The SKCA addressed the GOVSK’s three main arguments, which we go through in more detail below:

1. The GGPPA is unconstitutional for offending the principles of federalism;
2. The GGPPA imposes a tax, which offends s. 53 of the Constitution; and
3. The GGPPA was not enacted under a valid federal head of power.

1. Is the GGPPA unconstitutional for offending the principles of federalism?

• GOVSK’s argument: The GGPPA was unconstitutional because it only applied to provinces that chose not to adopt a GHG pricing regime, which violates the principles of federalism (ie. provincial autonomy, federal-provincial cooperation, and intergovernmental cooperation) (59).
• SKCA’s response: This argument was rejected. While the principles of federalism are to be taken into account when interpreting the Canadian Constitution and division of powers², the principles themselves cannot override an act that was otherwise validly enacted (ie. the government had the legal authority to implement such an act) (9). The SKCA noted that no judicial authority supported the GOVKS’s argument (68).

  The SKCA did not share the GOVSK’s concern that the federal government was applying laws based on how that province exercised their own jurisdiction. The SKCA’s main concern was whether the federal government was acting within its sphere of legislative authority (66).

2. Does the GGPPA offend s. 53?

• GOVSK’s argument: The GGPPA imposed a tax and therefore offended s. 53³ of the Constitution Act, 1867, by imposing a tax without the support of Parliament (ie. “taxation without representation”).
• SKCA’s response: This argument was rejected. First, the SKCA first determined that the GGPPA imposed regulatory levies, not taxes. Offending s. 53 was therefore not a concern. Even if the SKCA found that GGPPA imposed a tax, the court reasoned that Parliament had already contemplated this “tax”, as shown by the provisions they put in the GGPPA that clearly authorized the Governor in Council (GIC) to decide where the GGPPA applied (9). Therefore, the “tax” was supported by Parliament.
  

a) Does Part 1 impose a tax or regulatory charge?

The SKCA then went through the general principles of determining whether a charge is a tax or levy, starting with reviewing the basic characteristics of a tax. A charge may be a tax if it is

1. enforceable by law,
2. imposed by the legislature,
3. levied by public body, and
4. made for a public purpose (72)

The SKCA also defined the difference between a tax and regulatory charge: a levy is a tax if its primary purpose was to raise revenue for general governmental purposes, as opposed to a straight levy which is primarily for regulatory purposes (73). To determine whether a levy is for regulatory purposes, the court can consider the following non-exhaustive list of factors, as outlined in Westbank First Nation v British Columbia Hydro and Power Authority, [1999] 3 SCR 134 (SCC)

1. A complete and detailed code of regulations exists,
2. A specific regulatory purposes is aimed at affecting behaviour,
3. There is actual or properly estimated costs of regulation, and
4. There is a relationship between the regulation and person being regulated.
5. GOVSK’s argument: The charge is like a tax because payments are made to the state, administered by the Ministry of National Revenue, and paid into the Consolidated Revenue Fund.
6. SKCA’s response: This argument was rejected. While the SKCA agreed with the GOVSK’s position that the label for the charge (ie. calling it a “tax”, “levy”, or “charge”, etc…) did not determine the issue, the court rejected the GOVSK’s overall argument and concluded that the GGPPA imposed a charge, not a tax. Though the levy had the appearance of a tax, the court determined that upon a deeper inspection using the Westbank factors, the levy was a regulatory charge.

   First, the SKCA found the GGPPA included a detailed code of regulations (79). For example, the Act identified the particular fuels subject to the charge, specified the amount of the charge, set out specific rules about application, and provided for administration/enforcement procedures (80).

   The SKCA also found a specific regulatory purpose. The GGPPA was the result of a history of initiatives and agreements dating back to the United Nations Framework Convention on Climate Change in 1992. The GGPPA regarded GHG pricing as a fundamental part of mitigating emissions. The purpose was self-evident: impose a minimum national cost on fuels to incentivize behaviour changes that reduced emissions (81).

