Federalism & Allocation of Powers (2)

Question 1

POGG Powers

Answer 1

Emergency Branch:
there is still this historical emergency branch that was established by the JCPC (Privy Council). That is still available in times of war and crises.

Gap and Residual Branch:
power to legislate on relation to matters not included within any of the enumerated classes of subjects in Section 91 and Section 92.

National Concern Branch:
power to legislate in relation to distinct matters of inherent national concern. That means that the country is concerned about it as a whole; not just one province; not just to provinces; not just a collection of provinces, but the entire country is really concerned and we need to have the federal government come to the rescue.

Interprovincial Branch:
this is not an official branch. It has emerged as of late in the jurisprudence, but it is not clearly established. The problem is that it resembles the National Concern Branch, because this is the Interprovincial Branch which means “across provinces”. For me, “across provinces” strangely enough is defined in a position as to the overall country. This is not yet defined as a separate source of authority under POGG, but arguably implicitly established in decisions of the Supreme Court.

Question 2

Reference Re Anti-Inflation Act [1976]

Answer 2

there was an Act in 1975 that was a decision of the federal government to actually impose as an emergency power in order to combat inflation. It is a program that was applicable to the federal public sector, and also the provincial government, where provinces had to opt into a scheme and to have their wages, prices and profits on their companies regulated to reduce the inflation in the country.

The federal government did not go down the emergency route. They went down the “national concern” road. The majority of the court rejected this argument, and said that they did not see a national concern here.

The Court held 7-2 that the legislation could be supported on the basis of the emergency POGG power, though.

There are elements that you need to have an emergency.

It needs to be restrained in time. The Act is for a period of only three years.
There needs to be a rational basis. Basically, there needs to be an emergency.

Question 3

Emergency Act 1988

Answer 3

It defines a national emergency of an urgent and critical situation of a temporary nature that:

Seriously endangers the lives, health or safety of Canadians and is of such proportions or nature as to exceed the capacity or authority of a province to deal with it, or

This is if it is so bad that one province cannot deal with it on their own. We need the Army, or something else to go along with the emergency.

Seriously threatens the ability of the government of Canada to preserve the sovereignty, security and territorial integrity of Canada.

In the context of an emergency, the division of powers between Parliament and the legislatures set out in Sections 91 and 92 is effectively suspended for the duration of the emergency.

This has to be temporary.

Once the emergency branch of POGG comes into play, Parliament can enact legislation on any of the subjects in Sections 91 and 92, as long as it is reasonably necessary to deal with the circumstances of the emergency.

Question 4

PURELY RESIDUAL POWER

Answer 4

The ‘everything but that’ power.

Residual is in relation to matters that fall outside Section 92 — the provincial power — and are not characterized as falling within any of the enumerated subjects in Section 91 — the federal power.

So, not in the list of the province; not in the bottom list of the federal, but within the words of the opening section of Section 91.

What the beginning part of 91 says is that the federal government has the right to legislate on stuff that is not on the provinces list, and the list below.

That is quite complicated to find, because as I told you before, it is pretty much nothing. However, there is something. There is the tricky situation when it…

By definition, they fall within the opening words of Section 91 — example: matters involving land, waters or any matter that is not within the boundaries of one province but falls within the Canadian territory.

Question 5

Canadian Temperance Federation 1946

Answer 5

(National Concern Doctrine)

In 1946 where they expressly rejected that view, and decided to give a modern interpretation to the POGG power, and that is where we see the emergence of the National Concern Doctrine.

Question 6

Johannesson v West St. Paul (Rural Community)

Answer 6

a case about aeronautics which arises after WWI…why? Because you have a increase in air traffic across provincial lines. They were really confused as to how to regulate this.

Usually when something modern like this happens, such as communication, radio, and aeronautics, that triggers a national concern. That will fall under POGG power.

This makes sense because provinces would not know how to regulate it individually, so it would be a matter of national concern.

It also sounds a little bit like a residual power because it is not in the lists enumerated. So, that is why there is an overlap between those two branches.

