Monday, April 30, 2018

In a commentary in the National Post, Prof. David Schneiderman assesses the Supreme Court of Canada's decision in the Comeau interprovincial trade case and its relevance to disputes between Alberta and British Columbia ("Barriers for beer, but not oil," April 26, 2018).

Read the full commentary below (not available online).

Barriers for beer, but not oil

By David Schneiderman

April 26, 2018

There has been a great deal of handwringing over the Supreme Court of Canada’s recent Comeau ruling, which determined that New Brunswick is entitled to control the quantity of liquor that flows across its borders. At issue in the case was Section 121 of the 1867 Constitution, which provides that provincial “articles of Growth, Produce or Manufacture … shall be admitted free into each of the other Provinces.”

This section does not, the court concluded in Comeau (as it has on previous occasions), amount simply to unrestricted free trade. It is unsurprising that the court refused to turn the constitutional clock back to some imagined framing moment derived almost exclusively from the pen of a single British draftsperson. If the Constitution is a “living tree,” which is the Court’s approach to constitutional interpretation, then purported intentions, while admissible in constitutional litigation, are not dispositive.

Nor was Section 121 rendered meaningless. It is just that it will not do as much work as conservative constitutionalists would have preferred. The court declared that Section 121 renders barriers to interprovincial trade invalid only in so far as the “essence and purpose” of the restriction is to impede interprovincial economic movement. Incidental effects on interprovincial trade will not render provincial policy constitutionally invalid. What will be problematic are trade-policy measures that have provincial borders as their principal object. To illustrate, the court declared that the “essence and purpose” of the New Brunswick law was to “control the supply and use of liquor within the province.” This was its primary purpose, while it had the incidental effect of prohibiting the interprovincial movement of beer.

The exercise is familiar.

The Supreme Court characterizes laws and policy in most every federalism dispute. Whenever a government measure is challenged on grounds that it exceeds provincial or federal jurisdiction, courts determine the primary purpose. Courts then classify the law as falling within either federal or provincial enumerations in the 1867 Constitution Act. What the court proposes to do under Section 121, going forward, looks very much like the exercise the court has undertaken for most of Canada’s constitutional life.

New relevance of Section 121 arises because of Alberta’s Bill 12, introduced a few days before the Comeau decision. Alberta Premier Rachel Notley has made clear that the proposed law is intended to allow the curbing of petroleum resources out of Alberta and into British Columbia. It is styled the “Preserving Canada’s Economic Prosperity Act” and purports to “optimize” the interests of Albertans by requiring government permission to export natural gas, crude oil or refined fuels after deciding “whether adequate pipeline capacity exists to maximize” the return on those resources and whether adequate supplies remain to serve Albertans’needs, among other “relevant” considerations.

The Alberta government will have difficulty arguing that the law’s primary purpose is not to bar interprovincial movement of oil. Though the act purports to advance some genuine public policy interests - such as ensuring sufficient capacity to serve Albertans’ needs - these do not reflect either the circumstances or stated reasons that prompted the law. Alberta appears to have little economic incentive to hold back exports. However much Alberta purports to provide cover, by referring to prosperity or the maximization of returns, Bill 12’s principal purpose is to economically harm a recalcitrant province for interfering with Alberta’s ability to get its oil to port.

It also is unlikely that Alberta has authority to enact this law under Section 92A of the Constitution Act 1982. This newer section of the Constitution confers upon provinces the authority to make laws regarding the export of natural resources. Provinces are not authorized by the express terms of 92A to discriminate in “supplies exported to another part of Canada.” It would be difficult to argue Bill 12’s primary purpose is not punitive and therefore discriminatory.

There is a fair amount the Constitution can do to promote Canada’s economic union short of constitutionalizing free trade. There simply is no need for constitutional self-flagellation. Canada’s constitutional culture enables muscular provincial authority but disables power on those rare occasions when governments exceed traditional constitutional limits.