IpsofactoJ.com: International Cases [2005A] Part 9 Case 11 [SCC]


SUPREME COURT OF CANADA

Coram

Pelland

- vs -

Fédération des producteurs

de volailles du Québec

McLACHLIN CJ

MAJOR J

BINNIE J

LEBEL J

DESCHAMPS J

ABELLA J

BASTARACHE J

21 APRIL 2005


Judgment

Abella J

(with whom McLachlin C.J. and Major, Bastarache, Binnie, LeBel and Deschamps JJ. concurred)

  1. Over 25 years ago, this Court decided that a federal-provincial scheme with respect to the production and marketing of eggs was constitutional. André Pelland, a Quebec chicken farmer whose production is subject to a similar scheme, seeks a review of the scheme’s constitutionality.

    BACKGROUND

  2. In a landmark 1978 case which has come to be known as the “Egg Reference” (Reference re Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198), this Court unanimously affirmed the constitutional validity of a national agricultural marketing scheme collaboratively crafted by Parliament and the provinces in response to the Court’s evolving jurisprudence. The Egg Reference has since become the blueprint for federal-provincial marketing schemes.

  3. After the release of the Egg Reference, the federal and provincial governments entered into the 1978 Federal-Provincial Agreement with respect to the establishment of a Comprehensive Chicken Marketing Program in Canada (“Federal-Provincial Agreement”).

  4. To ensure effective marketing and a dependable supply of chicken to Canadian consumers, the Federal-Provincial Agreement was designed to weave together the legislative jurisdiction of both levels of government in order to ensure a seamless regulatory scheme. The integration of the federal and provincial components of the scheme is achieved through s. 22(3) of the Farm Products Agencies Act, R.S.C. 1985, c. F-4. (The relevant provisions are attached as appendices to these reasons.) Section 22(3) enables a federal marketing agency to authorize a provincial body to perform any function relating to inter-provincial or export trade in the regulated product that the federal agency is authorized to perform. Pursuant to the Canadian Chicken Marketing Agency Quota Grant of Administrative Authority (“Grant of Authority”), P.C. 1991-1090, June 13, 1991, the federal marketing agency delegated its authority to Quebec’s chicken marketing board, the Fédération des producteurs de volailles du Québec (“Fédération”). The Grant of Authority authorized the provincial body to allocate and administer federal quotas in accordance with both the federal Canadian Chicken Marketing Quota Regulations, 1990, SOR/90-556, and such relevant rules as were in force from time to time in the province.

  5. Implementing its part of the terms of the Federal-Provincial Agreement, and pursuant to what is now s. 16(1) the Farm Products Agencies Act, the federal government created a federal chicken marketing agency, then known as the Canadian Chicken Marketing Agency and now called the Chicken Farmers of Canada (“CFC”). It was expressly empowered by s. 22(1) of the Farm Products Agencies Act to implement a marketing plan and make such orders and regulations, subject to the approval of the Governor in Council, as were necessary for the execution of the plan.

  6. The provincial component of the scheme in Quebec is the subject of the constitutional challenge before us and is embodied in An Act respecting the marketing of agricultural, food and fish products, R.S.Q., c. M-35.1, and the Règlement sur la production et la mise en marché du poulet, R.R.Q., c. M-35.1, r. 13.2. In 1971, the Plan conjoint des producteurs de volailles du Québec, R.R.Q., c. M-35.1, r. 126 (“Plan”) was adopted pursuant to what is now s. 45 of the provincial legislation. The Plan is administered by the Fédération and governs all production and marketing of chicken within the province of Quebec.

  7. The function of the federal body is to assess the national market and set a global production quota for each province. It assigns a marketing quota to each province representing that province’s share of the national market.

  8. Each provincial body then adopts as its intra-provincial production quota the exact share federally assigned to it. It agrees to authorize its local producers to globally produce and market no more chicken than the quantity fixed by the federal body as that province’s share of the national marketing target. To produce and market chickens in Quebec, a farmer must receive a quota allocation from the Fédération and produce no more than his or her allocated quota for a given period. A producer in a province receives a single quota applicable to all of his or her production and marketing of chicken, regardless of intended destination.

  9. In order to facilitate the integration of production and marketing quotas, the federal body delegates its authority to regulate the marketing of chickens in inter-provincial and export trade to the provincial body, in this case the Fédération. Once producers obtain a production and marketing quota from the Fédération, they are free to decide where their product will be sold. Neither the federal nor the provincial body sets distinct intra-provincial or extra-provincial marketing quotas.

  10. In this way, the federal-provincial scheme combines in one body, the Fédération, provincial jurisdiction over production and intra-provincial marketing, and federal jurisdiction over extra-provincial marketing. The federally and provincially assigned quotas dovetail so that the total quantity of chicken produced in Canada does not exceed the agreed-upon national marketing total.

  11. Because Mr. Pelland produced 4,425,030 kg in excess of his allotted quota for the relevant periods, the Fédération, in accordance with the penalty provisions found in the provincial regulations, automatically reduced his quota to zero and imposed a monetary penalty in the amount of $2,433,766.50. In addition, it sought an interlocutory injunction.

  12. Crôteau J. granted the injunction: [2001] Q.J. No. 5828 (QL). He found that Mr. Pelland produced and sold about 29 times his quota, representing almost 50 percent of the surplus produced in Quebec for the relevant periods.

  13. In the Court of Appeal of Quebec, Rousseau-Houle J.A., writing for a unanimous court (Fish and Chamberland JJ.A.), dismissed Mr. Pelland’s appeal on the grounds that this Court’s decision in the Egg Reference was determinative of the constitutional issue raised by the appellant: [2003] Q.J. No. 3331 (QL).

  14. After leave was granted in October 2003, McLachlin C.J. stated the following constitutional questions:

    (1)

    Can An Act respecting the marketing of agricultural, food and fish products, R.S.Q., c. M-35.1, and the Règlement sur la production et la mise en marché du poulet, R.R.Q., c. M-35.1, r. 13.2, constitutionally apply ex proprio vigore to limit the production of chickens destined exclusively to the inter-provincial market?

