Andrew Bernstein is partner and practice group leader for litigation and Stefan Case is an articling student at Torys LLP.
This week’s Supreme Court ruling on the case of Gerard Comeau – a New Brunswick resident who wanted to take more beer than legally allowed over the border from Quebec – has once again raised the issue of federalism in Canada. The court’s decision to uphold the right of provinces to control the traffic of alcohol across borders reflects the reality of federal-provincial relations, and casts a new light on the many high-profile federal-provincial debates raging across the country. While Mr. Comeau now knows how much alcohol he can bring in from Quebec, various industries in Canada are still dealing with uncertainty. It will likely fall to the Supreme Court to provide industry clarity on jurisdiction and responsibility in an increasingly tangled world.
While fights over federalism have been with us since Confederation, their intensity and frequency wax and wane with the political winds. This year they are most definitely waxing, as issues related to pot, pipelines and pollution play out in the media, boardrooms and communities across Canada. Questions of federal-provincial jurisdiction are causing delays, potentially putting Canadian and local economic interests at risk.
Consider cannabis legalization and the question of provincial monopolies. Recreational cannabis use is becoming legal in 2018, and the various side effects include some serious questions about what provinces can and can’t regulate.
Under Parliament’s proposed cannabis framework, people under the age of 18 will be prohibited from possessing more than 5 grams of dried cannabis or its equivalent. However, some provinces plan to set different age restrictions. For example, Ontario will make it an offence for a person under the age of 19 to possess any amount of cannabis. The same is true for British Columbia. In Alberta, the legal age will be 18.
As some provinces threaten even stricter regulation about how, where and by whom cannabis can be consumed, the constitutional question that will arise is the extent of permissible provincial legislation on this topic. The federal government has been somewhat coy on this question, although their background document relating to Bill C-45 raised the possibility that provincial laws which interfere with the dual purposes of decriminalization (reducing illegal activities relating to cannabis and providing access to a quality-controlled supply of legal cannabis for adults) could be “deemed inoperable.” Canada is moving quickly toward legalization, so clarity on these issues is essential.
Then there is the interprovincial pipeline pandemonium.
It’s unlikely that you have missed the news that British Columbia is at loggerheads with Alberta and Ottawa over the construction of the Kinder Morgan Trans Mountain Pipeline expansion. A pipeline that extends beyond the boundaries of a province, such as the Trans Mountain Pipeline, falls under federal jurisdiction. However, a province clearly has jurisdiction to legislate regarding environmental concerns within its own borders. What happens when these two jurisdictions collide?
While environmental regulations that only incidentally affect an interprovincial work may be permissible under certain circumstances, the tone of B.C. Premier John Horgan’s communications suggest that B.C.’s true intention is to stop the Trans Mountain Pipeline altogether, or regulate what flows through it. This is likely to be outside the authority of a province.
Moreover, even if courts find that B.C.’s proposed regulations are within the province’s authority generally, they will likely be found not to apply to the Kinder Morgan project because interprovincial infrastructure falls exclusively within federal jurisdiction. This is an important legal point: While a law that is outside a province’s authority is simply invalid, a law technically within provincial authority may be valid, but still inapplicable to a federally-regulated undertaking, a rule known to constitutional lawyers known as interjurisdictional immunity.
In Burnaby v. Trans Mountain Pipeline, for instance, the B.C. municipality relied on local bylaws to interfere with work that was necessary to determine the route of the Trans Mountain Pipeline expansion. Interjurisdictional immunity rendered the bylaws inoperative because they impaired the practical operation of the pipeline by blocking its desired location. It is difficult to see how purporting to regulate what flows through a pipeline would not have the same effect.
Then there is the question of pollution. This year, Parliament plans to implement a federal carbon-tax regime that would require provinces lacking their own acceptable framework to price carbon dioxide beginning at $10 a tonne. Saskatchewan has refused to impose carbon pricing and plans to challenge Parliament’s imposition of a federal regime. This challenge will ask and, one hopes, answer other crucial questions regarding the federal-provincial relationship in Canada.
With all of these federal-provincial disputes on the legal horizon, businesses in the various industries involved are in a holding pattern. They will have to wait to see how and when the different layers of government choose to regulate and carefully pick their battles. After all, any one law or regulatory action may come into or out of vogue with different governments, but legislation and regulation itself are here to stay.