   The SKCA found that the last two Westbank factors were not as applicable, as the levy was not designed to raise funds and the charge itself was the instrument that fulfilled its regulatory purpose — in other words, it goes without saying: the person being regulated had a connection to the regulatory scheme by virtue of having to pay the charge (83).

   In conclusion, the Westbank factors supported the conclusion that the charges from Part 1 were part of a regulatory regime (84).

   The SKCA made two more considerations in addition to the Westbank factors:

1. First, the Minister of National Revenue must distribute the proceeds from the charges back to the province in which they originated (85). Although it may be true that tax revenues can also be returned to the public, as the GOVSK tried to argue, the SKCA explained that the money raised by the GGPPA was still different than regular tax revenues (86). The federal government can use taxes for any purpose and in any part of the world. Money raised by the GGPPA, on the other hand, must be returned to the specified province and cannot be used for any other purpose (86).

2. The SKCA further noted that the GGPPA could accomplish its objective (establishing a minimum national standard of price for GHG emissions) without raising revenue — for example, in the event that every province had put a pricing regime in place. A statute imposing a tax, on the other hand, has the primary goal of raising revenue for general purposes. The GGPPA seemed “ultimately wholly disinterested” in generating revenue, and the SKCA therefore did not deem raising revenue to be its primary purpose and could not accept that the charges were a tax in the constitutional sense of the term (87).

b) Does Part 2 impose a tax or regulatory charge?

The SKCA applied the Westbank analysis once again and found the following:

1. The excess emission charge is obviously part of a detailed code of regulations, which specified components like registration and reporting requirements (91),
2. The regulatory purpose was aimed at affecting behaviour (ie. imposing economic incentives to reduce emissions) (92),
3. The estimate costs of regulations was not an applicable factor because the regulations did not intend to raise funds or defray the cost of regulating — rather, the charge itself was the means of advancing its purpose (93), and
4. Like Part 1, the connection between the regulation and person being regulated existed by virtue of the requirement to make payments (93)

The charges imposed by Part 2 were not meant to raise revenue for general purposes. As such, the SKCA concluded it was not a tax (96).

c) If Part 1 did impose a tax, would s. 53 be offended?

The SKCA still considered whether s. 53 would be offended, assuming Part 1 did in fact impose a tax. The purpose of s. 53 was to protect the democratic principle that the Crown may levy taxes only with the consent of elected representatives (99).

• GOVSK Argument: The GOVSK does not disagree that taxing falls under the federal power as described by s. 91(3), but it is the fact that the GIC can apparently apply the GGPPA to certain provinces and not others that was contrary to s. 53 (100). The GOVSK also argued that the scope of the GIC’s discretion was too broad.
• SKCA Response: Both of these arguments were rejected. This was not a case where the GIC imposed a tax with complete discretion nor was this power simply incidental to the GGPPA — the GIC was specifically authorized by the GGPPA to act in this regard (104).

  As for the broadness argument, the SKCA disagreed, as the GGPPA confined the GIC’s powers in some of the following ways:

1. The GIC can apply the charge to some provinces and not others only for the purpose of ensuring that the pricing of GHG emissions was applied broadly and appropriately,
2. That in exercising its discretion, the GIC must take into account the primary factor: the stringency of that province’s pricing mechanism, and
3. Administrative laws prevent the GIC from making decisions that are based on irrelevant consideration or for reasons contrary to the purpose of the Act (105).

   Even if the provisions gave the GIC a wider authority, the doctrine of severance⁴ could be used or any offensive wording be read down to avoid constitutional problems (109). As such, the SKCA concluded that even if the charge was a tax, the GGPPA did not offend s. 53 (111).

3. Is the Act Sustainable under a valid head of power?

The SKCA concluded that the federal government had the power to enact the GGPPA under the national concern branch of the federal head of power known as POGG (POGG: NC).