    (2)

    If not, do An Act respecting the marketing of agricultural, food and fish products, R.S.Q., c. M-35.1, and the Règlement sur la production et la mise en marché du poulet, R.R.Q., c. M-35.1, r. 13.2, nonetheless apply to limit the production of chickens destined exclusively to the inter-provincial market by virtue of s. 22(3) of the Farm Product Marketing Agencies Act, R.S.C. 1985, c. F-4, and the Canadian Chicken Marketing Agency Quota Grant of Administrative Authority, P.C. 1991-1090?

  15. In my view, the 1978 Federal-Provincial Agreement, like the scheme in the Egg Reference, both reflects and reifies Canadian federalism’s constitutional creativity and cooperative flexibility. For the reasons that follow, and based largely on a generation of constitutional jurisprudence from this Court, I would dismiss the appeal.

    ANALYSIS

    A. THE CONSTITUTIONAL VALIDITY OF THE PROVINCIAL PRODUCTION AND MARKETING LEGISLATION

  16. Mr. Pelland does not dispute that he grossly exceeded his allocated quota. Rather, he challenges the interlocutory injunction obtained by the Fédération on the grounds that the entirety of his produce is exported to Ontario and not marketed in the province of Quebec. He argues that the provincial marketing Act and regulations can only apply to the production of chickens destined for Quebec markets, not those intended exclusively for inter-provincial markets.

  17. Mr. Pelland does not base his argument on the pith and substance of the provincial marketing Act and the provincial chicken regulation; instead, he urges the Court to conclude that placing quota restrictions on products destined for export is not a provincial matter. He does not challenge the validity of the provincial scheme, but argues that it cannot apply to the production of chicken destined solely for inter-provincial markets. The scheme he proposes as an alternative would be bifurcated: a federal quota for export production and a provincial one for intra-provincial trade.

  18. Mr. Pelland relies on Laskin C.J.’s statement in the Egg Reference that the provincial law and regulations at issue there would not be valid if they occurred “with a view to limiting inter-provincial or export trade” (p. 1287). However, this comment was made in the context of considering whether the law and regulations were in pith and substance a provincial matter. Ultimately, as explained later in these reasons, Laskin C.J. found that they were. This comment, therefore, does not support the proposition that provincial laws found valid under a pith and substance analysis are inapplicable to export trade.

  19. Contrary to Mr. Pelland’s submissions, in my view the pith and substance of the provincial marketing Act and the provincial chicken regulations are at the heart of this appeal. In order to determine whether the provincial component of the scheme is unconstitutional because it intrudes into a federal head of power, it is necessary first to determine its core character.

  20. The requisite approach was recently discussed by LeBel J. in Kitkatla Band v British Columbia (Minister of Small Business, Tourism and Culture), [2002] 2 S.C.R. 146, 2002 SCC 31, at paras. 53-54, a case involving provisions of the Heritage Conservation Act, R.S.B.C. 1996, c. 187:

    A pith and substance analysis looks at both (1) the purpose of the legislation as well as (2) its effect. First, to determine the purpose of the legislation, the Court may look at both intrinsic evidence, such as purpose clauses, or extrinsic evidence, such as Hansard or the minutes of parliamentary committees.

    Second, in looking at the effect of the legislation, the Court may consider both its legal effect and its practical effect. In other words, the Court looks to see, first, what effect flows directly from the provisions of the statute itself; then, second, what “side” effects flow from the application of the statute which are not direct effects of the provisions of the statute itself: see R. v Morgentaler, [1993] 3 S.C.R. 463, at pp. 482-83. Iacobucci J. provided some examples of how this would work in Global Securities Corp. v British Columbia (Securities Commission), [2000] 1 S.C.R. 494, 2000 SCC 21, 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. For example, in Saumur v City of Quebec, [1953] 2 S.C.R. 299, the Court struck down a municipal by-law that prohibited leafleting because it had been applied so as to suppress the religious views of Jehovah’s Witnesses. Similarly, in Attorney-General for Alberta v Attorney-General for Canada, [1939] A.C. 117, the Privy Council struck down a law imposing a tax on banks because the effects of the tax were so severe that the true purpose of the law could only be in relation to banking, not taxation. However, merely incidental effects will not disturb the constitutionality of an otherwise intra vires law.

    [emphasis added]

    (See also P. W. Hogg, Constitutional Law of Canada (loose-leaf ed.), vol. 1, p. 15.5(d))

  21. The essential character of an analogous scheme was scrutinized in the Egg Reference. Under the scheme at issue in that case, the Canadian Egg Marketing Agency set overall quotas for each province. It was created as a result of an agreement between the federal Minister of Agriculture, the federal marketing agency, and their counterparts in all provinces. The goal was to establish a comprehensive national egg marketing scheme. The federal Agency was given authority to set overall provincial quotas and to impose levies or charges on the marketing of eggs by egg producers, to be collected on its behalf by the provincial egg marketing boards. In Ontario, the Ontario Farm Products Marketing Board was the provincial board setting individual egg production quotas for its producers based on the province’s assigned quota. The Ontario legislation also prohibited egg production by anyone who did not have a quota.

  22. In the Egg Reference, this Court confirmed that the regulation of agricultural production is essentially a local matter within provincial jurisdiction pursuant to s. 92(10) of the Constitution Act, 1867. The Court reached the following relevant conclusions: although constitutional jurisdiction over marketing is divided, agricultural production is prima facie a local matter under provincial jurisdiction; the provincial scheme was not aimed at controlling extra-provincial trade, but was deemed to be coordinated and integrated with the regulations established under federal authority; and, most pertinently, producers could not claim exemption from provincial control over production by electing to devote their entire output to extra-provincial trade.

  23. Any effect of the provincial egg marketing and production scheme on extra-provincial trade was found to be incidental to the constitutionally permissible purpose of controlling agricultural production within the context of a cooperative federal-provincial agreement.

