurisdiction
    under the POGG power. The national concern branch of the POGG power creates new
    and permanent federal jurisdiction by taking powers away from the provinces; it
    is not about classification in the conventional sense. The more broadly a new
    matter is characterized, the greater the impingement on provincial
    jurisdiction.

[182]

My colleague, Justice
    Huscroft, cites Professor Jean Leclairs caution in The Elusive Quest for the
    Quintessential National Interest (2005) 38 U.B.C. L. Rev. 353, at pp. 363-64,
    that the conceptual indivisibility test in
R. v. Crown Zellerbach Canada
    Ltd.
, [1988] 1 S.C.R. 401, must be applied to the matter said to be of
    national importance, and not to the legislative means employed to ensure its
    regulation. In my view, Professor Leclairs point is not that the
    characterization of the pith and substance of a law cannot include any
    reference to means. Rather, his concern is that if the pith and substance of
    the law is broadly defined, that broad definition, and not the narrower means
    by which the purpose of the law is to be effected, must satisfy the
Crown
    Zellerbach
test.

[183]

At paras. 76 and 77 of
    his reasons, the Chief Justice describes the purpose of the
Act
as
    reducing GHG emissions on a nation-wide basis and characterizes the
    establishment of national minimum prices for GHG emissions as the means used
    to carry out the
Act
s purpose. But the Chief Justices
    characterization of the
Act
as establishing minimum national
    standards to reduce greenhouse gas emissions itself incorporates a means
    element  establishing minimum national standards. In my view, the Chief
    Justice tacitly recognizes that the characterization of a law may include some
    reference to the means by which its purpose is achieved.

[184]

Accordingly, I would
    characterize my limited disagreement with the Chief Justice as concerning the
    appropriate level of abstraction at which the pith and substance of the
Act
should be characterized.

[185]

At para. 113 of his
    reasons, the Chief Justice agrees with the Attorney General of British Columbia
    that
Crown Zellerbach
requires that the matter be characterized as
    specifically and narrowly as possible, at the lowest level of abstraction
    consistent with the fundamental purpose and effect of the statute. I also
    agree with this. But I disagree that characterizing the pith and substance of
    the
Act
as establishing minimum national standards to reduce
    greenhouse gas emissions characterizes the
Act
as specifically and
    narrowly as possible, at the lowest level of abstraction consistent with the
    fundamental purpose and effect of the
Act
.

[186]

Several interveners
    characterize the pith and substance of the
Act
more narrowly, with
    reference to GHG emissions pricing. For example:

·

Athabasca Chipewyan First Nation  putting a minimum national
    price on GHG emissions;

·

Canadian Environmental Law Association  mitigating climate
    change by imposing fuel charges or emissions levies on GHG emissions sources to
    induce them to reduce GHG emissions;

·

Canadian Public Health Association  incentivizing the
    behavioural changes necessary to reduce Canadas GHG emissions by ensuring that
    GHG emissions pricing applies throughout Canada; and

·

Centre québécois du droit de lenvironnement and Équiterre
    implementing a national carbon pricing scheme or ensuring that GHG emissions
    pricing applies throughout Canada.

[187]

The fundamental
    purpose of the
Act
is to put a minimum national price on anthropogenic
    GHG emissions. The intended effect of the
Act
is to thereby modify
    behaviour and reduce anthropogenic GHG emissions on a national basis.
    Characterizing the pith and substance of the
Act
as establishing
    minimum national greenhouse gas emissions pricing standards to reduce
    greenhouse gas emissions characterizes the pith and substance of the
Act
as specifically and narrowly as possible, consistent with its fundamental
    purpose and effect. It also captures the
Act
s true substance.

[188]

As the Chief Justice
    describes, a wide range of GHGs are emitted by human activity and there are a
    variety of forms of GHG emissions pricing. The means chosen by Parliament in
    the
Act
are a minimum national regulatory charge on carbon-based fuels
    and a mechanism that prices excess industrial GHG emissions.  Framing Canadas
    jurisdiction under the POGG power as establishing minimum national greenhouse
    gas emissions pricing standards to reduce greenhouse gas emissions leaves
    Canada considerable legislative latitude to reduce anthropogenic GHG emissions
    on a national basis through GHG emissions pricing in other ways. I disagree with
    Justice Huscroft that framing Canadas jurisdiction under the POGG power in
    this manner simply constitutionalizes the
Act
.

