Syncrude Canada Ltd. v. Canada (Attorney General)

Syncrude Canada Ltd. v. Canada (Attorney General)
Court (s) Database
Federal Court Decisions
Date
2014-08-06
Neutral citation
2014 FC 776
File numbers
T-1643-11
Decision Content
Date: 20140806
Docket: T-1643-11
Citation: 2014 FC 776
Ottawa, Ontario, August 6, 2014
PRESENT: The Honourable Mr. Justice Zinn
BETWEEN:
SYNCRUDE CANADA LTD
Applicant
And
THE ATTORNEY GENERAL OF CANADA
Respondent
JUDGMENT AND REASONS
TABLE OF CONTENTS
Para.
I. Introduction .....................................................................................................
1
II. Factual Background ...........................................................................................
2
III. Issues ................................................................................................................. .................................................................................................................
10
IV. Analysis............................................................................................................... .................................................................................................................
11
A. Constitutionality of the RFR vis-à-vis Syncrude ...................................
11
(1) The Dominant Matter - Pith and Substance................................
17
(a) The Purpose of the RFR..................................................
17
(b) The Effect of the RFR....................................................
40
(c) Conclusion on Pith and Substance..................................
54
(2) Categorizing the Law: Heads of Power Analysis ......................
55
(a) Criminal Law Power.......................................................
56
(b) Conclusion on Constitutionality......................................
86
(c) Ancillary Powers Doctrine..............................................
87
Heads of Power...............................................................
91
Nature of the Provision...................................................
93
History of Legislating.....................................................
95
B. Statutory Validity of Subsection 5(2) RFR............................................
98
(1) Was the Condition Precedent in Subsection 140(2) Observed?..
103
(2) Was a Strategic Environmental Assessment Required?..............
119
(3) Is the RFR Inconsistent with the Object of CEPA?...................
124
C. Was there a denial of procedural fairness?..............................................
138
(1) Syncrude’s Notice of Objection Not Filed in Time....................
140
(2) No Duty of Fairness is Owed Within the Legislative Process....
144
(3) The Decision to Convene a Board is Not Administrative in Nature .............................................................................
157
(4) Conclusion on Procedural Fairness.............................................
161
D. Minister’s Interpretation of “danger” and “substance”...........................
162
E. Reasonableness of the Decision on the Merits........................................
166
V. Conclusion........................................................................................................... .................................................................................................................
179
Judgment
Annex A
I. Introduction [1] Federal regulations require diesel fuel produced in Canada to contain at least 2% renewable fuel. Syncrude Canada Ltd. [Syncrude] produces diesel fuel at its oil sands operations in Alberta which it uses there in its vehicles and equipment. Syncrude challenges the validity and applicability to it of the 2% renewable fuel requirement.
II. Factual Background [2] The relevant statutory provisions are reproduced in Annex A.
[3] Subsection 139(1) of the Canadian Environmental Protection Act, 1999, SC 1999 c 33 [CEPA] provides that “[n]o person shall produce, import or sell a fuel that does not meet the prescribed requirements.” Subsection 272(1) of CEPA makes it an offence to contravene subsection 139(1). If prosecuted by way of indictment, Syncrude would be liable to a fine for a first offence of not less than $500,000 and not more than $6,000,000, and on a second or subsequent offence, to a fine of not less than $1,000,000 and not more than $12,000,000: CEPA subsection 272(3).
[4] Subsection 140(1) of CEPA provides that the Governor in Council, on the recommendation of the Minister, may make regulations “for the purposes of section 139.” In 2010, the Governor in Council promulgated the Renewable Fuels Regulations, SOR/2010-189 [RFR]. Subsection 5(2) of the RFR requires that diesel fuel produced, imported or sold in Canada must contain renewal fuel of at least 2% by volume. That requirement came into effect on July 1, 2011. That renewable fuel requirement may be met by blending diesel with biodiesel, a fuel made from biological waste matter, such as cooking oil, or from feed stocks such as canola, soy or other crops. The requirement may also be met by purchasing compliance units from those who have more than 2% renewable fuel in their diesel fuel. Syncrude has been meeting this 2% requirement by purchasing compliance units.
