REGS Committee Report

Government Response to the Second Report of the Standing Joint Committee For The Scrutiny Of Regulations

Government’s Response To Report No. 80 (Incorporation By Reference)

Introduction

On December 6, 2007, the Standing Joint Committee for the Scrutiny of Regulations (the “Committee”) issued its Report No. 80 relating to incorporation by reference of external materials into regulations, which was presented to the House of Commons on December 12, 2007. In accordance with Standing Order 109 of the House of Commons, the Committee requested that the Government table a comprehensive Response in the House of Commons.

The Government is pleased to present its Response to the Report of the Committee in the following pages.

Context

Reliance on “ambulatory” incorporation by reference has—in recent years—played an increasingly important role in the manner in which regulatory objectives, including harmonization and inter-governmental cooperation, are achieved in Canada. Use of this technique in regulations has become commonplace as an effective and efficient means to minimize duplication and inconsistency.

The Committee objects to ambulatory incorporation by reference in regulations in the absence of clear authority to do so in the enabling statute. In their view, ambulatory incorporation by reference always constitutes a subdelegation of authority to the author of the incorporated external material, which can only be permitted if Parliament has clearly authorized it, either expressly or by necessary implication.

The Government is of the view that ambulatory incorporation by reference of material generated independently of the regulation-making authority does not constitute a subdelegation of power. The Committee’s Report analyzes in detail the case law and generally concludes that it does not support the position of the Government. This Response will address that contention by highlighting key aspects of the case law to illustrate that it does indeed support the Government’s position.

The Committee’s Report comments on provisions that expressly authorize ambulatory incorporation by reference and also expresses concerns that may arise about the accessibility of incorporated material. This Response will address these issues as well as the merit in pursuing the enactment of general legislation permitting ambulatory incorporation by reference.

The Government’s Response

The Government agrees that if the use of incorporation by reference constitutes a delegation of legislative power, then its use in this fashion requires clear authority. However, in federal regulations it is seldom the case that a delegation of legislative power results from an ambulatory incorporation by reference. This is because the incorporated material is normally generated by a body that is external to the regulation-maker and is produced for reasons independent of its incorporation. There is a substantial body of case law to demonstrate that ambulatory incorporation by reference of such material does not constitute a subdelegation of legislative authority.

Inter-delegation Cases

As the Report notes, the Government’s position rests substantially on cases dealing with the inter-delegation of legislative powers between Parliament and the provincial legislatures, including Coughlin v. Ontario Highway Transport Board, [1968] S.C.R. 569, Attorney General of Ontario v. Scott, [1956] S.C.R. 137, Regina v. Glibbery (1962), 36 D.L.R. (2d) 548 and Re Meherally et al. and Minister of National Revenue (1987), 37 D.L.R. (4th) 609. 

The Report questions the relevancy of this case law because there are fundamental differences between the constitutional and administrative law contexts, pointing out that the latter deals with subdelegation, not inter-delegation. The Government agrees that there are such differences. Nevertheless, the two contexts find common ground in so far as subdelegation, which arises in administrative law, is a particular type of delegation. In other words, both relate to matters of “delegation”. A finding of delegation—whether it is an original delegation or a further delegation—requires that a holder of a power delegate some or all of that power to another person or body to exercise.

This is clearly recognized in the cases noted above, which determine that ambulatory incorporation by reference of the legislation of one level of government by the other does not constitute a delegation of power. Such incorporation did not have the effect of altering the division of legislative power in the Constitution. The legislation that was incorporated was made as a result of an independent legislative power and was not dependent upon any grant of federal power. The effect of the incorporation was not to grant any federal powers to a provincial legislature.

As Elmer A. Driedger writes:

In the case of referential legislation each legislature acts independently in the exercise of its own legislative authority; in the case of delegation, the authority to enact the legislation to be incorporated is derived from the other legislature and cannot stand on its own feet. (The Composition of Legislation, Ottawa, Government of Canada, 1976, p. 126)

This principle is reiterated in Attorney General of Ontario v. Scott where Rand J. stated, (at page 142):

The action of each legislature is wholly discrete and independent of the other, a relation incompatible with delegation; and that it is a case of adoption is equally clear.

For the same reasons, the incorporation by reference of material that is generated independently of the regulation-making authority does not constitute a subdelegation of the regulation-maker’s power. A delegation of power occurs only when a body that holds a power delegates some or all of it to another (a delegate). The effect of an ambulatory incorporation by reference of independently generated material is not to confer any additional powers on the author of the material, be it a provincial legislature or another body.

An essential element of the Government’s position is that the external material has to be produced under an independent power. It must be produced for its own purposes, and not simply for the purposes of being incorporated. The inter-delegation cases recognize that if the incorporated legislation is enacted pursuant to a power that is independent of the powers exercised in the making of the incorporating legislation, there is in fact no delegation of legislative authority.

Similarly, when a regulation-making authority incorporates by reference a document that another body has adopted under its own powers, the regulation-making (incorporating) authority does not confer any power on the other body. This is because its adoption is independent of the action of the incorporating authority since it has been generated for purposes other than those of the incorporating authority. The other body can amend the document on the basis of its own powers, which are entirely independent of the legislative scheme of the incorporating authority.

The Government acknowledges that ambulatory incorporation by reference results in the content of the regulation being changed as the external document is amended—indeed this is the objective of the use of the technique. However, this does not constitute a delegation (or subdelegation) of power. When a regulation-making authority incorporates external material, it does not thereby confer any new power on the author of the incorporated material. Their existing grant of power, which is independent of that of the regulation-maker, remains unchanged.