[189]

Finally, in
    characterizing the pith and substance of the
Act
more narrowly than
    the Chief Justice, I note, as Justice Huscroft does in his dissenting reasons,
    that it must also be remembered that Canada also has other constitutional
    powers  taxation, criminal law, and trade and commerce  it can rely upon to
    legislate to reduce anthropogenic GHG emissions.

[190]

I agree with and adopt
    the Chief Justices careful analysis, at paras. 78-138, of why the
Act
is constitutional under the national concern branch of the POGG power,
    recognizing that it would differ somewhat for my narrower characterization of
    the
Act
. I would only add that characterizing the
Act
in the
    manner that I propose further constrains the impact on provincial jurisdiction
    and therefore more readily satisfies the
Crown Zellerbach
test.

[191]

I also agree with the
    Chief Justice that the
Act
does not fall under the federal taxation
    power enumerated in s. 91(3) and the charges it imposes do not offend s. 53 of
    the
Constitution Act, 1867
, and with his reasons for so concluding.

Alexandra Hoy
    A.C.J.O.

Huscroft J.A. (dissenting):

[192]

This is a request for
    the courts advice on a question of constitutionality. The court is not
    required to decide anything about the science of climate change in order to
    provide that advice: all of the governments that are party to the reference
    those arguing in support of the constitutionality of the law as well as those
    opposing it  proceed on the basis that climate change is a real and pressing
    problem that must be addressed. Nor does this case require the court to decide
    anything about how climate change is best addressed. That is a question for
    governments and legislatures, not the court, which has neither the expertise
    nor the mandate to express any views on the matter.

[193]

This case concerns
    legislative authority in the Canadian constitutional order to address climate
    change. The starting point is well established: neither Parliament nor
    provincial legislatures enjoy exclusive lawmaking authority concerning either
    the environment in general or pollution in particular. Instead, lawmaking
    authority over these subject matters exists at both levels of government.
    Parliament has considerable authority to address climate change by, for
    example, employing its broad powers of taxation, which can be used to establish
    taxes on greenhouse gas (GHG) producing fuels and GHG emissions, and criminal
    law, which can be used to prohibit and regulate a wide range of activities that
    contribute to climate change. The provinces also have considerable authority to
    address climate change by, for example, exercising their powers over property
    and civil rights and matters of a local and private nature, which permit them
    to regulate manufacturing, farming, mining and related activities that generate
    GHGs, in addition to purely private, non-commercial activities.

[194]

There is no question
    that the provinces can address climate change by imposing fuel and excess
    emission charges; some provinces did so prior to Parliaments passage of the
Greenhouse
    Gas Pollution Pricing Act
, Part 5 of the
Budget Implementation Act,
    2018, No. 1
, S.C. 2018, c. 12 (the
Act
), which effectively
    requires that all of the provinces do so. However, several provinces prefer to
    employ different strategies to reduce GHGs and address climate change,
    strategies that are, in their view, more suited to local needs and conditions.

[195]

The question raised by
    this case is whether Canada can require these provinces to adopt its preferred
    means of addressing climate change  eschewing its enumerated powers under s.
    91 of the
Constitution Act, 1867
and asserting residual lawmaking
    authority under the national concern branch of the Peace, Order, and good
    Government (POGG) clause. In effect, Canada has asked the court to sanction
    a change to the constitutional order  to increase Parliaments lawmaking
    authority while diminishing that of the provincial legislatures, and to do so
    on a permanent basis.

