Who Does What?: The Courts and Modern Federalism

1. Who Does What?: The Courts and Modern Federalism • Cases discussed today: • Nova Scotia Interdelegation Case (1951) • PEI Potato Marketing Board vs. Willis (1952) • Aeronautics Case (1932) • Radio Case (1932) • Labour Conventions case (1937) • Canadian Industrial Gas and Oil (1979) • Central Canada Potash Co. Ltd. et al. v. Government of Saskatchewan, (1979)

2. Delegation • Legislation can be primary (created by a sovereign legislature) or subordinate • Subordinate powers can be delegated to cabinets, reg. agencies, municipalities in same jurisdiction • Delegation outside judisdiction (eg. To another sovereign legislative body) called interdelegation • Judicial rule: avoid overbroad delegation • Depression: all gov’ts wanted old-age pensions • Rowell-Sirois Report 1939: recommendated interdelegation • Nova Scotia first prov to pass necessary interdelegation legislation. Referred to SCC.

3. Nova Scotia Interdelegation Case (1951) • 7 judges wrote separate opinions. • Rinfret: we have a right not to be subjected to laws unless passed by appropriate legislature. (Also, specificity rule: interdelegation not specifically mentioned in BNA Act.) • Lord Atkin in Labour Conventions: “ship of state…watertight compartments.” • Taschereau: if interdelegation were possible, everything might get interdelegated. This would turn confederation on its head. • A constitutional amendment gave feds the right to enact old age pension legislation concurrently with provinces, with provincial paramountcy.

4. PEI Potato Marketing Bd v Willis (1952) • Fed Ag Products Marketing Act (1949) • Feds could delegate power to reg interprov marketing to a prov bd • OC in 1950 delegated interprov power to reg PEI pot’s to PEI PMB • PEI ref’d Q of validity to PEI Sup Ct Conclusion: ultra vires, following NS InterDel. • In SCC: NS InterDel disginguished. 9 js, 6 dec’s. • Rinfret: Act clearly in fed juris (T&C interprov, Ag) • NS Case just applies to del to legislatures. • Feds can choose own board or agency (precedents) • Praises fed-prov cooperation

5. PEI Potato Marketing Bd cont’d • Rand: would be valid if Feds created a separate interprov marketing bd, and appointed same people to it as on PEI Bd. • “Twin phantoms of this nature must, for practical purposes, give way to realistic necessities.” • Last JCPC decision: Winner (1954) declared that only feds can license vehicles for interprovincial purposes. Feds delegated interprov transport regs to prov. transport boards. • Couglin (1968): Fed transport del upheld. • No need for const amen’t re interdelegation

6. Treaty-Making Cases • Treaty-signing power, and treaty-implementation power, are two different powers. The feds had them both until 1926, under S. 132 of the BNA Act. In 1926, Canada became equal to Great Britain in handling foreign affairs (Balfour Declaration, later confirmed by Statute of Westminster, 1931), and so S. 132 became obsolete. • Aeronautics Case (1932) Canada was implementing a British Empire Treaty, but federal gov't has the power to implement a treaty on aeronautics under several heads of S. 91, such as defence, post office. • Radio Case (1932) Section 132 is now obsolete. Therefore, the treaty-making and treaty-implementation powers are new, and fall under POGG.

7. Labour Conventions Case (1937) • Part of the Bennett New Deal (signing on to international treaty on labour rights) • Lord Atkin - wrote decision • Distinguished Aeronautics and Radio cases. He said that the Radio case decided that power to regulate radio transmissions is new, and therefore falls under POGG. The treaty-signing power falls to the feds under POGG, but the treaty-implementation power depends on the subject-matter of the treaty. Matters that fall under S. 92 can only be implemented by the provinces. • Practical upshot of case is that whenever federal government enters into treaty whose implementation impinges on provincial jurisdiction, only the provinces can introduce appropriate enabling legislation. • What does this mean for NAFTA, or Kyoto Accord, or upcoming Copenhagen negotiations?