In the Report, the Committee cites Professor Côté (The Interpretation of Legislation in Canada, 2nd edition) to support their view that there is a presumption that “references which are made to an enactment from another authority are static” (para. 35). However, in his 3rd edition, Professor Côté, commenting specifically on incorporation by reference in regulations, states:

Since the Supreme Court has repeatedy [sic] held that open references do not constitute, strictly speaking, a delegation of power, the case law which considers that an open reference contained in a regulation violates the delegatus non potest delegare maxim is rather questionable. (p. 78)

Other Case Law

A close review of the case law shows that the reasoning in the inter-delegation cases, which dealt with legislation, has also been applied in cases involving the incorporation by reference of non-legislative material, such as

• accounting rules made by a professional association of accountants (Denison Mines Ltd. v. Ontario Securities Commission, (1981), 32 O.R. (2d) 469 (Div. Ct.)
• employment statistics produced by another government agency authorized to produce them (Calder v. Canada, [1980] 1 F.C. 842 (C.A.))
• rules produced by a horse-racing association (Kingston v. Ontario Racing Commission, [1965] 2 O.R. 10 (C.A.))

These cases are relevant in that they relate to the incorporation by reference of independently produced non-legislative material in regulations and demonstrate that their incorporation by reference does not constitute a delegation of power. For example, in the Kingston case, Stewart J. said:

I do not regard the adoption of the Canadian Trotting Association rules by the Ontario Racing Commission as the delegation of the latter’s authority. Merely to embody the rules of another organization into its own is not in any way delegating the authority to make such rules.

Similarly, in the Calder case LeDain J. said:

In leaving that statistical function to be carried out by Statistics Canada the Commission was not in my opinion delegating its regulation‑making authority or converting it into a discretionary decision‑making power, contrary to the principles recognized in the cases that have been referred to, but was adopting for its own administrative purposes statistical information produced by another agency. As I have said, it was justified in doing so, not only by the terms of the Statistics Act, but by the terms of paragraph 2(1)(s) of the Unemployment Insurance Act, 1971. In other words, in so far as Parliament has made rights depend on rates of unemployment, it has indicated an intention that reliance may be placed on the rates of unemployment determined by Statistics Canada. The determination of those rates is neither a power to make regulations nor a power to adjudicate under the Unemployment Insurance Act, 1971, so that it cannot be said to involve, when carried out by Statistics Canada, an invalid delegation of either kind of power.

The Kingstonand Calder cases clearly suggest that the incorporation by reference of independently produced material does not constitute a subdelegation of regulation-making power. In the Kingstoncase, the Trotting Association was institutionally independent of the Racing Association, while in Calder, independence existed because of separate and distinct statutory grants of power, even though the referenced material was produced by one branch and incorporated by another branch of the Government of Canada.

The Committee argues that the decision in Kingston is an example of a static incorporation by reference because of the absence of the words “as amended from time to time” in the provision at issue. It seems clear from the nature and the purpose of the reference that the reference in the Kingston decision was ambulatory. The same can also be said of the Denison Mines case (not discussed in the Report), in which the court upheld securities regulations that incorporated by reference accounting rules made by a professional association of accountants. It is very unlikely that the legislator would have intended to require auditors to follow rules that would eventually become outdated because of changes made by their own professional association. The court in Denison Mines held that this incorporation by reference did not constitute a subdelegation of power.

Accessibility

The Committee notes that the use of incorporation by reference may give rise to concerns relating to accessibility of the law. It is their view that these concerns are heightened where material is incorporated as “amended from time to time”. The Government agrees that all incorporated documents must remain available—the rule of law itself requires that the law be accessible. In all instances where incorporation by reference is used, the policy of the Government is to emphasize the importance of ensuring the accessibility of incorporated documents, not only at the time that the material is incorporated but also during the time that the regulation remains in force. However, the Government disagrees that accessibility is necessarily compromised by the use of ambulatory incorporation. In all cases, whether the incorporation is static or dynamic, incorporated materials must remain accessible.

Legislative Responses

The Government is confident in its legal position on the issue of ambulatory incorporation by reference in regulations, but acknowledges that there is a debate on this issue, as evidenced by the divergent positions held by both the Government and the Committee.

It is in this context, an important component of which has been the long-standing and well-known view of the Committee, that an increasing number of federal statutes have included an express reference to authority to incorporate material by reference. In many cases these provisions have been added out of abundance of caution or for greater certainty and frequently in anticipation of, or in response to, criticism from the Committee.

An attempt was made by the Government in the mid-90s to legislate the matter in a proposed new Regulations Act, which was introduced twice in the House of Commons, but which never became law. In that bill, a number of provisions dealt with ambulatory incorporation by reference. Since then, similar provisions have found their way into many specific statutes. Such provisions will become even more prevalent as the Government becomes increasingly reliant upon the use of the technique of incorporation by reference, particularly in the context of intergovernmental cooperation across Canada and abroad, and given the desire of Government to ensure timeliness, policy coherence and minimal duplication as most recently communicated in the Cabinet Directive on Streamlining Regulation. Given the increased reliance of modern governments on the technique of incorporation by reference, the Government will consider general legislation with a view of achieving more certainty.

Conclusions

The Government appreciates the Committee’s concerns about incorporation by reference in regulations and the opportunity its Report provides for further considering the use of this important regulatory technique. Although the Government disagrees with the contention of the Committee’s Report that ambulatory incorporation by reference necessarily entails the subdelegation of legislative power, it acknowledges that recourse to incorporation by reference might benefit from further clarification in legislation. The Government respectfully submits this document as its Response.