Question 7

Munro v Canada

Answer 7

with regards to legislation that was federal which was trying to impose a zoning in expropriation terms. That is purely a provincial matter. The court said that this was not national concern and that they were trying to go too far, and this needed to be left in the domain of the provinces.

So, the court sometimes does side with the provinces.

Question 8

Reference Re Offshore Mineral Rights (British Columbia)

Answer 8

this is about provinces that have water lines, like British Columbia, and the territory that falls outside of the provincial boundaries. So, there has been a limit that is been set by statute about how far provincial waters extend. Beyond that, when it is not yet international waters, there was originally a vacuum of law there, because it was not provincial waters and not yet international water. It was held to be Canadian water. That water is the water of the entire country that belongs to every single province. It does not matter if a particular province is more proximate to that water, it is still Canadian water. Therefore, the minerals that are there can be exploited by any province, but most likely by the federal government.

Question 9

INTERPROVINCIAL CONCERN

Answer 9

This branch is concerned is concerned with the regulation of matters which have interprovincial impact or effects and which cannot be regulated on the basis of any of the enumerated powers in Section 91.

Question 10

R v Crown Zellerbach Canada [1988]

Answer 10

The question was raised with regards to the federal jurisdiction related to the dumping of substances in the sea.

There was a piece of federal legislation that wanted to prevent marine pollution. It extended to regulation of dumping in provincial waters.

So, not federal waters, but the water close to provinces.

The respondent challenged that the federal jurisdiction to control dumping in provincial waters of substances that are not pollutant and that have an effect on extraterritorial waters should not fall under the act, and that it was actually unconstitutional to make them comply with the Act.

What a province argued in this case was that the substance that enters the water is not a pollutant and there is no toxicity in it, it is unconstitutional for the federal government to interfere, because the federal government are trying to regulate the provincial factory, which is something under provincial authority.

The Supreme Court held that the power to regulate dumping of substances extended to the regulation of dumping in provincial waters. The Justice LeDain explained that to fall under the National Concern Branch (and that’s why it is an interesting case, because it defines the National Concern Branch), the issue must pass a four part test:

1) The Act must be distinct from the emergency branch of POGG power (emergency power has a time limit). It cannot be a branch that overlaps. There must be a true national concern; it cannot be an emergency. We do not want to do these branches to overlap. That is the first criteria.
2) It applies to matters that are new since Confederation, or things that have changed in nature to move from provincial concern to national. This is an archaic conception of things because there was an extension of technology at that point. They are saying that if it wasn’t the case at the time of Confederation might’ve been a provincial matter, but now technology has made it into a national concern that will fall under that doctrine.
3) Must have “singleness, distinctiveness and indivisibility” that clearly distinguishes it from provincial concerns. In this case, it would be pollution.
4) One or many provinces are unable to regulate the matter sufficiently to prevent extra provincial consequences. That means that it is too much for the province to regulate it on its own.

It is impossible to delineate visually the boundary between “territorial sea” and “internal marine waters” and give marine pollution a “single distinctiveness and indivisibility”. So, this gives it a national concern.

Question 11

Morguard Investments Ltd v De Savoye [1990]

Answer 11

(Interprovincial Concern)

There have been two other cases by the Supreme Court that have suggested that there is such a fourth branch – the interprovincial branch.

Parliament was permitted to legislate in matters as regards to interprovincial concern, but the impact and significance of the Act were key to the decisions.

The cases were:

Morguard Investments Ltd v De Savoye [1990] 3 SCR 1077

Hunt v T&N plc [1993] 4 SCR 289.

Question 12

Citizens Insurance Company v Parson (1881)

Answer 12

It is a challenge of an Ontario statute with regards to an insurance policy.

The main question was whether the Act was falling within the classes of subject enumerated in Section 92.

The judge who delivered the judgement said that Section 92 had a broad meaning, which meant property and civil rights were given an expansive interpretation.