[196]

I agree with the Chief
    Justice, as well as with both the majority and the minority of the Court of
    Appeal for Saskatchewan in
Reference re Greenhouse Gas Pollution Pricing
    Act
, 2019 SKCA 40, appeal as of right to S.C.C. filed, 38663, that
    Canadas assertion of authority over the cumulative dimensions of GHGs cannot
    be supported under the national concern branch of the POGG power. Given the
    pervasiveness of GHGs  the fact that GHGs are generated by most activities
    regulated by the provinces  recognition of federal authority over the
    cumulative dimensions of GHGs would result in an extensive and permanent
    transfer of lawmaking authority to Parliament, allowing Parliament to regulate
    vast areas of provincial life, business as well as personal.

[197]

However, I disagree
    with the Chief Justices reformulation of Canadas position, and his conclusion
    that Parliament has the authority to establish minimum national standards to
    reduce GHG emissions under the POGG power. Although this formulation narrows
    the lawmaking authority granted to Parliament somewhat, it is amorphous and
    distorts the POGG power and the limited purpose it is designed to serve in the
    constitutional order.

[198]

I appreciate that
    federalism concerns seem arid when the country is faced with a major challenge
    like climate change. As long as something gets done, it may seem unimportant
    which level of government does it. But federalism is no constitutional nicety;
    it is a defining feature of the Canadian constitutional order that governs the
    way in which even the most serious problems must be addressed, and it is the
    courts obligation to keep the balance of power between the levels of
    government in check.

I.

Federalism and Peace, Order, and Good Government

[199]

I begin with some
    brief background on the nature of federalism analysis and Parliaments POGG
    power.

[200]

The two-step approach
    that informs the analysis of federalism questions is well established. The
    first step is to characterize the impugned law. This is referred to as
    determining the pith and substance of the law, an arcane phrase that
    describes a simple idea: the court must identify what the law does  its
    essential character  before it can determine where lawmaking authority lies.
    The second step is to determine whether the law comes within a class of
    subjects assigned to provincial or federal lawmaking authority.

[201]

This case is unusual
    because Canadas primary claim is that Parliament has legislated, not on the
    basis of the federal powers enumerated in s. 91, but on the basis of its power
    to legislate for peace, order, and good government. In order to evaluate this
    claim, the court must determine whether the
Act
fits under a subject
    matter that ought to be recognized under the POGG power.

[202]

Parliaments power to
    make laws under the POGG power flows from the introductory clause in s. 91 of
    the
Constitution Act, 1867
, which provides as follows:

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
; and for greater Certainty, but not so as to restrict the
    Generality of the foregoing Terms of this Section, it is hereby declared that
    (notwithstanding anything in this Act) the exclusive Legislative Authority of
    the Parliament of Canada extends to all Matters coming within the Classes of
    Subjects next hereinafter enumerated. [Emphasis added].

[203]

Once a matter is
    recognized by the court to be a matter falling under the POGG power, Parliament
    acquires exclusive jurisdiction of a plenary nature to legislate in relation
    to that matter, including its intra-provincial aspects:
R. v. Crown
    Zellerbach Canada Ltd.
, [1988] 1 S.C.R. 401, at p. 433. The transfer of
    power from provincial legislatures to Parliament effected under the POGG power
    is either temporary, in the case of the emergency branch, or permanent, in the
    case of both the gap branch (not at issue in this case) and the national
    concern branch, under which Canada claims the authority to enact the
Act
.
    In effect, Canada seeks to augment the list of federal powers enumerated under
    s. 91, not by amendment to the Constitution but by means of judicial
    interpretation of the POGG clause.

II.       Characterizing the
Act

[204]

With this background
    in mind, I turn to the impugned legislation. What does it do, and where in the
    constitutional order does it fit?

[205]

The characterization
    of legislation in the course of federalism analysis is based on the
    understanding that laws will often have more than one feature; indeed, they may
    have several features that address several goals. Thus, the court is concerned
    with identifying the most important feature of the law  its essential
    character. The law is classified having regard to its essential character
    regardless of any secondary or incidental aspects that it may have.

[206]

The second step,
    classification, can be difficult because the powers enumerated under ss. 91 and
    92 of the
Constitution Act, 1867
, are, in significant respects, worded
    vaguely rather than specifically, and overlap between them is to be expected.