  24. While disagreeing about the exact scope of the relevant provincial head of power, Pigeon J., for the five-person majority, and Laskin C.J., in a minority concurring opinion, agreed that the provincial component of this marketing scheme was constitutional because its purpose did not extend beyond production and trade within the province. They also both accepted that if the true purpose of the provincial legislation had been to regulate inter-provincial and export trade, it would have been ultra vires.

  25. Pigeon J. held that because agricultural production is prima facie within provincial jurisdiction, production quotas could be imposed by a province on all its producers, regardless of the ultimate destination of the goods produced. A producer could not evade a province’s jurisdictional authority over production by producing goods destined for an export or extra-provincial market (p. 1295):

    "No operator can claim exemption from provincial control by electing to devote his entire output to extra-provincial trade. I can find no basis for the view that there must be a division of authority at the stage of production between what will be going into intra-provincial and what will be going into extra-provincial trade.

    [emphasis added]

  26. This is the conclusion Mr. Pelland seeks to set aside, primarily on the basis of Laskin C.J.’s minority opinion expressing the concern that if the focus of the provincial legislation had been the regulation of extra-provincial interests, it would have been beyond the province’s jurisdiction. The possibility that specifically caused Laskin C.J. to articulate a caveat to Pigeon J.’s opinion was that of a province using its regulatory jurisdiction over production to “choke off” inter-provincial trade at its very source (p. 1286):

    It is true that a Province cannot limit the export of goods from the Province, and any provincial marketing legislation must yield to this. How then, it may be asked, can it be allowed to accomplish this forbidden end by choking off inter-provincial trade at its very source, at the point of production?

  27. Based on this analysis, Mr. Pelland submits that this Court ought to reconsider the constitutionality of a marketing scheme like the one he is regulated by, find the provincial component of the scheme to be unconstitutional, and confine the jurisdiction of provincial marketing boards to production for provincial marketing only.

  28. It seems to me that the impugned legislation is constitutionally valid whether the majority or minority opinion in the Egg Reference is applied. Pigeon J. did not dispute that provincial legislation which is aimed at regulating extra-provincial trade is ultra vires. He held only that agricultural production is prima facie a provincial matter (p. 1293):

    In my view, the control of production, whether agricultural or industrial, is prima facie a local matter, a matter of provincial jurisdiction.

    He qualified this position, however, by stating (p. 1296):

    "This does not mean that such power is unlimited, a province cannot control extra-provincial trade, as was held in the Manitoba Egg Reference, [1971] S.C.R. 689, and in the Burns Foods case, [1975] 1 S.C.R. 494. However, “Marketing” does not include production and, therefore, provincial control of production is prima facie valid. In the instant case, the provincial regulation is not aimed at controlling the extra-provincial trade. In so far as it affects this trade, it is only complementary to the regulations established under federal authority. In my view this is perfectly legitimate, otherwise it would mean that our Constitution makes it impossible by federal-provincial cooperative action to arrive at any practical scheme for the orderly and efficient production and marketing of a commodity which all governments concerned agree requires regulation in both intra-provincial and extra-provincial trade.

    [emphasis added]

    Laskin C.J. was in substantial agreement with this analysis ( pp. 1286-87):

    The primary object is to regulate marketing in intra-provincial trade. Although it would not be a valid regulation of such marketing to impose quotas on production with a view to limiting inter-provincial or export trade, I am not persuaded that I should give s. 21a, seen in the context of the Ontario Farm Products Marketing Act of which it is part, that construction. 

    [emphasis added]

  29. With respect, I have difficulty seeing how Laskin C.J.’s reasons in the Egg Reference assist Mr. Pelland or yield a fertile basis for reconsidering the constitutionality of the provincial component of the scheme in this case. In a passage of equal applicability to the present case, Laskin C.J. wrote that ( pp. 1282-83):

    It is clear that the intention was to mesh federal and provincial regulatory control so as to embrace both the producers who market their production in a particular Province and those who seek to export their production to another Province or beyond Canada. It was certainly open to the federal authorities to fix the respective provincial shares of Canadian egg production for the purpose of regulating the movement of eggs in inter-provincial or export trade. The share so fixed for a particular Province would establish a limitation for that Province in respect of its own marketing policies. Hence, the fact that a Province has adopted the same share percentage does not per se rule out its connection with intra-provincial trade. The adoption provides no more than a reference point by which to measure the provincial approach to marketing quotas for producers in the Province. I do not think that the use of this reference point amounts to an invasion of federal authority in relation to inter-provincial trade. Rather, and the terms of the challenged Regulation so indicate, it is enacted under a recognition of that authority and an appreciation of the control of that trade under federal legislation. In short, it envisages that there will be inter-provincial and export marketing by producers in Ontario

    [emphasis added]

  30. As a substantive matter, neither judgment in the Egg Reference deviated from this Court’s defining prior analysis in Carnation Co. v Quebec Agricultural Marketing Board, [1968] S.C.R. 238. In Carnation, Martland J., writing for a unanimous Court, undertook a careful review of this Court’s jurisprudence, including Reference re The Farm Products Marketing Act, [1957] S.C.R. 198, and concluded that ( pp. 253-54):

    The view of the four judges in the Ontario Reference was that the fact that a transaction took place wholly within a province did not necessarily mean that it was thereby subject solely to provincial control. The regulation of some such transactions relating to products destined for inter-provincial trade could constitute a regulation of inter-provincial trade and be beyond provincial control.

    While I agree with the view of the four judges in the Ontario Reference that a trade transaction, completed in a province, is not necessarily, by that fact alone, subject only to provincial control, I also hold the view that the fact that such a transaction incidentally has some effect upon a company engaged in inter-provincial trade does not necessarily prevent its being subject to such control.