[5] Syncrude produces synthetic crude oil and other substances by mining and processing oil sands within the Athabasca oil sands region in Alberta. This involves the excavation of oil sands from open pit mines, the extraction of bitumen from the oil sand, the conversion of bitumen to crude oil components, the upgrading and sweetening of the produced oil streams, the combining of the oil streams into synthetic crude oil, and the rehabilitation and reclamation of the mine and operations areas that have been completed.
[6] Syncrude uses a fleet of custom equipment to perform its extraction operations. To power this equipment, it purchases diesel fuel but also produces much of its own diesel fuel on site. The fuel it produces on site is used only by Syncrude and only in the Province of Alberta. In 2010, Syncrude’s operations consumed more than 361 million litres of diesel fuel, of which more than 204 million litres were produced from its own operations.
[7] After the promulgation of the RFR but prior to subsection 5(2) coming into effect, Syncrude on April 26, 2011, filed a notice of objection to the proposed regulation and requested that a board of review be established “to inquire into the nature and extent of the danger posed by the substance in respect of which the … regulation … is proposed.”
[8] The Minister responded on August 18, 2011, denying Syncrude’s request to convene a board of review, stating:
Your comments were considered in the preparation of the final Regulations Amending the Renewable Fuels Regulations. Responses to the comments received were included in the Regulatory Impact Analysis Statement submitted with the final Regulations, which were published in the Canada Gazette on July 20 [2011].
[9] Syncrude challenges the constitutional validity and statutory validity or vires of subsection 5(2) of the RFR. It also submits that it was denied procedural fairness by the Minister in making the decision to not convene a board of review, and further says that the Minister’s decision in this regard is unreasonable.
III. Issues [10] In addition to the question of the applicable standard of review, the following are the issues to be addressed:
1. Does Parliament have constitutional authority to apply the biodiesel blending requirement prescribed by subsection 5(2) of the RFR to Syncrude’s diesel fuel?
2. Is the RFR ultra vires the regulation-making authority of the Governor in Council under section 140 of CEPA?
3. Was there a denial of procedural fairness by the Minister in making the decision not to convene a board of review due to a failure to provide reasons and a failure to consult with Syncrude?
4. Did the Minister err in interpreting the words “danger” and “substance” in section 333 of CEPA?
5. Was the Minister’s decision unreasonable on the merits?
IV. Analysis A. Constitutionality of the RFR vis-à-vis Syncrude [11] Questions going to constitutional authority and the division of powers between a province and the federal government are determined on the standard of correctness: Dunsmuir v New Brunswick, 2008 SCC 9, para 58.
[12] The Minister correctly notes in his Memorandum that “Syncrude only challenges the constitutionality of subsection 5(2) of the RFR, and only as it relates to its operations.” The Minister submits that “subsection 5(2) is in pith and substance a legitimate use of the federal criminal law power to suppress the evil of air pollution by mandating a 2% renewable fuel content in diesel fuel produced.” Syncrude submits that the dominant purpose and effect of subsection 5(2) of the RFR is to regulate non-renewable resources and promote the economic benefits of protecting the environment, “more precisely, its dominant purpose and dominant effect is to create a demand for biofuels in the Canadian market place” and any prohibition of harm that flows from the subsection is merely ancillary.
[13] For the reasons that follow, I find that the RFR are intra vires the federal government as a valid exercise of Parliament’s criminal law power.
[14] The Supreme Court of Canada in Québec (Procureur Général) v Canada Procureur (Procureur Général), 2010 SCC 61, [2010] 3 SCR 457 [Re: Assisted Human Reproduction] provides the framework for determining division of powers questions such as that raised here. The Chief Justice at para 16 observes that when, as here, the challenge is only to one or more of the provisions of the legislation, and not its entirety, a court might begin by examining the challenged provisions because if they do not intrude into the other’s jurisdiction, there is no need to make any further inquiry. She went on to observe, however, that in order to make sense of the challenged provisions, it may be necessary to examine the entire scheme of the legislation for the “impugned provisions must be considered in their proper context.”
