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On October 11, 2019, the Ontario Superior Court of Justice, Divisional Court, confirmed that the repeal of the cap-and-trade system in Ontario absent engaging in public consultation was unlawful. The Ontario Divisional Court concluded that the Ontario government was “obliged” under the Environmental Bill of Rights to engage in public consultation prior to terminating the carbon pricing system implemented by the Liberal government.

The claim against the repeal of the cap-and-trade regime was filed in 2018 by Greenpeace Canada. Greenpeace Canada sought through the claim, the restoration of cap-and-trade system that places caps on the amount of pollution permitted by various industries who in turn could sell its pollution credits if that industry was under the applicable pollution limits.

The Environmental Bill of Rights (“EBR”) was enacted in 1993 and is considered a procedural piece of legislation. The intent and purpose of the EBR is to provide for public participation in government action that impacts the environment. While the EBR itself does not preclude or prevent changes to Ontario’s environmental policies it provides a requirement of meaningful public consultation. The meaningful public consultation relates to government actions that may have significant impacts on the environment. The Preamble to the EBR states:

The people of Ontario have as a common goal the protection, conservation and restoration of the natural environment for the benefit of present and future generations.

While the government has the primary responsibility for achieving this goal, the people should have means to ensure that it is achieved in an effective, timely, open and fair manner.

In 2016 the government enacted the Climate Change Mitigation and Low-Carbon Economy Act (the “Act”). The stated purpose of the Act is to combat climate change and create a regulatory regime, (a) to reduce greenhouse gas to respond to climate change to protect the environment, and (b) to enable Ontario to collaborate and coordinate its actions with similar actions in other jurisdictions.

The Act established a cap and trade program as a market mechanism to implement a cap on the amount of greenhouse gas emissions permitted by various major emitters. The cap and trade either required major emitters to limit their emissions to ensure that they were below the permitted cap, or conversely purchase emissions credits from others who were in a position to get credits for being below the allowable limits established. The Act contained mandatory greenhouse gas emission reduction targets to reduce greenhouse gas emissions below the 1990 levels as follows: 15% by 2020;  27% by 2030; and, 80% by 2050. The Act also placed on obligation on the provincial government to prepare a climate change action plan to achieve greenhouse gas emission reduction targets, review the plan every 5 years, and prepare an annual progress report.

The Ontario government, under Doug Ford as the elected Premier was sworn into office on June 29, 2018. On that very same date this “new” government enacted a new regulation to revoke the cap-and-trade regulation (“Cancelling Regulation”) making Ontario’s cap and trade inoperable. The new regulation also made it an offence to engage in any transactions under the former cap and trade program with a potential penalty of imprisonment. 

Approximately five months after enacting the Cancelling Regulation, on November 15, 2018 the government repealed the Cap and Trade Act including the Cap and Trade Regulation.

The Divisional Court in its October 11, 2019 decision concluded that the government was obligated under the EBR to engage in a process of public participation prior to enacting the Cancelling Regulation terminating Ontario’s cap and trade program. The Court also specifically stated that the election did not relieve the government from its obligation to follow the requirements of the EBR.

While Greenpeace’s claim was dismissed by Ontario’s Divisional Court, the majority of the Court agreed that the Premier’s decision to revoke the cap-and-trade program in 2018 was unlawful. In coming to this conclusion Justice Corbett confirmed the importance of respect for the Rule of Law stating:

The government’s clear breach of the EBR, its unlawful reliance on the exemption clause, and its apparent efforts to avoid judicial review of this conduct raises serious concerns – not about whether the government had the lawful authority to repeal the Cap and Trade Act, but of its respect for the Rule of Law and the role of the Rule of Law and the role of the courts, as a branch of government.

Justice Corbett also stated:

The declaration sought does not affect the validity of the government’s repeal of the Cap and Trade Act. But in my view the government’s continuing position that it acted within the law, and that its actions should not be subject to judicial review, the declaration makes a point broader than its four corners … that the government is not above the law and may not insulate itself from judicial review when it acts unlawfully.

In its ruling, two of the three Divisional Court judges ruled that the decision to revoke the cap-and-trade program was illegal due to the government’s failure to comply with the provisions of the Environmental Bill of Rights.

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