It must, therefore, include contracts of insurance.

If you think about property and civil rights, obviously insurance would be a property.

However, this was not a sufficient consideration for the court because they believed that insurance contracts could also be characterized as the regulation of trade and commerce.

This is what you need to take away from the Parson case, is that it fractured the trade and commerce power of the federal Parliament into two branches.

The first branch:

1) The dividing line between trade and commerce and property and civil rights is based on a distinction: interprovincial (between provinces) and export trade (with other countries) vs. local trade.

So, if it has to do with trade among the 10 provinces, across provincial lines, or trade with one province or Canada with a foreign state…that is federal.

AND

2) “The general regulation of trade affecting the whole dominion”.

The phrases seems to invite an assessment of the relative importance of an economic activity to the national economy, as well as whether subjectivity should be regulated by Parliament as opposed to the provinces.

Question 13

Motor Vehicle Safety Act

Answer 13

These are some examples of how the Supreme Court has departed from the Privy Council’s very restrictive approach to the “trade and commerce” interpretation.

They have extended it.

We see the Supreme Court upholding federal legislation providing for voluntary regulation of local trade with mandatory federal standards

Question 14

Reference Re Agricultural Products Act 1970

Answer 14

The Supreme Court upholds federal legislation that is part of a cooperative and comprehensive federal-provincial scheme

Question 15

Caloil

Answer 15

The Supreme Court upholds that Parliament may enact legislation that “incidentally” regulates local trade where the legislation is necessary to a scheme or the regulation of interprovincial or international trade.

“Incidental doctrine”…we know that with regards to trade and commerce they are keen on using “pith and substance” (we always need to start with pith and substance), but also the necessary ancillary doctrines with regards to that.

This is the case of an oil company (Caloil) from Montréal, Québec that was importing petroleum from Algeria and Spain and selling this product to Ontario and Québec. The problem was that there was a National Energy Board that was restricting importations to the afflicted provinces – to Québec and the small eastern region of Ontario. That was an attempt to preserve the market that the Western oil refineries had. Caloil claimed that the amended regulation was invalid were regulating the local transportation in the sale of a product that was reserved exclusively to their province.

The Supreme Court upheld the National Energy Board’s decision, and said it was necessary as part of a scheme for the regulation of interprovincial trade and export because it was something that had to do with a foreign state, but was also crossing provincial lines. In this case, it was fine to have the federal regulation apply. It was not actually encroaching on the property and civil rights of the province of Québec.

Question 16

Global Securities case & the Asbestos Minority case

Answer 16

These two other cases, Supreme Court use the “pith and substance” Doctrine (in the essence of what the law/act is), what the Act really means to regulate…how many tests do we have under Pith and Substance? We have to look at the matter, effect and consequence of the legislation to be able to plug it in to the list of the federal or the list of the provincial governments. That is the pith and substance — basically, is it about a federal law or a provincial law?

Under that, in pith and substance it looks like it is federal. But, there is another doctrine of interpretation used by the Supreme Court – the Necessary/Ancillary Doctrine of Interpretation – meaning that if it supplements a federal act but it encroaches on the provincial legislation…if it is necessary for the scheme to work, and it cannot work without this encroachment, we are going to uphold it and say that the federal law can go forward.

Question 17

Labatt Breweries of Canada v AG Canada [1980]

Answer 17

(Second Branch of Parsons)

There was a federal statute that was setting some standards with regards to the regulation of light beers, because it was putting boundaries on the level of alcohol it should have been the beer. They were doing this under the fact that the federal law has power over trademarks.

The producers had to label their packages and sell their light beer in compliance with the federal legislation. What happened with Labatt Brewery was that their labels were not in accordance with federal legislation because the alcohol level was too high.

So, they were found to be in contravention of the federal law. The Attorney General brought forward a case accusing them of being in violation of the act. The federal government defended its Act by saying that it was a voluntary scheme; they could adhere to it or not, citing specific standards and designation to use on food labels.