    I agree with the view of Abbott J., in the Ontario Reference, that each transaction and each regulation must be examined in relation to its own facts .... They did not purport directly to control or to restrict such trade. There was no evidence that, in fact, they did control or restrict it. The most that can be said of them is that they had some effect upon the cost of doing business in Quebec of a company engaged in inter-provincial trade, and that, by itself, is not sufficient to make them invalid.  

    [emphasis added]

  31. This analysis underlies the concern expressed by Laskin C.J. in the Egg Reference, and it arises whenever there is overlapping jurisdiction. Laws enacted under the jurisdiction of one level of government often overflow into or have incidental impact on the jurisdiction of the other governmental level. That is why a reviewing court is required to focus on the core character of the impugned legislation, as this Court did in Carnation; Attorney-General for Manitoba v Manitoba Egg and Poultry Assn., [1971] S.C.R. 689; the Egg Reference; Canadian Industrial Gas & Oil Ltd. v Government of Saskatchewan, [1978] 2 S.C.R. 545; and Central Canada Potash Co. v Government of Saskatchewan, [1979] 1 S.C.R. 42.

  32. Turning to an examination of the essence of the provincial component of the 1978 federal-provincial chicken marketing scheme, one observes at the outset that the scheme is functionally identical to Ontario’s egg marketing and production legislation considered in the Egg Reference. Like that case, the parties agree that the provisions of the Constitution Act, 1867 engaged by the federal-provincial chicken marketing scheme at issue here are s. 91(2), which confers jurisdiction over trade and commerce to the federal government, and s. 92(10), which gives provincial governments jurisdiction over local works and undertakings.

  33. As previously indicated, once the national quota for chicken production is divided among the provinces, a producer must be allotted an individual production quota in order to produce chicken in the province. Chicken producers within each province receive only one individual marketing and production quota.

  34. The provincial chicken regulation expresses quotas in square meters of barn space, clearly tying quotas to physical production within Quebec. The quota assigned to each producer in a province does not distinguish between what can be marketed within the province and what can be marketed extra-provincially; rather, the decision whether to market internally or externally is up to each producer once he or she obtains the proper licences (Canadian Chicken Licensing Regulations, SOR/81-517). Quebec’s chicken producers are free to market their products intra-provincially, extra-provincially or in some combination of the two, so long as they do not exceed their individual quotas.

  35. The only requirements imposed on provincial producers wishing to export their product are that they obtain a marketing and production quota from the Fédération and a licence from the federal body. A producer may not engage in the marketing of chicken in inter-provincial or export trade without the appropriate licence. The licensing requirement, however, is not onerous. On receipt of a valid application, the federal body is required to issue a licence. For its part, the producer is required to abide by the applicable laws and to make regular reports detailing its extra-provincial sales. The amount of chicken that a producer may export is not specified on the licence and is, in theory, limited solely by the quota amount assigned by the Fédération.

  36. It is important to stress that in examining the provincial laws at issue in the Egg Reference, both Laskin C.J. and Pigeon J. agreed that they were constitutional because they did not purport to, nor did they in fact, directly control or restrict export trade. The same is true of the provincial scheme in this case.

  37. The core character of the provincial legislative component of the federal-provincial chicken marketing scheme is not to set quotas or fix prices for exported goods or to attempt to regulate inter-provincial or export trade. As in the Egg Reference, its purpose is to establish rules that allow for the organization of the production and marketing of chicken within Quebec and to control chicken production to fulfill provincial commitments under a cooperative federal-provincial agreement. Any impact of this legislation on extra-provincial trade is incidental.

  38. With respect, I see no principled basis for disentangling what has proven to be a successful federal-provincial merger. Because provincial governments lack jurisdiction over extra-provincial trade in agricultural products, Parliament authorized the creation of federal marketing boards and the delegation to provincial marketing boards of regulatory jurisdiction over inter-provincial and export trade. Each level of government enacted laws and regulations, based on their respective legislative competencies, to create a unified and coherent regulatory scheme. The quota system is an attempt to maintain an equilibrium between supply and demand and attenuate the inherent instability of the markets. To achieve this balance, it cannot exempt producers who seek to avoid production control limits by devoting all or any of their production to extra-provincial trade.

  39. Mr. Pelland also suggested that the Court consider the analysis in Central Canada Potash as offering analagous guidance. With respect, however, that case is not applicable. It turned on “the true nature and character” of the operative provincial scheme (p. 75). In Central Canada Potash, in fact, Laskin C.J. affirmed the decision of this Court in the Egg Reference. At issue was the constitutional validity of provincial regulations in Saskatchewan whereby each producer’s share of potash production was allocated based solely on production capacity. It was common ground that at the time the regulations were made, almost all Saskatchewan-produced potash was sold in inter-provincial and export trade. The case was decided before s. 92A was added to the Constitution Act, 1867, enlarging provincial powers over non-renewable natural resources.

  40. Laskin C.J. found that the purpose of the regulations was to regulate the marketing of potash through the fixing of a minimum selling price applicable to the permitted production quota. The only market for which the scheme had any significance was the export market. Citing the Egg Reference, he held that while it is true that production controls and conservation measures with respect to natural resources in a province are ordinarily matters within provincial authority, the situation may be different where a province establishes a marketing scheme with price fixing as its central feature. He found Saskatchewan’s legislation to be ultra vires because it took direct aim at the production of potash destined for export and had the intended effect of regulating the export price.

  41. In Mr. Pelland’s case, however, quotas are not being imposed on production with a view to limiting inter-provincial trade, the hypothetical situation left open by Laskin C.J.’s minority judgment in the Egg Reference. Unlike Central Canada Potash, where the provincial scheme took direct aim at production destined for export, or the Manitoba Egg and Poultry case in which the provincial scheme was designed to restrict or limit the free flow of trade between provinces, the cooperative scheme at issue in this case is designed, like the scheme in the Egg Reference, to integrate federal and provincial marketing and production programmes.