[15] Subsection 5(2) of the RFR, read alone and without reference to its enabling statute, is a prohibition on the production, importation, or sale of diesel fuel that contains less than 2% renewable fuel, and thus one could suggest, as Syncrude does, that it deals with local works and undertakings, property and civil rights, matters of a merely local or private nature, or the development of non-renewable natural resources – matters that fall within provincial, rather than federal jurisdiction. However, as the Supreme Court has cautioned, one must go further and ask what the purpose and effect of that provision is and how it fits into the regulatory scheme. As the Chief Justice stated in Ward v Canada (Attorney General), 2002 SCC 17, [2002] 1 SCR 569 [Ward] at para 19: “The question is not whether the Regulations prohibit the sale so much as why it is prohibited.” Answering that question requires that the subsection be viewed in its proper context which in this case requires that one examine not only the RFR but also CEPA. The Court must examine the legislative scheme as a whole and determine whether it is a valid exercise of federal jurisdiction. Then the Court must examine whether the specific subsection complained of is also valid.
[16] The validity assessment is undertaken in two steps. First, the dominant matter – the pith and substance – of the legislation must be determined. Once that has been done, one must determine whether it falls under one of the heads of power of the federal government or the provinces. The pith and substance of legislation is determined by examining the purpose and the effect of the legislation. As the Chief Justice noted at para 22 of Re: Assisted Human Reproduction referencing an article by D.W. Mundell: “One must ask, ‘[w]hat in fact does the law do and why?’”
(1) The Dominant Matter – Pith and Substance (a) The Purpose of the RFR [17] The RFR is subordinate legislation and as such it is relevant to consider the stated purpose of its enabling legislation, CEPA. While not determinative of the pith and substance of the RFR, it provides informative background and context. The following excerpts from the preamble to CEPA are instructive and identify that CEPA is designed, in part, to address environmental degradation, protect the environment and human health, and place the cost and responsibility of pollution on the polluter. It sets out that in developing laws to achieve these goals, a variety of interests will be considered contemporaneously, including environmental, health, social, economic, and technical issues:
Whereas the Government of Canada is committed to implementing the precautionary principle that, where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation
…
Whereas the Government of Canada recognizes the importance of endeavouring, in cooperation with provinces, territories and aboriginal peoples, to achieve the highest level of environmental quality for all Canadians and ultimately contribute to sustainable development;
…
Whereas the Government of Canada recognizes the integral role of science, as well as the role of traditional aboriginal knowledge, in the process of making decisions relating to the protection of the environment and human health and that environmental or health risks and social, economic and technical matters are to be considered in that process.
…
Whereas the Government of Canada recognizes the responsibility of users and producers in relation to toxic substances and pollutants and wastes, and has adopted the “polluter pays” principle.
[emphasis added]
[18] Also informative is the preamble to the RFR which focuses on the reduction of air pollution:
Whereas the Governor in Council is of the opinion that the proposed Regulations could make a significant contribution to the prevention of, or reduction in, air pollution resulting from, directly or indirectly, the presence of renewable fuel in gasoline, diesel fuel or heating distillate oil;
…
[19] The Supreme Court has unequivocally held that the Regulatory Impact Analysis Statement [RIAS] accompanying regulations can also be considered by courts in determining the purpose of the regulations and their intended application: Bristol-Myers Squibb Co v Canada (Attorney General), 2005 SCC 26, [2005] 1 SCR 533, at para 157.
[20] The various RIASs that were published relating to the RFR indicate that Greenhouse Gas [GHG] emissions were the primary concern of the Minister when proposing the RFR.
[21] In 2005, six GHGs were added to Schedule 1 of CEPA which lists toxic substances. The RIAS accompanying the 2005 amendments to Schedule 1 published in the Canada Gazette Part II, Vol 139, No 24, explained at p 2627 that they were added to the toxic substances list because they “have significant global warming potentials (GWPs), are long-lived and therefore of global concern… [and] have the potential to contribute substantially to climate change.” Additionally, it noted at p 2634 that there has been a substantial rise in the concentrations of GHGs “as a result of human activities, predominantly the combustion of fossil fuels,” which could lead to an increase in frequency and intensity of heat waves, that in turn could “lead to an increase in illness and death.”