[207]

An example
    demonstrates the point. In
Ward v. Canada (Attorney General)
, 2002 SCC
    17, [2002] 1 S.C.R. 569, the Supreme Court considered the constitutionality of
    a federal regulation that prohibited the sale of young hooded and harp seals.
    On the face of things, this appeared to be a regulation concerning
    intraprovincial trade, and so a matter of provincial lawmaking authority under
    the property and civil rights power (s. 92(13)). But the court did not consider
    simply the immediate effect of the regulation; it went on to consider
why
the regulation banned the sale of seals. Looked at from this perspective, the
    court concluded that the prohibition was directed not at trade within a
    province but, instead, at managing fisheries  the economic viability of the
    seal fishery and Canadian fisheries in general, a matter of Parliaments lawmaking
    authority under the sea coast and inland fisheries power (s. 91(12)).
Ward
demonstrates the importance of ensuring that laws are not characterized on the
    basis of the means chosen to give effect to the legislatures purpose. See also
    this courts decision in
Canada Post v. Hamilton (City)
, 2016 ONCA
    767, 134 O.R. (3d) 502, at para. 37.

[208]

A similar point can be
    made about the
Reference re Firearms Act (Can.)
, 2000 SCC 31, [2000] 1
    S.C.R. 783. In that case, the court concluded that the purpose and effect of a
    law requiring the licensing and registration of firearms was the enhancement of
    public safety  a matter of federal criminal lawmaking authority under s.
    91(27)  even though the means chosen by Parliament included requirements that,
    on the face of things, involved the regulation of firearms as property
    ownership, otherwise a matter of provincial jurisdiction under s. 92(13).

[209]

In this case, Canada
    asserts that the impugned legislation is in pith and substance concerned with
    the cumulative dimensions of GHG emissions. This characterization was
    rejected by the Court of Appeal for Saskatchewan on the basis that there is no
    meaningful distinction between individual and cumulative GHG emissions, and
    that recognizing GHGs as a subject matter under the POGG power would upset the
    fundamental distribution of legislative power under the Constitution:
Reference
    re Greenhouse Gas Pollution Pricing Act
, at paras. 134-38,
per
Richards C.J.S., at paras. 424-26,
per
Ottenbreit and Caldwell JJ.A.
    (dissenting). It is also rejected by the majority in this case on the basis
    that it is vague and confusing, because GHGs are inherently cumulative and
    the cumulative dimensions of the problem are undefined.

[210]

I agree. However, in
    my view, the majority decisions in both cases characterize the
Act
in
    ways that are problematic.

[211]

In Saskatchewan,
    Richards C.J.S. characterizes the
Act
in a manner that dictates the
    outcome of the POGG analysis. He proffers a highly specific characterization of
    the law, concluding that its pith and substance is best seen as being the
    establishment of minimum national standards of price stringency for GHG
    emissions: para. 125. To a similar effect, the Associate Chief Justice in this
    case concludes that the
Act
s pith and substance is establishing
    minimum national greenhouse gas emissions pricing standards to reduce
    greenhouse gas emissions. These are both descriptions of the means or
    technique Parliament has chosen to give effect to the
Act
s ultimate
    purpose, rather than a characterization of the
Act
s dominant feature.

[212]

The Chief Justices
    decision in this case avoids this problem but introduces a different one. With
    respect, to say that the essential character of the
Act
is to
    establish minimum national standards to reduce greenhouse gas emissions is to
    leave unanswered the key question for classification purposes: minimum
    standards of
what
? This characterization leaves standards
    free-floating. What is it, exactly, that the
Act
regulates? The
    problem is all the more acute given that we are concerned not with whether the
    law fits under one of the existing federal powers enumerated in s. 91, but,
    instead, the more normative question of whether it fits under a new federal
    subject matter that
ought
to be recognized for purposes of the POGG
    power.

[213]

In my view, the
Act
should be characterized more simply: it regulates GHG emissions. The means
    Parliament has adopted is the establishment of an escalating fuel charge on
    carbon-based fuels and a mechanism for crediting and charging industrial GHG
    emissions, both of which are supposed to establish economic incentives that
    help to achieve the
Act
s ultimate purpose: reducing GHG emissions.