  42. At best, Mr. Pelland might argue that his production was effectively “choked off” by the reduction of his quota to zero through the penalty provisions of the provincial legislation. It is true that in his case the penalty provisions had this effect. But since the purpose of the provincial legislation is not to strangle export production, and since Mr. Pelland had been entitled, if he so chose, to export his entire quota of chickens, he cannot argue that the limits on his production and marketing contradict the purpose of the provincial legislation.

  43. Mr. Pelland had his quota reduced not to control what he exported to extra-provincial markets, but in proportionate and formulaic response to his overproduction, regardless of the intended market. An individual producer like Mr. Pelland receives a single production quota, regardless of marketing destination. The fact that his quota was reduced to zero had nothing to do with a provincial attempt to regulate inter-provincial or export trade, and everything to do with a flagrant disregard for his production quota.

  44. Accordingly, the answer to the first constitutional question is affirmative, namely, the provincial legislation is constitutional and can operate to limit the production of chickens destined exclusively for the inter-provincial market.

    B. ADMINISTRATIVE DELEGATION AND REFERENTIAL INCORPORATION

  45. Mr. Pelland’s alternative argument is that the Grant of Authority in this case was constitutionally improper.

  46. In British Columbia (Milk Board) v Grisnich, [1995] 2 S.C.R. 895, the Court held that a provincial administrative body does not need to specify on the face of a decision the exact source of the authority to make it. So long as a provincial marketing board is properly endowed with both federal and provincial powers, the court will not look behind any given decision.

  47. If, however, there is a deficiency in the federal-provincial scheme, the court may scrutinize the impugned decision of the provincial board to determine the authority under which it was made. The question then becomes whether the decision is constitutionally sustainable given the legislative or administrative defect.

  48. I see no such defect in this case. The federal body, through the Grant of Authority, properly delegated its regulatory power over inter-provincial and export trade to the Fédération.

  49. Mr. Pelland concedes that a provincial marketing board may impose quota restrictions on products destined for export if there is a proper federal delegation of authority. It is his position, however, that the federal body, the CFC, failed to properly delegate its regulatory authority to the Fédération. He cites as the dispositive irregularity the referential incorporation by the federal body of provincial rules under s. 4 of the Grant of Authority which provides that, in allotting and administering federal quotas, a provincial board shall, in accordance with the federal regulations, apply such rules as are in force from time to time in the province in relation to the allotment and administration of provincial quotas.

  50. He contends that only Parliament can referentially incorporate the legislation of a province and that Parliament must do so expressly. Unless so authorized, a federal regulatory body may not referentially incorporate provincial laws when delegating its powers to a provincial marketing board. Since s. 22(3) of the Farm Products Agencies Act does not expressly provide for referential incorporation, Mr. Pelland maintains that it was not open to the federal body to referentially incorporate provincial laws under s. 4 of the Grant of Authority. Section 22(3) states:

    An agency may, with the approval of the Governor in Council, grant authority to any body, authorized under the law of a province to exercise powers of regulation in relation to the marketing locally within the province of any regulated product in relation to which the agency may exercise its powers, to perform on behalf of the agency any function relating to inter-provincial or export trade in the regulated product that the agency is authorized to perform.

  51. Both the intent and wording of this provision are satisfied by the Grant of Authority: it was approved by the Governor in Council; the Fédération is a “body, authorized under the law of a province to exercise powers of regulation in relation to the marketing locally within the province of any regulated product”; s. 3 of the Grant virtually mirrors the language of the statute granting authority to the Fédération; and s. 4 of the Grant fulfills the obligations of the federal body under s. 9 of the Chicken Farmers of Canada Proclamation, SOR/79-158, as amended, to “prescribe the function that is to be performed on behalf of [Chicken Farmers of Canada]” by the Fédération and other provincial boards.

  52. Moreover, a venerable chain of judicial precedent chokes off Mr. Pelland’s argument. In P.E.I. Potato Marketing Board v H. B. Willis Inc., [1952] 2 S.C.R. 392, this Court affirmed the constitutionality of an administrative inter-delegation from Parliament to a provincial administrative body. Parliament, it held, has the authority to enable a provincial body to exercise, with respect to a matter of federal jurisdiction, the same powers as it exercises within provincial jurisdiction. It is the validity of precisely such a delegation which was reaffirmed in the Egg Reference. While provinces cannot use their jurisdiction over local matters to regulate extra-provincial commerce, they may nonetheless use their provincial powers to complement federal regulation in the area. As previously noted, it was explicitly stated in the Egg Reference that no producer can claim an exemption from provincial control by electing to devote the bulk of his or her production to extra-provincial trade.

  53. In Coughlin v Ontario Highway Transport Board, [1968] S.C.R. 569, this Court held that Parliament may, acting within its legislative competence, incorporate provincial legislation by reference. Writing for the majority in a case concerning a federal referential incorporation of a provincial law dealing with motor vehicle transport, Cartwright J. held: “In my opinion, there is here no delegation of law-making power, but rather the adoption by Parliament, in the exercise of its exclusive power, of the legislation of another body as it may from time to time exist ....” (p. 575). Referential incorporation is thus designated to be a useful technique when there is overlapping constitutional jurisdiction and it is necessary to dovetail federal and provincial legislation.

  54. In Coughlin, both administrative inter-delegation and referential incorporation were deemed constitutional because neither violated the constitutional bar on legislative inter-delegation. The prohibition against legislative inter-delegation was set out by this Court in Attorney General of Nova Scotia v Attorney General of Canada, [1951] S.C.R. 31, where it held that one legislative body cannot enlarge the powers of another by authorizing the latter to enact laws which would have no significance or validity independent of the delegation.

  55. Applying the principles governing administrative delegation to the chicken marketing scheme, the federal body, the CFC, was free to referentially incorporate provincial legislation under the Grant of Authority. The Grant of Authority falls squarely within a well-established body of precedent upholding the validity of administrative delegation in aid of cooperative federalism, such as Willis, Coughlin, the Egg Reference and Peralta v Ontario, [1988] 2 S.C.R. 1045.