[22] A notice of intent to develop the RFR was introduced in 2006 in the Canada Gazette Part I, Vol 140, No 52. The notice stated:
Use of renewable fuels offer significant environmental benefits, including reduced greenhouse gas (GHG) emissions, less impact to fragile ecosystems in the event of a spill because of their biodegradability and reduction of some tailpipe emissions, such as carbon monoxide, benzene, 1,3-butadiene and particulate matter. However, ethanol use may result in increased emissions of volatile organic compounds, nitrogen oxides and acetaldehyde.
[23] Under the heading “Rationale for Action” the notice focused first on the reduction of GHG emissions:
Use of renewable fuels can significantly reduce emissions of greenhouse gases. This environmental benefit is projected to increase as next-generation feedstocks and technologies come online.
Achieving a renewable volume equal to 5% of Canada’s transportation fuel pool would result in an additional 1.9 billion litres of renewable fuels per year, over and above the effects of provincial regulations already in place. This represents incremental lifecycle GHG emission reductions of 2.7 million tones per year (the equivalent of almost 675,000 vehicles).
[24] The notice set out additional rationale for the proposed regulations, including benefits to the economy and to Canadian farmers:
Early entry into the renewable fuels market and the wider bio-economy may bring short- and long-term benefits to the Canadian economy, as well as allowing farmers to find new markets, offset financial losses, and diversify income sources.
The emerging global bioeconomy is an opportunity to diversify farm incomes by creating market opportunities for Canadian farmers as both developed and developing countries move away from dependence on traditional petroleum based fossil fuels in favour of more sustainable options. The economic potential of the bioeconomy is significant; by 2050, the global market for renewable fuels and bio-energy alone is expected to grow from $5 billion to well over $150 billion per year.
[25] The proposal recognized that the provinces were also regulating renewable fuel content and providing tax incentives to promote renewable fuels production and use. However, it was stated that federal regulation was also desirable to “address inconsistencies created by a patchwork of provincial fuel requirements” which could “create barriers to interprovincial trade, e.g. by favouring the use of biofuels produced within a certain province.”
[26] In April 2010, a draft of the RFR was published in Part I of the Canada Gazette. The public was given an opportunity to file comments or notices of objection. The RFR was published in the Canada Gazette Part II, Vol 144, No 18 in September 2010.
[27] The RIAS accompanying the RFR [September 2010 RIAS] explicitly states that the issue being addressed is the emission of GHGs:
Greenhouse gasses (GHGs) are primary contributors to climate change. The most significant sources of GHG emissions are anthropogenic, mostly as a result of combustion of fossil fuels. The emissions of GHGs have been increasing significantly since the industrial revolution and this trend is likely to continue if no action is taken. … The Government of Canada is committed to reducing Canada’s total GHG emissions by 17% from 2005 levels by 2020.
Existing Government of Canada initiatives on renewable fuels have had limited success in achieving significant reductions in GHG emissions. In view of the environmental concerns related to climate change, additional actions are required to further reduce these emissions.
…
The objective of the Regulations is to reduce GHG emissions by mandating an average 5% renewable fuel content based on gasoline volume, thereby contributing towards the protection of Canadians and the environment from the impacts of climate change. … The Regulations fulfill the commitments under the Renewable Fuels Strategy of reducing GHG emissions from liquid petroleum fuels and create a demand for renewable fuels in Canada…
…
The Regulations will promote an integrated and nationally consistent approach, and make a significant contribution to reduction in air pollution from GHGs to protect the health and environment of Canadians.
[28] Substantially similar explanations were provided in the RIAS accompanying the 2011 amendments to the RFR which set July 1, 2011, as the date on which the 2% biodiesel requirement in subsection 5(2) of the RFR would come into force: Canada Gazette Part I, Vol 145, No 9.