III.      Classifying the
Act

[214]

As I mentioned above,
    it is well established that neither the environment nor pollution is a
    standalone area of legislative responsibility under the Canadian constitution.
    Both Parliament and provincial legislatures can, within their enumerated
    powers, legislate to protect the environment and address the problem of
    pollution:
R. v. Hydro-Québec
, [1997] 3 S.C.R. 213, at para. 112;
Friends
    of the Oldman River Society v. Canada (Minister of Transport),
[1992] 1
    S.C.R. 3, at pp. 63-64.

[215]

Plainly, the
Act
imposes charges on manufacturing, farming, mining, agriculture, and other
    intraprovincial economic endeavours too numerous to mention, in addition to
    imposing costs on consumers, both directly and indirectly, as businesses can be
    expected to pass on increased costs, to a greater or lesser extent  all
    matters that would be classified as falling under provincial lawmaking
    authority over property and civil rights (s. 92(13)) or matters of a local or
    private nature (s. 92(16)). The thrust of Canadas argument is that Parliament
    is, nevertheless, entitled to legislate on the basis of the national concern
    branch of the POGG power. Before I address this argument, it is important to
    refer briefly to the emergency branch of the POGG power and its relevance in
    this case.

The emergency branch

[216]

It is well established
    that Parliament may legislate under the POGG power on the basis of an
    emergency, and in so doing, may encroach upon provincial lawmaking authority,
    albeit for a temporary period.

[217]

Although the language
    of Canadas submissions is cast in terms of an emergency  climate change is
    described as an urgent threat to humanity  this is not an emergency case. In
    this court, counsel for Canada conceded that the
Act
was not passed on
    the basis that climate change constitutes an emergency. Nevertheless, in its
    written argument, Canada submitted that the
Act
could be upheld on the
    basis of the emergency power, adopting a submission advanced by one of the
    interveners. This submission came in the final sentence of Canadas reply
    factum.

[218]

It is difficult to see
    how this court could endorse so casual a submission of an emergency. It is one
    thing for Canada to proffer an emergency argument on an alternative basis, as
    occurred in
Re: Anti-Inflation Act
, [1976] 2 S.C.R. 373, but quite
    another not to make the argument at all, only to adopt the submissions of a
    private intervener as an afterthought.

[219]

In any event, unless
    the Supreme Court revisits the requirements to enact legislation under the
    emergency branch of the POGG power, the
Act
could not be upheld on
    that basis. The emergency branch argument founders on the requirement that
    emergency legislation be of a temporary nature:
Re: Anti-Inflation Act
,
    at pp. 427, 437 and 461;
Crown Zellerbach
, at p. 432. The
Act
is not  and does not purport to be  a temporary measure.

The national concern branch

[220]

Given that this is not
    an emergency case, it is important to ensure that the rhetoric of emergency
    does not colour the POGG analysis. The courts have long prescribed caution when
    it comes to using the POGG national concern power because it results in a
    permanent, as opposed to a temporary, transfer of provincial lawmaking
    authority to Parliament. Lord Watson counselled that great caution had to be
    used in identifying things that had become matters of national concern:
Attorney-General
    for Ontario v. Attorney-General for the Dominion
, [1896] A.C. 348 (P.C.),
    at p. 361 (the
Local Prohibition
case). More recently, Beetz J.
    warned that courts had to be careful not to add hitherto unnamed powers of a
    diffuse nature to the list of federal powers, given the risk that those powers
    would continue to expand federal lawmaking authority:
Re: Anti-Inflation
    Act
, at p. 458.

[221]

The criteria
    identified by Le Dain J. in
Crown Zellerbach
 singleness, distinctiveness,
    and indivisibility  speak to this caution. These criteria constrain rather
    than facilitate the exercise of the power, but they do not establish a test
    that can be applied to reach an undisputed outcome. Thus, resort to the POGG
    power is bound to be controversial, as the decisions of divided courts in cases
    like the
Re: Anti-Inflation Act
and
Crown Zellerbach
attest.

