On September 22 and 23, 2020, the Supreme Court of Canada (“SCC“) heard appeals by Saskatchewan, Ontario and Alberta regarding the constitutionality of the Greenhouse Gas Pollution Pricing Act (the “GGPPA“). The SCC will decide whether the GGPPA, which regulates provincial greenhouse gas (“GHG“) emission sources (by imposing a “carbon tax”) is constitutional. At issue is whether the federal government has jurisdiction to unilaterally impose its chosen policy to regulate sources of GHG emissions on the provinces.
The GGPPA became effective in April 2019 and imposes a carbon pollution pricing system. This system is divided into two parts: a pollution price on fuel and a pollution price for industry. Generally, the GGPPA only applies in provinces that have not imposed an “adequate” carbon pricing model (in the view of the federal government).
GGPPA is having a significant impact on many sectors, often adding costs and increasing administrative burden. For example, certain motor carriers now have registration obligations, quarterly filing responsibilities, and find themselves navigating complex net tax calculations. This includes motor carriers who conduct at least part of their business operations in a “listed province” (i.e.: Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nunavut and Yukon), using specified commercial vehicles powered by gasoline, diesel, natural gas or propane. For more information, please see our previous article on the matter.
The provinces of Saskatchewan and Ontario each challenged the GGPPA on the basis that the GGPPA is outside federal jurisdiction. The appeal courts in both Saskatchewan and Ontario upheld the law in split decisions, finding that the federal government is within its jurisdiction to enact the legislation under its “peace, order and good government” power. Both provinces appealed to the SCC.
Alberta also challenged the constitutionality of the GGPPA. The Alberta Court of Appeal was the only provincial appeal court to rule (in a 4-1 majority decision) in favour of the Province.
The SCC will have the final say on the constitutionality of the GGPPA. Their decision (either way) will impact fuel producers, fuel wholesalers, emitters, fuel distributors, air, marine, rail and road carriers, and other businesses.