[29] As earlier noted, the purpose of CEPA is to promote environmental quality, address threats of environmental damage, to achieve the highest level of environmental quality for all Canadians, and ultimately contribute to sustainable development.
[30] The RFR is consistent with all of those aims. The RIAS for both the RFR and its amendment which set the date subsection 5(2) became effective make clear that GHG emissions pose a significant, enduring effect on the environment, have high global warming potentials, and can directly affect the health of Canadians. The RIASs also explain that renewable fuels have been shown to make a significant contribution to lowering GHG emissions on a life-cycle basis. While the provinces currently have regulations imposing renewable fuels requirements, Parliament was of the view that federal regulation could contribute above and beyond the provincial contributions and would fill gaps and address inconsistencies in provincial legislation.
[31] Undoubtedly, the RFR was also intended to increase the demand for renewable fuels and develop new market opportunities for agricultural producers and rural communities – the RIAS explicitly states that this is part of the plan. However, the RIAS also makes clear that these economic effects are part of a four-pronged Renewable Fuels Strategy, one purpose of which is to reduce GHG emissions: Canada Gazette Part II, Vol 144, No 18 at pp 1684-1685. These same goals were set out in Questions & Answers – Renewable Fuels Regulations, which was prepared to explain the RFR.
[32] Canadian jurisprudence has held that the economy and the environment are not mutually exclusive – they are intimately connected. The Supreme Court of Canada in Friends of Oldman River Society v Canada (Ministry of Transport), [1992] 1 SCR 3 at para 93 stated: “The environment, as understood in its generic sense, encompasses the physical, economic and social environment touching several heads of power assigned to the respective levels of government.” The Court went on at para 96 to say that “it defies reason to assert that Parliament is constitutionally barred from weighing the broad environmental repercussions, including socio-economic concerns, when legislating with respect to decisions of this nature.” This is consistent with the expression in the preamble of CEPA which states that “environmental or health risks and social, economic and technical matters are to be considered.”
[33] Syncrude points to significant expenditures by the federal government to promote the renewable fuels industry as evidence that the dominant purpose of the RFR was to create a market for renewable fuels. Among other expenditures, the Government of Canada contributed $200 million over four years for capital expenditures on construction or expansion of renewable fuel production facilities, $1.5 billion over nine years to support renewable fuels production in Canada, $500 million over eight years to produce next-generation renewable fuels, and $10 million over two years for scientific research and analysis.
[34] In my view, Syncrude takes a myopic view of the role of the RFR in ultimately reducing GHG emissions. Part of the long-term strategy was to create a demand for renewable fuels that would drive development of next generation technologies. Parliament expected that these next generation technologies would contribute to greater reductions of GHG emissions in the long term. However, it had to create the “conditions necessary to drive these next-generation technologies to market.” These conditions include establishing a demand for renewable fuels to “give industry the certainty needed in order to secure investments and a supply of renewable fuels for the Canadian market:” Questions & Answers – Renewable Fuels Regulations.
[35] Creating a demand for renewable fuels was therefore a necessary part of the overall strategy to reduce GHG emissions, but it was not the dominant purpose. The reason the government wanted to create a demand for the fuels was to make a greater contribution to the long term lowering of GHG emissions.
[36] As the Minister of the Environment stated in an interview on May 23, 2006, “what we’re looking for is, number one, that the technology that we’re looking to invest in provide the maximum opportunity for emissions reductions” [emphasis added]. In the same interview, when asked whether there would be “a net benefit to the environment,” the Minister went on to say: “Yes. And that’s why we brought these three components together. We can’t do this framework without the three components of energy, environment, and agriculture” [emphasis added].
[37] The underlying reason for contributing to infrastructure costs, production of renewable fuels, and investment in next generation technologies was to “generate greater environmental benefits in terms of GHG emission reductions:” Canada Gazette Part I, Vol 145, No 9 at p 699. Creating economic and agricultural opportunities were necessary components of achieving these goals.