So, they justify this under the Parliament’s trade power. This is the power of trade and commerce and will affect the trade and commerce within the entire dominion, because all the provinces consume this beer.

This is also a health, food ,and safety precaution too that is of a national concern.

If we do not know what is in the beer and the level of alcohol, this is a national concern issue.

They also went about this with regards to the POGG power, and also criminal law.

So, this reasoning of the federal government was accepted in the dissenting opinion of Justice Pigeon.

However, the majority – 6-3 — found that the regulation was actually out of the scope of the federal legislation.

Justice Etsey said:
The 1st branch of Parson (international trade, interprovincial trade vs local trade) does not apply as the impugned regulation was concerned with production and local sale.
The 2nd branch of Parson does not apply either, as the federal authority cannot be justified under the general trade power.
It says that they are trying to regulate common names. They were trying to arrogate those common names and prescribed a standard. They said they could just not take words from the dictionary and impose standards on common names.
The federal government cannot arrogate common names and prescribe standards for their use through federal trademark power.

Therefore, the second branch of Parson does not apply in this case.

Question 18

General Motors of Canada v City National Leasing [1989]

Answer 18

it defines the second branch of Parson, and it uses the Necessary Ancillary Doctrine.

There is City National Leasing, which is a car company that leases, and is alleged that General Motors was giving interest rate support to its competitors, and thus helping its competitors in the market. That was in violation of an Act called Combines Investigation Act.

Chief Justice Dickson made a restatement of the Necessary Ancillary Doctrine.

To know whether or not the provision is valid he will look at:

1) The impugned provision (Section 31(1) Combines Investigation Act) to ascertain whether it intrudes on the jurisdiction of the other level of government (i.e., is it stepping on the foot of the provincial properties and civil rights power?)
2) Whether the impugned provision is contained within a valid regulatory scheme. Is the Act as a whole and the scheme it regulates valid?
3) The fit between the impugned provision and the valid regulatory scheme. How big is the fit? That, in other words, means that there will be a level of overlap.


Question 19

Carnation Co v Québec Agricultural Marketing Board [1968]

Answer 19

What happened? The province of Québec were selling the raw milk production to Carnation, but they decided to have a board that would fix the price of production.

Carnation argued that that was unlawful since the processing of milk was done in Quebec, and the product was shipped and sold outside the bounds of Québec.

However, the Supreme Court said that the ultimate destination of the product was not affecting the validity of the act.

So, we have a provincially appointed board that fixes prices for the Carnation raw milk, but Carnation thinks that this is a unlawful statute because it says after the milk is processed and Carnation buys it, it will then be sold outside of the province. Carnation argued that this was trade.

The Supreme Court said no. This is because they were buying raw milk within the province. The province can, under Section 92(13) do whatever it wants.

Carnation argue that this would affect the prices of their products and affect its business. However, the Supreme Court said that employment laws are in the domain of the province, and they also affect businesses, and everyone is subjected to those if they want to operate in Québec. So, Carnation’s argument was not a good one.

The transaction – the processing of the raw milk – took place in Québec.

The ultimate destination of the product cannot affect the validity of the provincial statute because it is directed at a transaction.

While the provincial legislation might affect interprovincial trade and commerce, this was not its primary purpose.

The pith and substance of the law was the regulation of a local transaction.

Question 20

AG Manitoba v Manitoba Egg and Poultry Association (Manitoba Egg and Poultry Reference) [1971]

Answer 20

The Manitoba Egg Reference prevented outside eggs from coming in. The regulations trying to stop people from coming into the market. This is what Justice Laskin objected to. This was in contravention of the trade powers of federal law because the transaction was not about something that happens within the boundaries.

On the face of the legislation it looked like it was only about the eggs of Manitoba. Indirectly, however, it was sheltering the market of Manitoba.

So the Supreme Court said that this was not the same as in Carnation. Manitoba was trying to indirectly regulate the markets of other provinces, and lock them away from its market.

That is why the outcome incarnation and the Manitoba Egg Reference are so opposite.