  56. The Grant of Authority must be construed in the context of other elements of the regulatory scheme. Section 6(1) of the Chicken Farmers of Canada Proclamation states that the CFC shall establish a quota system whereby quotas are allotted to producers in each province by the appropriate provincial board. Both sections 3 and 4 of the Grant of Authority clearly indicate that the powers delegated to the Fédération are to be exercised subject to the federal regulations, which themselves impose a number of substantive constraints on the delegated power. They provide, for example, that a provincial producer marketing chickens in inter-provincial trade must have been allotted a federal quota by the provincial board. The federal regulations also provide that the number of kilograms marketed must be equal to or less than the federal quota and that the producer must comply with the rules that the Fédération is authorized to exercise in the name of the CFC.

  57. When the federal legislation, regulations and the Grant of Authority are considered together, it is clear that Parliament intended at all times to retain its administrative control over the Fédération through the CFC. There is no indication that the Grant of Authority attempted to expand provincial legislative authority. The CFC can take back the powers it delegated at any time. The federal chicken regulations in no way altered the nature of the delegation of authority from the CFC to the Fédération, and there was no impermissible legislative delegation by the Grant of Authority.

  58. It is interesting to note that the argument raised by Mr. Pelland was also raised in the Egg Reference, where it was argued that only Parliament could incorporate provincial legislation by reference. For the Governor in Council to do so, would be unconstitutional. Laskin C.J. discussed administrative delegation and referential incorporation at some length, concluding, in a passage concurred in by Pigeon J., that ( pp. 1225-26):

    Involved in the appellants’ submissions, as reflected in their factum and in oral argument, was the contention that there is a constitutional requirement in the delegation of authority that standards be fixed by Parliament or where, as here, there is delegation in depth, that is by orders which the Governor-in-Council is authorized to make, the orders of the Governor-in-Council should establish standards and not, by wholesale redelegation, leave their determination to the provincial boards nor, as s. 2(1) provides, adopt the various provincial standards for federal purposes. I do not think this Court would be warranted in imposing such a constitutional limitation on the delegation of authority. The matter of delegation in depth is covered by the judgment of this Court in Reference re Regulations (Chemicals) under the War Measures Act, [1943] S.C.R. 1., and I would not limit its rationale to emergency legislation. There is sufficient control on an administrative law basis through the principle enunciated and applied by this Court in [Brant Dairy Co. v Milk Marketing Commission of Ontario, [1973] S.C.R. 131] (which arises for consideration under question 2) and I find no ground for raising it to a constitutional imperative

    [emphasis added]

  59. The analysis remains apposite: there is no basis in the present appeal for elevating the claim that only Parliament can referentially incorporate provincial legislation to the level of a constitutional principle.

  60. As envisaged by the 1978 Federal-Provincial Agreement, Parliament intended that federal and provincial legislation create an interlocking scheme for the effective regulation of chicken production and marketing. It was clearly intended that the “federal quota” and the “provincial quota”, as defined in the federal chicken regulations, be integrated. Parliament could not have intended that the federal body establish 10 different sets of quota administration rules subject to modification whenever provincial quota administration rules were modified. And it is clear from s. 22(3) of the Farm Products Agencies Act that Parliament intended that the CFC enact regulations which would promote the integrity of the federal-provincial scheme. The federal and provincial schemes were intended to dovetail.

  61. In order to give effect to this legislative intent with respect to the allocation and administration of quotas, the federal body could either have re-enacted the relevant provincial legislation in each jurisdiction as its own, or incorporated it by reference. That it chose to do so by referential incorporation does not render the choice vulnerable to constitutional censure.

  62. Mr. Pelland, during oral argument, abandoned his final submission that the Grant of Authority was invalid because it was not properly published in the Canada Gazette.

  63. I would dismiss the appeal with costs to Fédération des producteurs de volailles du Québec. No other party requested costs.

APPENDIX A

RELEVANT FEDERAL LAWS AND REGULATIONS

Farm Products Agencies Act, R.S.C. 1985, c. F-4.

16.

(1)

The Governor in Council may, by proclamation, establish an agency with powers relating to any farm product or farm products the marketing of which in inter-provincial and export trade is not regulated pursuant to the Canadian Wheat Board Act or the Canadian Dairy Commission Act where the Governor in Council is satisfied that a majority of the producers of the farm product or of each of the farm products in Canada is in favour of the establishment of an agency.

21.

The objects of an agency are

(a)

to promote a strong, efficient and competitive production and marketing industry for the regulated product or products in relation to which it may exercise its powers; and

(b)

to have due regard to the interests of producers and consumers of the regulated product or products.

22.

(1)

Subject to the proclamation by which it is established and to any subsequent proclamation altering its powers, an agency may

....

(b)

implement a marketing plan the terms of which are set out in the proclamation establishing it or in any subsequent proclamation issued under subsection 17(2) in respect of it;

....

(f)

 

where it is empowered to implement a marketing plan, make such orders and regulations as it considers necessary in connection therewith, but all such orders and regulations shall, in the case of orders and regulations that are of a class to which paragraph 7(1)(d) is made applicable, be submitted to the Council before the making thereof, and in any other case, be submitted to the Council either before or after the making thereof ....

....

(n)

 

do all such other things as are necessary or incidental to the exercise of any of its powers or the carrying out of any of its functions under this Act.

(2)

An agency may perform on behalf of a province any function relating to intra-provincial trade in any regulated product in relation to which it may exercise its powers that is specified in an agreement entered into pursuant to section 31.

(3)

An agency may, with the approval of the Governor in Council, grant authority to any body, authorized under the law of a province to exercise powers of regulation in relation to the marketing locally within the province of any regulated product in relation to which the agency may exercise its powers, to perform on behalf of the agency any function relating to inter-provincial or export trade in the regulated product that the agency is authorized to perform.

Canadian Chicken Marketing Quota Regulations, 1990, SOR/90-556.

2.

In these Regulations,

...

“Agency” means the Canadian Chicken Marketing Agency;

...