[222]

There is no doubt
    that, in common parlance, climate change is a matter of national concern. More
    than this, it is a matter of international concern, as the history of treaties
    to which Canada is a party demonstrates. But the national concern branch of the
    POGG power does not authorize federal plenary lawmaking authority wherever
    there is intense, broadly based concern. The national concern branch of the
    POGG power operates on a limited basis in limited circumstances. That is the
    point of the approach that has long been taken by the Supreme Court, as Le Dain
    J. recapitulated in
Crown Zellerbach
, at pp. 431-32:

1. The national
    concern doctrine is separate and distinct from the national emergency doctrine
    of the peace, order and good government power, which is chiefly distinguishable
    by the fact that it provides a constitutional basis for what is necessarily
    legislation of a temporary nature;

2. The national
    concern doctrine applies to both new matters which did not exist at
    Confederation and to matters which, although originally matters of a local or
    private nature in a province, have since, in the absence of national emergency,
    become matters of national concern;

3. For a matter
    to qualify as a matter of national concern in either sense it must have a
singleness,
    distinctiveness and indivisibility that clearly distinguishes it from matters
    of provincial concern and a scale of impact on provincial jurisdiction that is
    reconcilable with the fundamental distribution of legislative power
under
    the Constitution;

4. In
    determining whether a matter has attained the required degree of singleness,
    distinctiveness and indivisibility that clearly distinguishes it from matters
    of provincial concern it is relevant to consider what would be the effect on
    extra-provincial interests of a provincial failure to deal effectively with the
    control or regulation of the intra-provincial aspects of the matter. [Emphasis
    added].

[223]

The criteria
    articulated by the court in that case  singleness, distinctiveness, and
    indivisibility  are each amenable to broader or narrower interpretation, but
    they are not proffered as discrete tests and should not be applied
    mechanically. They should, instead, be interpreted in light of the purpose they
    are designed to serve: limiting the scope of the national concern branch rather
    than expanding it.

(1)     Identifying a matter of national concern

[224]

It is important not to
    conflate pith and substance analysis at the first step  characterizing a law
    for purposes of classifying it  with the subsequent classification that is
    required to identify a corresponding head of power at the second step.
    Conflation results in circularity: if legislation is classified in terms of a
    particular subject matter it will necessarily be classified as falling under
    that matter, as they will be one and the same. This problem is evident in the
    majority decision of the Court of Appeal for Saskatchewan. In essence, that
    decision specifically constitutionalizes the
Act
, as opposed to
    finding (1) that the
Act
can be characterized as an instance of a
    matter that (2) comes within the scope of a matter appropriately recognized
    under the national concern branch of the POGG power.

[225]

The problem here is
    conceptual in nature: the national concern branch of the POGG power requires
    the identification of a new subject matter independent of the means adopted in
    the relevant law. Once something is recognized as a matter of national concern
    under POGG, it becomes subject to exclusive federal lawmaking authority. Hence,
    it is a category error to describe the specific means adopted in legislation to
    address a problem, rather than the subject matter of the problem itself, as a
    matter of national concern.

[226]

Past examples of
    national concern  POGG matters demonstrate the need to identify the  matter at
    an appropriate level of generality: aeronautics (
Johannesson v.
    Municipality of West St. Paul
, [1952] 1 S.C.R. 292); radio (
In re
    Regulation and Control of Radio Communication in Canada
, [1932] A.C. 304
    (P.C.)); atomic energy (
Ontario Hydro v. Ontario (Labour Relations Board)
,
    [1993] 3 S.C.R. 327); a national capital region (
Munro v. National Capital
    Commission
, [1966] S.C.R. 663); and marine pollution (
Crown Zellerbach
).
    These matters function as heads of federal lawmaking authority under s. 91, and
    allow for the passage of additional federal legislation  or alternative
    legislation that employs other means  as required.

