The Administrative State after the Carbon Tax References

Here is the introduction to my new paper on SSRN, “The Administrative State after the Carbon Tax References“. Regular readers will have seen the posts which make up the bulk of the paper (see e.g. here), but this introductory material is new and attempts to place the administrative law aspects of the References in broader context:

This is a case comment on the aspects of the Supreme Court of Canada’s 2021 decision in the References re Greenhouse Gas Pollution Pricing Act which are relevant to the administrative state.

This was, of course, a significant decision on Parliament’s authority to make legislation for the Peace, Order and Good Governance of the nation. In the end, the legislation was held to be a valid exercise of the POGG power.

The Court’s decision on the constitutionality of the legislation has already been the subject of a great deal of commentary. The matter was hard fought, with several provinces objecting to what they perceived to be federal over-reach: emissions of greenhouse gases originate locally and, as such, are naturally a subject for provincial legislation.

Nonetheless, emissions cross provincial boundaries and contribute to a national and indeed international accumulation of emissions, with harmful effects on climate. The difficulty in the courts below – the Courts of Appeal of Alberta, Ontario and Saskatchewan were asked by their respective provincial governments to opine on the validity of the legislation – was in drawing appropriate boundaries between provincial and federal authority in respect of emissions of greenhouse gases. The Court had similar difficulties, with a majority prepared to uphold the GGPPA under the POGG power but a minority seeing this decision as a destabilizing influence on Canadian federalism.

My focus in this case comment is not on the POGG analysis, but rather three aspects of the References which are of importance to Canada’s administrative state: the constitutional limits on delegation in Canada; judicial review of regulations made under POGG; and the distinction between a regulatory charge and a tax for the purposes of Canadian public law.

Through its analysis of these aspects, the decision in the References sets out high-level principles about the delegation of authority to Canada’s administrative state. On two of these aspects – constitutional limits on delegation and judicial review of regulations – there was disagreement between the majority and dissenting judges. These disagreements highlight the importance of the decision to the administrative state and careful consideration of the dissenting judges’ observations helps to supplement the majority’s analysis of these aspects of the decision. Ultimately, therefore, inasmuch as this case comment contains an argument, it is that the majority got the References right on the aspects relating to the administrative state, but that the dissenting judges’ cogent concerns deserve to be taken seriously.

Each of these aspects is worthy of analysis in its own right.

First, the COVID-19 pandemic has exposed the extent to which Parliament and provincial or territorial legislative assemblies can delegate sweeping coercive authority to officials: the Court’s decision strongly maintains the status quo in respect of such delegations, reducing the scope for any successful challenge to the validity of administrative delegations (for instance to medical officers of health); but the decision is accompanied by a powerful partial dissent authored by Côté J, which takes aim specifically at Henry VIII clauses as a constitutionally repugnant form of delegation. This partial dissent may well be taken up by lower courts in the future. I argue, however, that the majority’s analysis of this aspect is persuasive and that the appropriate means of responding to concern about over-broad delegation is judicial review of action taken under such delegations.

Second, the legislative framework of the GGPPA is, if not skeletal, certainly in need of fleshing out in the years to come. The primary mechanism for putting meat on the bones of Parliament’s policy for reducing carbon emissions is to empower the federal cabinet to make regulations. These regulations may, however, be as contentious as the GGPPA itself. Accordingly, it would not be surprising to see their validity tested in court in the future. In that regard, the framework set out by the Court for assessing the validity of regulations made under the GGPPA will be of particular importance to Canada’s response to greenhouse gas emissions. Indeed, guidance on judicial review of regulations is important in its own right, as many federal and provincial policies are given life in regulatory form. On this aspect, the minority judges objected that reviewing regulations made by the federal cabinet is especially difficult, as there are barriers to reviewing the output of this ‘black box’. I argue, however, that this objection cannot be maintained in light of recent jurisprudence on the ability of courts to review high-policy decisions made by cabinet, which signals something of a sea change in judicial attitudes to judicial review of regulations. When supplemented by consideration of this recent jurisprudence, the majority’s analysis of judicial review of regulations made under the GGPPA is sound, in my view.

Third, the Court clarified the distinction between taxes, which are subject to constitutional limitations, and regulatory charges, which are not. Whereas the principle of ‘no taxation without representation’, enshrined in the Bill of Rights 1689 and now in s. 53 of the Constitution Act, 1867, limits the ability of legislative delegates to impose taxes without statutory authority, no such limits apply to regulatory charges. But what is a regulatory charge? And, in particular, are monies payable under the GGPPA still a regulatory charge even if they are not subsequently directed to the reduction of greenhouse gas emissions? The Court was clear – and on this aspect, it was unanimous – that there must be a nexus between monies payable and the purposes of a regulatory scheme but was equally clear that the GGPPA imposed a regulatory charge even though the monies thereby collected would not be directed specifically at climate change. This maximizes the flexibility Parliament and provincial or territorial legislatures will have in the future to impose charges ancillary to regulatory schemes. Ultimately, when the three aspects are considered together, Canada’s administrative state emerges strengthened from the References. The constitutionality of broad delegations of authority has been reaffirmed in strong terms. Creative uses of regulatory charges by administrative officials who wish to influence the behaviour of Canadians are constitutionally permissible. Those who fear that such powers might be abused can take some comfort in the fact that administrative action is subject to robust judicial review, as officials are required to justify their use (creative or otherwise) of broad delegations of authority. At a moment when delegation of authority to governmental officials is under attack in the United States – a country whose jurisprudential influence on Canada has historically been significant – there is no existential challenge to the administrative state on the other side of the 49^th parallel. I will return to this observation in the Conclusion.

This content has been updated on March 25, 2022 at 14:58.