“Commodity Board” means, in respect of the Province of

...

(b)

Quebec, the Fédération des producteurs de volailles du Québec,

...

“federal quota” means the number of kilograms of chicken, expressed in live weight that a producer is entitled, pursuant to these Regulations, to market in inter-provincial and export trade during the year referred to in Schedule I or the period referred to in Schedule II.;

...

“producer” means a person who raises chicken for processing or for sale to the public;

“provincial quota” means the number of kilograms of chicken, expressed in live weight, that a producer is entitled, pursuant to orders, regulations or policy directives made by the appropriate Commodity Board, to market in intra-provincial trade during the year referred to in Schedule I or the period referred to in Schedule II.

3.

(1)

Subject to subsection (2), these Regulations apply to the marketing of chicken in inter-provincial and export trade.

(2)

These Regulations do not apply to the marketing of chicken under quota exemptions granted by a Commodity Board.

4.

No producer shall market chicken in inter-provincial or export trade

(a)

unless a federal quota has been allotted to the producer, on behalf of the Agency, by the Commodity Board of the province in which the producer’s chicken production facilities are located;

(b)

in excess of the federal quota referred to in paragraph (a); or

(c)

contrary to any rule of the Commodity Board referred to in paragraph (a) that the Commodity Board has been authorized by the Agency, pursuant to subsection 22(3) of the Act, to apply in performing on behalf of Agency the function of allotting and administering federal quotas.

5.

(1)

Subject to subsection (2) and (3), a producer is not entitled to be allotted a federal quotas unless, on August 25, 1990, the producer was entitled to a federal quota pursuant to the Canadian Chicken Marketing Quota Regulations.

(3)

On or after August 26, 1990, a producer is entitled to be allotted a federal quota if, pursuant to the rules of the Commodity Board of the province in which the producer’s chicken production facilities are located, the producer is allotted a provincial quota.

6.

The quantity of chicken that a producer is authorized to market from a province under a federal quota for the year referred to in Schedule I or the period referred to in Schedule II shall equal the provincial quota allotted to the producer for that year or period by the Commodity Board of the province minus the quantity of chicken marketed by that producer in intra-provincial trade in that province during that year or period.

7.

The Commodity Board of a province shall allot federal quotas to producers in the province in such manner that the aggregate number of kilograms of chicken produced in the province and

(a)

authorized to be marketed by producers in inter-provincial or export trade under federal quotas allotted on behalf of the Agency by the Commodity Board of the province

(b)

authorized to be marketed by producers in intra-provincial trade under provincial quotas allotted by the Commodity Board of the province, and

(c)

anticipated to be marketed by producers under quota exemptions granted by the Commodity Board of the province,

during the year referred to in Schedule I or the period referred to in the Schedule II will not exceed the number of kilograms of chicken set out in respect of that province for that year or period.

Canadian Chicken Marketing Agency Quota Grant of Administrative Authority, P.C. 1991-1090, June 13, 1991.

2.

In this Grant of Authority,

“Agency” means the Canadian Chicken Marketing Agency;

...

“Commodity Board” means, in respect of the Province of

...

(b)

Quebec, the Fédération des producteurs de volailles du Québec,

...

“federal quota” means the number of kilograms of chicken, expressed in live weight, that a producer is entitled, pursuant to these Regulations, to market in inter-provincial and export trade during the year referred to in Schedule I to the Regulations or the period referred to in Schedule II to the Regulations;

...

“producer” means a person who raises chicken for processing, for sale to the public or for use in products manufactured by the producer;

“provincial quota” means the number of kilograms of chicken, expressed in live weight, that a producer is entitled, pursuant to orders, regulations or policy directives made by the appropriate Commodity Board, to market in intra-provincial trade during the year referred to in Schedule I to the Regulations or the period referred to in Schedule II to the Regulations.

“Regulations” means the Canadian Chicken Marketing Quota Regulations, 1990.

3.

Subject to section 4, the Agency hereby grants to the Commodity Board of each province authority to perform on behalf of the Agency the function of allotting and administering, in accordance with the Regulations, federal quotas in the province and, for the purpose of performing that function, to exercise on behalf of the Agency all and any powers that the agency would be entitled to exercise in the performance thereof.

4.

In performing the function of allotting and administering federal quotas pursuant to this Grant of Authority, a Commodity Board of a province shall, in accordance with the Regulations, apply in relation to the matters listed below such rules, if any, as are in force from time to time in the province in relation to the allotment and administration of provincial quotas:

(a)

entitlement to a quota;

(b)

the basis on which the amount of a quota is determined;

(c)

an increase or decrease in a quota or an allotment of an additional quota;

(d)

the allotment of quotas to producers who have or have not previously been allotted a quota;

(e)

the period of time for which a quota is valid;

(f)

maximum and minimum quota size;

(g)

the determination of who is a producer including the producer’s affiliates, partners, associates and subsidiaries;

(h)

cancellation, suspension or variation of quotas for breach of the rules relation to quotas or for non-payment of levies imposed by the Commodity Board or the Agency;

(i)

reduction or loss of a quota for failure to utilize the quota;

(j)

ownership, leasing and transfer of quotas;

(k)

quota banks;

(l)

the definition of chicken production facilities and the application and relationship of the definition to quotas;

(m)

utilization of quotas;

(n)

marketing arrangements with processors; and

(o)

information and reports to be submitted by producers.

APPENDIX B

RELEVANT PROVINCIAL LAWS AND REGULATIONS

An Act respecting the marketing of agricultural, food and fish products, R.S.Q., c. M-35.1.

1.

This Act establishes rules to allow orderly organization of the production and marketing of agricultural and food products and the marketing of fish products and of wild fur, whether or not such activities are carried on for purposes of sale.

45.

Ten or more interested producers may transmit to the Régie a draft joint plan permitting the establishment of conditions for the production and marketing of an agricultural product originating from a designated territory or intended for a specified purpose or a particular buyer, and the constitution of a producer marketing board to administer the plan.

64.