[227]

Canada argued that the
    matter that should be recognized under the POGG power is the cumulative
    dimensions of GHG emissions, but this is untenable. There is no meaningful
    distinction between the cumulative dimensions of GHG emissions and GHG
    emissions per se. Thus, Canadas position must be understood as an attempt to
    establish exclusive federal lawmaking authority over GHG emissions  to repeat,
    exclusive jurisdiction of a plenary nature to legislate in relation to that
    matter, including its intra-provincial aspects, as Le Dain J. explained in
Crown
    Zellerbach
, at p. 433. Given that GHGs are generated by virtually every
    activity regulated by provincial legislation, including manufacturing, farming,
    mining, as well as personal daily activities including home heating and
    cooling, hot water heating, driving, and so on, federal authority over GHG
    emissions would constitute a massive shift in lawmaking authority from
    provincial legislatures to the Parliament of Canada.

(2)     Singleness, distinctiveness, and indivisibility

[228]

In addressing the
    criteria of singleness, distinctiveness, and invisibility the Chief Justice
    reasons as follows:

·

Greenhouse gases are a distinct form of pollution that knows no
    boundaries.

·

The provinces cannot alone or in tandem regulate greenhouse gases
    emitted extraprovincially and cannot reduce Canadas net emissions. Moreover,
    action or inaction in other provinces can undermine an individual provinces
    efforts.

·

Therefore, greenhouse gas emissions must be addressed on a
    national basis.

[229]

The difficulty is that
    this reasoning begs the question: it depends on the premise that a national
    standard is required  something that, by definition, no province can
    establish. There are many things that individual provinces cannot establish,
    but it does not follow that those things are matters of national concern on
    that account. If it were otherwise, any matter could be transformed into a
    matter of national concern simply by adding the word national to it.

[230]

In short, provincial
    inability to establish a national standard on carbon pricing is not
    determinative of federal jurisdiction under the POGG power. But in any event,
    carbon pricing is only one approach to addressing GHG emissions  one of many
    policy options that might be chosen, whether alone or as part of a broader
    strategy. There are many ways to address climate change and the provinces have
    ample authority to pursue them, whether alone or in partnership with other
    provinces, using their powers under ss. 92(13) and (16). Put another way,
    nothing stops the provinces from taking steps to reduce their GHG emissions,
    and hence the emissions of Canada as a whole, and they are in fact doing so.

[231]

No doubt, action or
    inaction by one province could undermine the effectiveness of another
    provinces efforts to establish carbon pricing, but this does not speak to
    provincial inability to address the GHG problem; it is, instead, a reflection
    of legitimate political disagreement on a matter of policy, and in particular
    the suitability of carbon pricing as a means of reducing GHG emissions in a
    particular province.

[232]

In summary, Parliament
    is fully entitled to choose its preferred policy option in dealing with a
    particular problem, but only if it has lawmaking authority over the subject
    matter with which the problem is concerned. Parliament cannot insist that its
    preferred means of dealing with a problem be implemented by the provinces when
    that means encroaches on provincial lawmaking authority. The criteria of
    singleness, distinctiveness, and indivisibility apply to a
matter
, not
    to the particular means Parliament has chosen to address that matter. As
    Professor Jean Leclair has explained in The Elusive Quest for the
    Quintessential National Interest (2005) 38 U.B.C. L. Rev. 353, at pp.
    363-64:

The conceptual indivisibility test must be
    applied using the approach of Justice Beetz in
Anti- Inflation
;
that is, to the matter said to be of national interest  and
    not to the legislative means employed to ensure its regulation  In other
    words, t
he conceptual indivisibility of a particular matter should hinge
    upon whether the totality of legislative means necessary for its overall
    regulation amounts to an important invasion of provincial spheres of power.
    Otherwise, the central government could adopt a law said to be confined to a
    very limited aspect of a particular trade, argue successfully that it was
    sufficiently indivisible to qualify as a matter of national interest and, after
    having established its ... exclusive jurisdiction of a plenary nature to
    legislate in relation to that matter, Parliament could select, this time in
    all impunity, any other legislative means it would find appropriate to adopt.
    [Footnote omitted.]

