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Living Tree or Invasive Species? Critical Questions for the Constitutionality of Federal Carbon Pricing

Grant Bishop
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Grant Bishop: C.D. Howe Institute

C.D. Howe Institute Commentary, 2019, issue 559

Abstract: In the upcoming hearings by the Supreme Court on constitutional challenges to the federal government’s carbon pricing backstop under the Greenhouse Gas Pollution Pricing Act (GGPPA), the court must coherently define the “national concern” for the federal government to have jurisdiction to regulate greenhouse gases (GHGs) under its peace, order and good government (POGG) power. The “minimum national standards” approach to defining the national concern by the majorities of the Ontario and Saskatchewan courts of appeal lacks any precedent in previous POGG jurisprudence. In all previous case law, a national concern conferred exclusive federal jurisdiction. In contrast, the Ontario and Saskatchewan decisions appear to be policy-driven contortions of constitutional law to enable both federal and provincial governments to concurrently price carbon. A “minimum national standards” approach for federal jurisdiction under POGG would mean both “death by a thousand cuts” for federalism, as one jurist has put it, and could undermine the exclusive federal jurisdiction for other national concerns like aeronautics, radio communications and nuclear power. Because carbon pricing is good policy does not mean courts should contort Canada’s constitutional architecture. Given the transboundary effects of GHGs and the collective action problem facing consistent provincial regulation, the Supreme Court must confront whether greenhouse gases should fall under exclusive federal jurisdiction as a national concern. Courts have also so far failed to grapple with the industry-specific picking of winners through the federal output-based pricing system (OBPS) for large emitters, which differentiates carbon costs per tonne between different industries and production processes. If not restricted from imposing industry-byindustry GHG standards, the federal government would have a back door to invade provincial jurisdiction for intra-provincial industries and natural resources. Even if greenhouse gases are a national concern, activity-level regulation like the OBPS should arguably be outside of federal jurisdiction. To address “leakage,” the federal government could instead use measures under its international trade power or work cooperatively with provinces. The Supreme Court must now tackle vital constitutional questions that the Ontario and Saskatchewan courts neglected. In particular, the Supreme Court must: address the obvious problems with a “minimum national standards” approach to defining national concerns under POGG; coherently confront whether or not “greenhouse gases” are the national concern for which the federal government would have exclusive jurisdiction; and consider whether output-based pricing of GHGs with product- and process-specific benchmarks intrudes into provincial jurisdiction.

Keywords: Financial Services and Regulation; Banking, Credit and Payments; Environmental Policies and Norms; Role and Efficiency of Government; Public Governance and Accountability; Economic Union and Internal Trade; Federalism and Constitution (search for similar items in EconPapers)
JEL-codes: Q58 K32 K23 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:cdh:commen:559