8. Canadian Industrial Gas and Oil v. Government of Saskatchewan (1979) • In 1973 in the aftermath of a Mid East war and successful market-sharing agreement by OPEC cartel, oil and gas prices jumped precipitously. • Saskatchewan oil producing companies selling their products at new world prices reap enormous windfall profits (their own production costs did not increase appreciably) • Sask govt decides to tax away these windfall profits for public purposes through an innovative tax scheme. • Production from “freehold lands” were subject to a new Mineral Income Tax which placed a 100% tax on the difference between what a company received for its oil at the “wellhead”, i.e. the world price of a barrel of oil, and what the govt defined as the “basic well-head price”

9. Canadian Industrial Gas and Oil cont… • Sask govt made allowances for companies which faced higher production costs (more tax deductions) • At same time govt required companies to sell at the international price to prevent them from escaping this new tax by selling for less than prevailing prices. • CIGOL contested new law in court. • SCC sided with oil producers arguing a) the Mineral Income Tax is an indirect tax (a tax passed on to consumers) and therefore ultra vires the province b) since majority of Sask oil is exported to rest of Canada tax violates fed power over interprovincial trade in 91(2)

10. Central Canada Potash Co. Ltd. et al. v. Government of Saskatchewan (1979) • Sask. major producer of potash by 1960s • Other major producer: New Mexico • Sask. potash companies more productive/cheaper costs • Sask-based companies export majority of potash to U.S. • Fear that U.S. govt would place tariffs on cheaper Sask potash imports led Sask govt to reach agreement with New Mexico state govt on rationing scheme for US market to stabilize prices and avert trade war. • Sask. govt assigned provincial potash producers a pro-rated share of the American export market based on productive capacity of mines. • Initial agreement by prov. Lib. Govt and approved by fed. Lib. govt

11. Central Canada Potash continued • In 1972 details of pro-rationing scheme changed somewhat by new incoming NDP govt. • Under new scheme appellant company was assigned a smaller share of US market then in previously enjoyed. • Appellant challenged Sask’s pro-rationing scheme as unconstitutional on division of powers grounds (fed govt now joins potash firm in appeal) • SCC agreed arguing that the true nature and character of the scheme is directly aimed at the production of potash destined for export with the effect of regulating its export price. • What federal power does this scheme infringe upon?

12. Central Canada Potash continued • Both the previous CIGOL case and the Potash case provoked political storm in Sask and other western provinces. Political anger at the federalist sympathies of SCC and calls for provincial involvement in selection of SCC judges. • Likewise calls for a constitutional amendment to division of powers to place control of exploitation and marketing of natural resources fully under provincial control. • No success in first endeavor but partial success in latter when negotiations for the new 1982 constitution took place:

13. Central Canada Potash continued • 92A.(1) In each province, the legislature may exclusively make laws in relation to • (a) exploration for non-renewable natural resources in the province; (b) development, conservation and management of non-renewable natural resources and forestry resources in the province, including laws in relation to the rate of primary production therefrom; and (c) development, conservation and management of sites and facilities in the province for the generation and production of electrical energy. • (2) In each province, the legislature may make laws in relation to the export from the province to another part of Canada of the primary production from non-renewable natural resources and forestry resources in the province and the production from facilities in the province for the generation of electrical energy, but such laws may not

14. Central Canada Potash continued • authorize or provide for discrimination in prices or in supplies exported to another part of Canada. • (3) Nothing in subsection (2) derogates from the authority of Parliament to enact laws in relation to the matters referred to in that subsection and, where such a law of Parliament and a law of a province conflict, the law of Parliament prevails to the extent of the conflict.

15. Central Canada Potash continued • Taxation of resources • (4) In each province, the legislature may make laws in relation to the raising of money by any mode or system of taxation in respect of • (a) non-renewable natural resources and forestry resources in the province and the primary production therefrom, and (b) sites and facilities in the province for the generation of electrical energy and the production therefrom, whether or not such production is exported in whole or in part from the province, but such laws may not authorize or provide for taxation that differentiates between production exported to another part of Canada and production not exported from the province.