[38] Syncrude recognizes at para 76 of its Amended Memorandum of Fact and Law that part of the objective of the RFR was to encourage next-generation renewable fuels production and create capital incentives to provide opportunities to farmers in the biofuels sector. It observes that these and other incentives collectively create a demand for biofuels. What Syncrude overlooks is that the market demand for renewable fuels and advanced renewable fuels technologies has to be created to achieve the overall goal of greater GHG emissions reduction.
[39] In my view, for the reasons stated above, the dominant purpose of the RFR was to make a significant contribution to the reduction of air pollution, in the form of reducing GHG emissions.
(b) The Effect of the RFR [40] The second step of the pith and substance analysis is to examine the effect of the law on those who are subject to it. The Court may consider both its legal effect and its practical effect: Kitkatla Band v British Columbia (Minister of Small Business, Tourism and Culture), [2002] 2 SCR 146 at para 54.
[41] Syncrude submits that, at best, the effect of the law from an environmental perspective was unknown at the time the RFR was introduced. There was conflicting evidence regarding the actual quantity of GHG emissions reductions that renewable fuels generated in comparison to traditional fuels. Syncrude submits that there was some evidence available that suggested that the creation and use of renewable fuels actually generated increased emissions compared to traditional fuels.
[42] The Minister submits that the pith and substance analysis is not concerned with the efficacy of the law or whether it actually achieves its goals – this is a concern properly directed to and considered by Parliament.
[43] I agree with the Minister that it is not for this court to assess the efficacy of the law in achieving its stated purpose, as has been stated by the Supreme Court in Ward at para 18:
The pith and substance analysis is not technical or formalistic. It is essentially a matter of interpretation. The court looks at the words used in the impugned legislation as well as the background and circumstances surrounding its enactment. In conducting this analysis, the court should not be concerned with the efficacy of the law or whether it achieves the legislature's goals [references omitted and emphasis added].
[44] Syncrude’s effort to present evidence that undermines the conclusions as to the actual savings to GHG emissions by the introduction of renewable fuels is in vain: the efficacy of the law or whether it achieves the legislature’s goals is an irrelevant consideration. As the Supreme Court of Canada stated in Reference re Firearms Act (Can), [2000] 1 SCR 783 [Firearms Reference], at para 18 “efficaciousness is not relevant to the court’s division of powers analysis.”
[45] Even if the Court were to consider the efficacy of the law, Syncrude has failed to present convincing evidence to show that the blending of renewable fuels would not “make a significant contribution to the prevention of, or reduction in, air pollution” as required by section 140 of CEPA. Syncrude did not lead any expert evidence to support its position that the data undermines the conclusion that there would be a significant contribution to the reduction of air pollution.
[46] Syncrude points to evidence that the environmental impact of land use changes would outweigh the benefits of renewable fuels. In certain countries, in order to allow for the production of the feedstocks used to produce renewable fuels, there needs to be some change in land use. There was some evidence to suggest that land use changes may blunt some of the upside to renewable fuels, that the environmental impacts from land use changes might actually outweigh the benefits of renewable fuels production, and that agricultural land should not be converted to land used for biofuels crops. However, this evidence does not apply to Canada because no land use changes need occur here. The February 26, 2011 RIAS made clear that the RFR “are not expected to result in changes in land use:” Canada Gazette Part I, Vol 145, No 9 at p 719. Moreover, the evidence relied on by Syncrude was in the context of the European Union where they had higher targets of 10% renewable fuel content compared to the Canadian targets of 2% for biodiesel and 5% for gasoline.
[47] Syncrude’s submission also ignores the evidence that exists to support the conclusion that incorporating renewable fuels would reduce both GHG emissions on a life-cycle basis and certain other emissions including acetaldehyde (in the case of biodiesel), Volatile Organic Compounds [VOCs], and fine particle pollutants [PM2.5]. This evidence was referred to in the RIAS accompanying the RFR. The reduction of GHGs is only one part of the overall goal to reduce “air pollution.”