The producer marketing board is established upon the coming into force of a plan; it is responsible for administering the plan and may exercise every power conferred by this Title, subject to any restriction or condition set out in the plan or determined by the Régie.

93.

A marketing board may, by by-law, fix production and marketing quotas for the product marketed under the plan it administers and, for that purpose, subject production and marketing to the conditions, restrictions and prohibitions it determines.

Without restricting the scope of the first paragraph, a board may, by by-law,

...

(2)

require that every producer be the holder of an individual quota allocated by the board and authorizing him to produce or market the product marketed under the plan it administers, fix the minimum and maximum quotas the producer may hold, individually or in association with other persons, and determine the proportion of the quota each producer must produce himself within his operation;

(3)

determine the conditions governing the allocation, maintenance or renewal of an individual quota, and the manner in which it is issued;

(4)

establish equivalences based on the area under cultivation or operation or the number of animals reared or marketed, for the purpose of fixing the quota of a producer;

(5)

determine the manner and conditions applicable to the temporary or permanent reduction of the quota of a producer who produces or markets a larger or smaller quantity of the product marketed under the plan than is permitted by his quota;

(6)

impose on any producer who contravenes a by-law made under this section, a penalty based on the volume or value of the product marketed or the area under cultivation or operation, and prescribe the use of this penalty for particular purposes;

94.

Where a marketing board makes a by-law under section 93, no person may produce or market the product concerned unless he holds a quota, except in the circumstances and on the conditions determined in the by-law.

Règlement sur la production et la mise en marché du poulet, R.R.Q., c. M-35.1, r. 13.2.

1.

Any person who produces and markets chicken covered by the Plan conjoint des producteurs de volailles du Québec (c. M-35, r. 126) shall first be the holder of a quota granted by the Fédération des producteurs de volailles du Québec in accordance with this regulation.

“Quota” (quota) means an authorization to produce expressed in square metres that is confirmed by a certificate.

53.

In every period, every producer shall breed a number of chickens sufficient to meet his individual quota (contingent individuel) and shall market the quantity in kilograms provided for in his individual quota.

54.

A producer’s individual quota (contingent individuel) represents the maximum quantity of chicken, expressed in kilograms of body weight, that he may produce and market in the course of a period based on his quota (quota) and the percentage of use determined by the Fédération.

90.

Any producer who, after the application of section 71, produces or markets chicken in a quantity exceeding his individual quota in a given period shall, during the sixth period following the one in which his overproduction occurred, reduce his production and marketing by a quantity equivalent to his overproduction

92.

Any producer who produces and markets chicken in a quantity exceeding his individual quota as adjusted in accordance with the provisions of Chapter IV shall, in addition to complying with the reduction imposed pursuant to section 90, pay to the Fédération:

$0.35 $ per kilogram of chicken in body weight for any production up to 3 % of his individual quota; and

$0.55 $ per kilogram of chicken in body weight for any portion of his production exceeding 3 % of his individual quota.


Cases

Reference re Agricultural Products Marketing Act, [1978] 2 S.C.R. 1198

Kitkatla Band v British Columbia (Minister of Small Business, Tourism and Culture), [2002] 2 S.C.R. 146, 2002 SCC 31

Carnation Co. v Quebec Agricultural Marketing Board, [1968] S.C.R. 238

Reference re The Farm Products Marketing Act, [1957] S.C.R. 198

Attorney-General for Manitoba v Manitoba Egg and Poultry Assn., [1971] S.C.R. 689

Canadian Industrial Gas & Oil Ltd. v Government of Saskatchewan, [1978] 2 S.C.R. 545

Central Canada Potash Co. v Government of Saskatchewan, [1979] 1 S.C.R. 42

British Columbia (Milk Board) v Grisnich, [1995] 2 S.C.R. 895

P.E.I. Potato Marketing Board v H. B. Willis Inc., [1952] 2 S.C.R. 392

Coughlin v Ontario Highway Transport Board, [1968] S.C.R. 569

Attorney General of Nova Scotia v Attorney General of Canada, [1951] S.C.R. 31

Peralta v Ontario, [1988] 2 S.C.R. 1045.

Legislations

An Act respecting the marketing of agricultural, food and fish products, R.S.Q., c. M-35.1, s. 1, 45, 64, 93(2), (3), (4), (5), (6), 94.

Canadian Chicken Licensing Regulations, SOR/81-517.

Canadian Chicken Marketing Agency Quota Grant of Administrative Authority, P.C. 1991-1090, June 13, 1991, ss. 2, 3, 4.

Canadian Chicken Marketing Quota Regulations, 1990, SOR/90-556, ss. 2, 3, 4, 5(1), (3), 6, 7.

Chicken Farmers of Canada Proclamation, SOR/79-158, ss. 6(1), 9.

Constitution Act, 1867, ss. 91(2), 92(10), 92A.

Farm Products Agencies Act, R.S.C. 1985, c. F-4, ss. 16(1), 21, 22.

Federal-Provincial Agreement with respect to the establishment of a Comprehensive Chicken Marketing Program in Canada, 1978.

Plan conjoint des producteurs de volailles du Québec, R.R.Q., c. M-35.1, r. 126.

Règlement sur la production et la mise en marché du poulet, R.R.Q., c. M-35.1, r. 13.2, ss. 1, 53, 54, 90, 92.

Authors and other references

Hogg, Peter W. Constitutional Law of Canada, vol. 1, loose-leaf ed. Scarborough, Ont.: Carswell, 1992.

Representations

Louis H. Lacroix, François Chevrette and Sébastien Locas (instructed by Louis H. Lacroix, Berthierville, Quebec), for the appellant.

Pierre-Christian Labeau (instructed by Attorney General of Quebec, Sainte-Foy), for the respondent the Attorney General of Quebec.

Pierre Brosseau and Nancy Lemaire (instructed by Tremblay, Brosseau, Fleury, Savoie, Montreal), for the respondent Fédération des producteurs de volailles du Québec.


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