(3)

Scale of impact on provincial jurisdiction

[233]

Even assuming that
    GHGs were a matter that satisfied the singleness, distinctiveness, and
    indivisibility criteria, the scale of impact on provincial jurisdiction would
    have to be considered. Although the criteria from
Crown Zellerbach
are
    oft-quoted, Le Dain J.s warning is often overlooked. He emphasized that in
    order for a matter to be recognized as a matter of national concern under the
    POGG power,
it must have ascertainable and reasonable limits, in so far as
    its impact on provincial jurisdiction is concerned
: p. 438 (emphasis
    added). The key concern, in other words, lies in containing the reach of the
    POGG power, and so limiting its capacity to undermine the balance of power in
    the federal order.

[234]

The majority of the
    Court of Appeal for Saskatchewan addresses this problem by, in essence, constitutionalizing
    the
Act
as the matter of national concern under the POGG power. By
    definition, the POGG matter the court recognized is contained; it goes no
    further than the
Act
itself, and so the impact on provincial
    jurisdiction is ascertainable and limited. But the POGG power is not designed
    to constitutionalize particular legislation; it is designed to afford
    Parliament the authority to legislate in regard to a matter of national
    concern. On the Court of Appeal for Saskatchewans approach, Parliaments
    ability to legislate under the POGG power begins and ends with the carbon
    pricing scheme the current legislation supports.

[235]

The Chief Justice
    concludes that the
Act
has a limited impact on provincial jurisdiction
    and is reconcilable with the fundamental division of legislative power. His
    reasons may be summarized as follows:

·

Properly characterized, the
Act
deals only with the
    establishment of minimum national standards to reduce GHG emissions; its
    operation is limited to an aspect of a threat to Canada as a whole and leaves
    the provinces free to legislate intraprovincially to establish higher (and
    additional) standards that can operate concurrently.

·

The
Act
strikes an appropriate balance given the
    importance of climate change and the need for collective action. It is not in
    conflict with any existing or proposed Ontario legislation or measures to
    address climate change, and does no more than address what the provinces are
    constitutionally unable to do.

[236]

But while the Chief
    Justice emphasizes the limited reach of the
Act
, the matter of
    national concern that he has identified is too vague to limit the reach of
    Parliaments authority in the manner required. It affords no basis to determine
    the areas in which Parliament may legislate to establish minimum national
    standards beyond the carbon pricing scheme that his decision upholds.

[237]

Thus, the Chief
    Justice avoids the problem apparent in the Court of Appeal for Saskatchewans
    decision, but does so by introducing great uncertainty and, as a result, a
    potentially significant impact on provincial lawmaking authority. Can
    Parliament establish minimum national standards governing such provincial
    matters as home heating and cooling? Public transit? Road design and use? Fuel
    efficiency? Manufacturing processes? Farming practices? These are just some of
    the things that a vaguely worded federal power to establish minimum national
    standards to reduce GHG emissions may permit  all of which would have a major
    impact on provincial jurisdiction.

IV.     Conclusion

[238]

For these reasons, I
    conclude that Parts 1 and 2 of the
Act
are not valid exercises of the
    national concern branch of the POGG power. The constitutionality of Parts 3 and
    4 of the
Act
is not challenged.

[239]

I conclude with a
    brief comment on Parliaments lawmaking authority.

[240]

The key point is this:
    my conclusion that passage of the
Act
is not authorized under the
    national concern branch of the POGG power does not mean that Parliament is
    powerless to address climate change. On the contrary, Parliament has
    significant authority to address pollution and the environment, including
    lawmaking authority over taxation, criminal law, and trade and commerce  none
    of which have been exercised here. Not only can Parliament legislate in a
    variety of ways to reduce GHGs; it can legislate to accomplish much of what the
Act
aims to do.

[241]

The provinces, too,
    have significant lawmaking authority that allows them to reduce GHGs. In a
    federal constitutional order, a variety of different approaches may be taken to
    the same problem, with each jurisdiction learning from the experience of the
    others. That is how Canada has long been governed. As the Supreme Court has
    emphasized, Canadian federalism is characterized by overlapping legislative
    jurisdiction and cooperation to achieve national goals. Canada has not
    established that Parliaments lawmaking authority should be expanded under the
    POGG power in this case.

Released: GS     JUN 28 2019

Grant Huscroft J.A.