[48] Additionally, and consistent with the preamble of CEPA, the RFR admits that Parliament did not necessarily have a full comprehension of the GHG emissions of various types of renewable fuels, but acknowledged a willingness to adjust the requirements as that evidence became available: Canada Gazette Part II, Vol 144, No 18 at p 1725. There is nothing unconstitutional about Parliament taking steps to address the threat of GHGs in the way it thought best, based on the evidence available to it at the time. The scientific method is based on the assumption that what is known today may not necessarily be what is known tomorrow. CEPA recognizes this, particularly in the environmental context. But, as the preamble to CEPA states, Parliament must act to address environmental threats on the best evidence available at the time, and not await scientific certainty. There is nothing preventing Parliament from adjusting or repealing the RFR if conclusive evidence is presented that renewable fuels do not reduce GHG emissions, but that is a decision for Parliament, not for the courts.
[49] Syncrude further argued that because the RFR did not actually produce the alleged intended effect of reducing GHG emissions, the dominant purpose must have been to create a demand for renewable fuels and benefit farmers. However, Syncrude has not demonstrated that the introduction of renewable fuels has not led to reduced GHG emissions. Therefore, this submission must also fail.
[50] Finally, Syncrude says that there is evidence that it would achieve significant GHG emissions reductions if the RFR did not apply to it because it produces and uses all of its own diesel on site thereby saving on the GHG emissions resulting from transporting fuel. Apart from the fact that Syncrude provided no evidence to the Minister before the RFR was promulgated that there would be an increase in GHG emissions if the RFR applied to Syncrude, this is simply an attempt to re-brand the efficacy argument. The Supreme Court of Canada in Ward stated at para 26 that “the purpose of legislation cannot be challenged by proposing an alternate, allegedly better, method for achieving that purpose.”
[51] At its most basic level, the argument is that since the RFR applied to Syncrude would not achieve its stated purpose, the RFR is unconstitutional. Again, the Court is not the arbiter of whether or not the means Parliament has chosen are effective or adequate. An analysis of the legal and practical effects of the law is relevant only for the purpose of determining the pith and substance of the law. As the Supreme Court of Canada stated in Global Securities Corp v British Columbia (Securities Commission), [2000] 1 SCR 494 at para 23, “the effects of the legislation may also be relevant to the validity of the legislation in so far as they reveal its pith and substance.” Although Syncrude can request an exemption from the application of the RFR, failure by the Minister to provide such exemption does not render the RFR unconstitutional.
[52] However, even if the RFR as applied to Syncrude would increase Syncrude’s GHG emissions, this is not evidence that the RFR overall would not decrease GHG emissions. Syncrude led evidence that, together with Suncor, their combined production accounted for 12% of western Canada’s distillate production and that the amount used on-site accounted for only 3% of western Canada’s distillate production. Even accepting Syncrude’s arguments at face-value, it is a stretch to infer that the RFR will not achieve a reduction in GHG emissions even with Syncrude’s alleged increased emissions.
[53] For these reasons, I find that the effect of the RFR is to reduce GHG emissions by requiring renewable fuels to be blended with traditional fuels.
(c) Conclusion on Pith and Substance [54] The pith and substance of the RFR and of subsection 5(2) is the reduction of GHG emissions, and potentially other emissions. The dominant purpose is to reduce GHG emissions; the benefits to the economy and the renewable fuels industry are a necessary, but secondary component of the plan to achieve reduced GHG emissions, and an intermediary step to introducing next generation technologies that will provide even greater GHG reductions. The effect of the RFR is to reduce GHG emissions on a life-cycle basis both in the short term and the long term by incorporating renewable fuels.
(2) Categorizing the Law: Heads of Power Analysis [55] Having determined the pith and substance of the law, the second stage requires the Court to identify which heads of power are engaged by the law: Re: Assisted Human Reproduction at para 19.
(a) Criminal Law Power [56] The Minister argues that the RFR and its subsection 5(2) fall under the federal criminal law power under subsection 91(27) of the Constitution Act, 1867 [Constitution].