Question 21

(CIGOL)Canadian Industrial Gas & Oil Ltd v Saskatchewan [1978]

Answer 21

In the 1970s we had the oil crisis. The prices started spiking.

What happens in the business of extraction of oil and gas was that there was one price, which was the price when the oil was extracted, and then there was the price back in the day.

There was a difference.

The “basic price” – the price prior to the crisis – was lower.

The “actual price” at the well was much higher because of the oil crisis.

What the government of Saskatchewan tried to do was tax the difference between the “basic price” and the “actual price”.

So far, if you extract in Saskatchewan and sell within Saskatchewan it should be fine.

The Premier of Saskatchewan said that not only did he want to tax the difference between the “basic price” and “actual price”, but that he was going to set what the “basic price” was.

He said if he did not agree with the price that the companies were selling at before the crisis and that if it looked like they were trying to dump oil on the market sold at a lower price than the market wanted — i.e., the market would have paid more; the companies had a surplus of oil and were going to sell it very cheaply and flood the market with it.

In that sense, the Premier was going to decide what the fair market value of the oil price should have been by setting a “basic price”.
So, basically what happened indirectly is that they were fixing the price of oil in that province because nobody wanted to be taxed on their surplus. So, this influenced how these companies would dispose of their product.

CIGOL wanted to bring this to court. This went in front of the Supreme Court.

Surprisingly, the outcome of this litigation is the opposite of what happened in the Carnation case, although it is a very similar case to Carnation.

Carnation…you had the cow, you milk the cow, and you sell the milk within the province. The Supreme Court wasn’t interested because this was intra-provincial.

In CIGOL, you pump the oil, sell the oil, but then disposing of the oil outside… The Supreme Court said that this was not provincial anymore.

Striking parallel with Carnation. In both cases the province regulated the sale within the province of a good destined for export.

In Carnation, the province was setting the price for the local sale of the product.
In CIGOL the province was taxing the producer (on site), but sale outside the province

Opposite conclusion. This case reinforces the decision in Manitoba Egg (the context and purpose of the legislation are key to determine whether it is a matter that falls outside of the province).

Question 22

Potash Co v Government of Saskatchewan [1979]

Answer 22

With regards to potash, there was a surplus in the 1970s. From the 1960s to the 1970s we had a dramatic drop in the prices of potash, and this is because of the surplus on the market.

Saskatchewan tried to process a lot of natural resources and sell them in the United States. Producers of potash went to see the producers in the United States, and they agreed to stop production of potash. This was an attempt to make the prices go back up.

This was an attempt to lower production and increase prices.

One producer in Saskatchewan said that this was an imposition of a quota on them, and they had a lot of potash, and that they would be able to sell and dispose of their potash above the quota cap price.

The province wanted to uphold this legislation, and the province of Saskatchewan argued that the provincial power of property and civil rights included the power to impose and control production on natural resources within their province.

The production was something that happened within the province. Now, this is no longer a sale and transaction. This is the actual production of the matter.

So, this is a little bit different than Carnation. Carnation is not just about the production, but it is also about the sale of it.

Potash is only about production. The Saskatchewan government said if it is in the boundaries of the province they could do whatever they wanted.

There was a unanimous court opinion on this. The true nature and character of the legislation is that it was impacting the international trade, because what they were doing was exporting their primary mineral. This impacted international trade with a foreign country.

Yes, it was the production of that mineral within the boundaries, but that mineral was destined to be exported to the United States. Therefore, on the first branch of Parson, with regards to international trade, that is the domain of the federal parliament.

The court said this did not pertain to Section 92(13) — not property and civil rights controlled by the province — this is actually part of Federal Trade — Section 91(2). This is because it did interfere with international trade with the United States.

So, after all of these controversies, in 1982 they decided to enact Section 92(A) Constitution Act 1867. This is not really extending the power of the provinces, it is just relating what the case of Potash, and it’s actually just putting more boundaries on properties and civil rights.