The process of analysis looked liked this:

1. The GGPA’s core purpose was to establish a minimum price on GHG emissions.
2.  The new power being created under POGG: NC would be the authority to establish a minimum price on GHG emissions.
3. This new power met the applicable legal test as being an appropriate POGG: NC power.
4. The GGPPA falls under POGG: NC. Therefore, the federal government has the power to enact the GGPPA.

a) Pith & Substance: Determining the core of the Act

The court first launched into the standard pith and substance (P&S) analysis⁵.

The SKCA found that the purpose and effect of the GGPPA was aimed at GHG pricing. The court considered the broad context in which the GGPPA was enacted⁶, all of which had the same goal: to limit global GHG emissions (119). The legislative history⁷ also revealed that the purpose of the GGPPA was to ensure the minimum national standards of price stringency (120).

b) Determine the Matter: What are we giving the federal government the power to do?

Before determining whether POGG: NC was an appropriate head of power, the SKCA had to first define the exact power or “matter” they would be categorizing under POGG: NC as the legislative authority for enacting the GGPPA. Properly determining the matter at issue was important, particularly with POGG, as this head of power can fundamentally alter the division of powers (ie. powers categorized under POGG become an exclusive area of jurisdiction to the federal government, which means that provincial government cannot legislate in relation to that power) (126).

Framing the matter

• FEDGOV argument 1: The matter of national concern was “GHG emissions”.
• GOVSK response 1: Framing the matter as “GHG emissions” was problematic, as it would give the federal government too much power because almost everything people do emits GHG emissions (127).
• SKCA response 1: The FEDGOV’s argument was rejected. The SKCA did not share the GOVSK’s concern that granting powers over GHG emissions would essentially give the federal government “comprehensive” jurisdiction over every GHG-producing activities (128). The concern was that because GHG emissions were intimately embedded in every aspect of intra-provincial life to such an extent, giving the federal government authority over GHG emissions would allow them to overextend “very substantially into traditionally provincial affairs”, such as livestock, fuel efficiency of vehicles, manufacturing, etc. (128). 
  
  
• FEDGOV argument 2: During oral submissions, the FEDGOV tried to argue that the matter was not just “GHG emissions”, but the “cumulative dimensions of GHG emissions”. 
• SKCA response 2: This argument was rejected. The court found that the FEDGOV did not sufficiently explain what “cumulative dimensions” actually meant (134). The SKCA pointed out their concern: there is an apparent lack of a practical or operational break between legislating individual GHG emissions and cumulative GHG emissions. A federal power over cumulative dimensions of GHG emissions is essentially the same as recognizing a general power over GHG emissions (136).

  The SKCA decided on an alternative characterization of the subject matter, much in line with the Attorney General of BC’s submissions, which suggested that the matter be defined as an “establishment of minimum national standards of price stringency for GHG emissions” (139). Framing the power in this way would cover the ability to determine a price for emissions and to put in place the necessary regulatory framework (139).
  
  The SKCA acknowledged that POGG: NC matters are often expressed more generally (“aeronautics”, “marine pollution”, etc… ) but this framing worked overall for the following reasons:

1. The terminology is similar to the Constitution, which focused on “the establishment of” something,
2. Not all matters need to be described in the same manner (142),
3. The narrowness of the matter that otherwise met the proper legal tests should not generally be barred from falling under POGG: NC, and
4. The court acknowledged the severity of climate change lying behind the the legal issues before them:

   “The record indicates climate change has emerged as a major threat, not just to Canada, but to the planet itself… the Constitution Act, 1867 is ‘a living tree capable of growth and expansion… [and] must be interpreted in a way that is fully responsive to “emerging realities”’. If it is necessary to apply established doctrine in a slightly different way to ensure both levels of government have the tools essential for dealing with something as pressing as climate change, that would seem to be entirely appropriate.” (144)

c) Can the above matter be sustained under POGG: NC? Application of the Crown Zellerbach Test

Now that the matter had been defined, the court asked the question: Can the matter — the establishment of minimum national standards — be sustained under POGG: NC?