[57] Syncrude challenges the validity of enacting the RFR under the criminal law power, stating that the pith and substance of the RFR is directed at regulating “non-renewable resources (petroleum fuels)” and promoting “the benefits of protecting the environment by creating a demand for biodiesel in the Canadian marketplace.” This analysis arguably engages the provincial heads of power for: (1) local works and undertakings; (2) property and civil rights; and (3) matters of a merely local or private nature under subsections 92 (10), (13) and (16) of the Constitution respectively. It also engages the development of non-renewable natural resources under paragraph 92A(1)(b).
[58] When the Federal head of power in issue is Parliament’s criminal law power under subsection 91(27) of the Constitution, para 27 of the Firearms Reference teaches that the matter is a valid exercise of the criminal law power if there is: (1) a prohibition; (2) backed by a penalty; (3) with a criminal law purpose.
[59] There is no dispute between the parties that the first two criteria are met. The determinative issue is whether the RFR was enacted with a valid criminal law purpose.
[60] In order to have a valid criminal law purpose, the law must address a public concern relating to peace, order, security, morality, health, or some similar purpose: Re: Assisted Human Reproduction para 43. It must suppress an evil or safeguard a threatened interest such as public peace, order, security, health, or morality, stopping short of pure economic regulation: Reference re: Dairy Industry Act (Canada), s 5(a), [1949] SCR 1.
[61] Relying on Canada (Procureure générale) v Hydro-Québec, [1997] 3 SCR 213 [Hydro] and Re: Assisted Human Reproduction, the Minister submits that the RFR addresses a valid criminal law purpose because it aims to suppress GHG emissions that cause harm to the environment “since unblended diesel fuel releases more GHGs on a life cycle basis than that with renewable fuel content.”
[62] Prohibitions directed at protecting the public from environmental hazards have been considered valid criminal law purposes in the past, see for example Hydro, where a unanimous Supreme Court of Canada (although split in its decision on other issues), agreed at para 123 that “the protection of a clean environment is a public purpose … sufficient to support a criminal prohibition … to put it another way, pollution is an ‘evil’ that Parliament can legitimately seek to suppress.”
[63] In Hydro, the Supreme Court made clear at para 43 that:
To the extent that Parliament wishes to deter environmental pollution specifically by punishing it with appropriate penal sanctions, it is free to do so, without having to show that these sanctions are ultimately aimed at achieving one of the ‘traditional’ aims of criminal law … the protection of the environment is itself a legitimate basis for criminal legislation [emphasis added].
[64] At issue in Hydro were provisions of the Environmental Protection Act, RSC 1985, c 16 (4th Supp), regarding the designation and regulation of toxic substances, as well as a provision that permitted the Minister to issue an interim order directing that a substance be temporarily placed on the toxic substances list and regulating that substance, where the Minister is of the opinion that immediate action is required.
[65] The dissent agreed that protection of the environment was a legitimate public purpose, but found that the impugned provisions were more of an attempt to regulate environmental pollution than to prohibit or proscribe it. In particular, the dissent found that the prohibitions were ancillary to the regulatory scheme and not the other way around. It further concluded that the impugned provisions were not focused on specifically prohibiting toxic substances, but rather, regulating and controlling the manner in which they are allowed to interact with the environment. Finally, it noted the seemingly unlimited breadth of the impugned provisions owing to the broad definition of “toxic substance” and “substance” in the Act.
[66] The majority held that “environmental protection legislation should not be approached with the same rigour as statutes dealing with less complex issues in applying the doctrine of vagueness developed under s. 7 of the Charter” in relation to criminal law cases, and that “the effect of requiring greater precision would be to frustrate the legislature in its attempt to protect the public against the dangers flowing from pollution.” It agreed with the dissent that in certain cases, sweeping prohibitions “could be so broad or all-encompassing as to be found to be, in pith and substance, really aimed at regulating an area falling within the provincial domain and not exclusively at protecting the environment,” but ultimately determined that the provisions demarcated a restricted number of substances. The use of these substances in a manner contrary to the regulations was ultimately prohibited, and this was a specific targeting of substances without resort to unnecessarily broad prohibitions.
[67] On its face, the RFR appears to be more regulatory in nature than prohibitory. However, like the majority in Hydro, I am of the view that th