The SKCA started by reviewing the basic principles of POGG as outlined in R v Crown Zellerbach Canada Ltd., [1988] 1 SCR 401 (SCC), which was the leading case:

1. The national concern doctrine is distinct from the national emergency doctrine of POGG, primarily distinguishable by the fact that the national emergency branch only addresses legislation of a temporary nature,
2. The national concern doctrine applies to new matters which did not exist at Confederation and those matters of a local or private nature in a province that have since become matters of national concern,
3. The test for whether a matter is of national concern: (a) the matter must have a “singleness, distinctiveness and indivisibility” that clearly distinguishes it from provincial concerns and (b) the scale of impact on provincial jurisdiction must be reconcilable with the division of powers, and
4. In determining the above, it is relevant to consider how a province’s failure to deal effectively with the intra-provincial aspects of the issue would affect other extra-provincial interests.
   (117)

Following that, the SKCA went through the factors:

1. Was the matter of national importance? Yes. 
2. Does the matter have a singleness, distinctiveness, and indivisibility that clearly distinguishes it from matters of provincial concern? Yes. The Framework Convention defined GHGs as distinct chemicals and Schedule 3 of the GGPPA lists some 33 chemicals. GHG emissions were a “very particular type of environmental pollutant”, defined scientifically and readily identifiable from other gases (151). A distinction can also be drawn between the authority to establish minimum national standards and other regulatory authorities that also concerned themselves with emissions (151). The scope of the GGPPA was not difficult to discern.
3. Did the effects of other provinces’ failure to deal effectively with the matter impact extra provincial interests? Yes, there were several impacts provincial failures could have:
   1. GHG emissions do not respect provincial boundaries. As a result, the failure of one province to take action will have an impact on other provinces (154).
   2. A province was vulnerable in at least two ways if another failed to adequately price GHG emissions:
      1. A province must deal with the impact of climate change caused by another province’s failure to address the emissions (although this is mostly hypothetical, as any one province’s contributions are relatively insignificant globally) (155).
      2. The more concrete concern is the carbon leakage⁸. However, studies suggest that these pressures are significant for only a few sectors (155).
4. Does recognizing federal authority over setting a minimum price have a scale of impact on provincial jurisdiction irreconcilable with the distribution of powers? No. The authority to establish a minimum standard does not allow the federal government to reach into otherwise intra-provincial authority — establishing a minimum national standard price is nothing more than just that (160). Limiting the federal jurisdiction to establishing minimum national standards still leaves for provinces to act in relation to GHG emissions (161).

The court then concluded that the GGPPA was constitutionally valid, as the P&S of the GGPPA came under the federal authority POGG: NC (164).

Other issues: the double aspect doctrine

• FEDGOV ARGUMENT: The FEDGOV argued that the double aspect doctrine⁹ dealt with the issue that giving the federal government exclusive federal authority over GHG emissions would prohibit provinces from legislating in relation to those emissions. 
• SKCA RESPONSE: This argument was rejected. The SKCA found this to be an error in thinking (129). The double aspect doctrine applied when federal and provincial characteristics of a law are roughly equal in importance (129). Currently, where GHG emissions have not been recognized as falling within federal jurisdiction, there is room for the double aspect doctrine to apply: provinces can use their property and civil rights power to regulate emissions while the federal government can tax them, for example (130). However, if GHG emissions are exclusively given to the federal government through POGG, any provincial law regarding GHG emissions would be unconstitutional (130).

4. Other Heads of Powers

The SKCA then addressed the remaining heads of powers that other parties raised as possible grounds for authority to enact the GGPPA.

a) Trade and commerce, s. 91(2)

• Intervenor argument: Part 2 of the Act fell under the federal government’s jurisdiction over trade and commerce under s. 91(2).

  Federal authority under s. 91(2) is limited to (a) interprovincial and international trade and commerce, and (b) the general regulation of trade affecting the whole country (167). The court reiterated the test from General Motors of Canada Ltd. v City National Leasing, [1989] 1 SCR 641 (SCC), which outlined several considerations to be taken into account:

(a) Is the law a part of a general regulatory scheme?

(b) Is the scheme under the oversight of a regulatory agency?

(c) Is the law concerned with trade as a whole rather than with a particular industry?

(d) Is the scheme of such a nature that the provinces, acting alone or in concert, would be constitutionally incapable of enacting it?

(e) Would a failure to include one or more provinces or localities in the scheme jeopardize its successful operation in other parts of the country?
(168)

• SKCA’s Response: This argument was rejected. The GGPPA did not in P&S concern itself with  trade and commerce (171). Although the GGPPA does have economic impacts and uses an economic tool, this is merely incidental to the core purpose and effect, which was to establish  minimum price stringency for emissions (171).

b) Treaty Powers

• Intervenor argument: Because the GGPPA intended to help Canada meet its obligations, this was grounds for the authority to enact it. 
• SKCA’s response: This argument was rejected. Section 132¹⁰ of the Constitution Act, 1867, grants federal powers to enact legislation necessary to implement treaties, but its scope is significantly limited (175). The case law establishes that treaties do not have the force of law just because they are ratified. Section 132 authorized the British Empire and foreign countries to follow their obligations, but it does not extend to treaties between Canada and foreign countries. There is not such thing as “treaty legislation” — the power to implement treaties is still based on the distribution of legislative powers under ss. 91/92 (176).

c) Criminal Law Power

SKCA’s response: This argument was rejected. Generally, legislation can fall under s. 91(27) if it has a “valid criminal law purpose backed by a prohibition and a penalty” (179). The court determined the GGPPA had a valid criminal law purpose, as the case law has established that protection of the environment is a legitimate public criminal law purpose (180).

As such, a federal law aimed at reducing GHG emissions could also be a valid criminal law purpose — but this was not the case regarding the GGPPA, based on its purpose as determined above. Assuming the GGPPA did have a valid criminal law purpose, the court rejected the criminal law argument in any case because of the lack of prohibitions and penalties (182). The GGPPA involves a positive obligation to pay a charge, but there is no operational prohibition. Any offences are concerned only with compliance, not for threatening the environment (184). The Act just attaches a cost to GHG emissions. Consumers, businesses, and others can still continue to make emissions (192). It is not possible to say the GGPPA is in P&S directed at “protecting the environment through prohibitions and penalties” (198).

d) Emergency Power

SKCA’s response: This argument was rejected. The emergency power only operates in relation to legislation of a temporary nature (200). The SKCA did not find climate change to be an emergency in the legal sense of the word. It was an emergency in that it was a genuine threat to Canada, but the SKCA disagreed with the implication that climate change was then a “short run” or the Act was intended to have a limited duration. This is unlike wars, which are of an uncertain length, but nonetheless have some end point (202).

e) Section 35

SKCA’s response: The court decided not to deal with this suggestion at length as the factual record was too thin.

Section 125

• Intervenor argument: Sask Power and Sask Energy argued that as agents of the Crown, they are immune from the GGPPA under s. 125 which makes the Crown immune from taxes in general (207).
• SKCA’s response: This argument was rejected. The law recognizes a clear distinction between the constitutionality of a law and its applicability (207). A law that is unconstitutional is of no force or effect, while a constitutional law that happens to be inapplicable is still valid (207). In any case, applicability was not part of the question posed by the Lieutenant Governor in Council. The question was whether the GGPPA was unconstitutional in whole or in part, not whether it was inapplicable. It would therefore not be appropriate to offer an opinion about the application of the Act (209).