Supreme Court clips wings of CRTC

The Supreme Court, in a 5 to 4 decision, pared back the CRTC’s ability to regulate yesterday. The decision will also have the effect of reducing the lifetime of over-the air television. Both results are probably good. The text of the decision is here.

The issue was whether the CRTC would have authority to impose a fee for carriage on cable companies for carrying signals of “over the air” television – local broadcast signals. Right now the cable companies are exempt from paying anything. The CRTC sought a reference to the federal court for an opinion on the legality of such an idea. (The fee has never been imposed, largely because a majority of CRTC Commissioners opposed the idea). The purpose of such a fee scheme was to try to shore up the declining revenues of over-the-air television, on which regulatory burdens fall for Canadian content. With less revenue from advertizing, they have less ability to develop Canadian programming.

Thus another attempt to reach into Canadians’ pockets for cultural subsidies failed. More important, however, was the reasoning of the majority of the Court.

Previously, the CRTC had only to argue that if something it proposed was consistent with the broad policy objectives imposed on it by Parliament, then the Courts would give the measure its approval. The CRTC did not have to argue that its regulatory powers specifically encompassed a particular scheme. It had only to argue that scheme x was consistent with policy directions a, b or c. Legal scholars may quibble but that is the essence of it. The Supreme Court gave broad latitude to the CRTC, and the Commission ran with it.

The majority of the Court said this was a formula for an unfettered reach of regulation, and was inconsistent with the rule of law, in effect. In future, the CRTC would have to tie its regulatory scheme more tightly to the powers of regulation and licensing expressly granted it by the Broadcasting Act.

The Broadcasting Act can’t be interpreted to give the CRTC that power, Justice Marshall Rothstein wrote for the majority.

“First, a contextual reading of the provisions of the Broadcasting Act themselves reveals that they were not meant to authorize the CRTC to create exclusive rights for broadcasters to control the exploitation of their signals or works by retransmission,” Rothstein wrote.

“Second, the proposed regime would conflict with specific provisions enacted by Parliament in the Copyright Act.”

 

The actual headnote (summary) of Rothstein’s position is given here.

 

No provision of the Broadcasting Act expressly grants jurisdiction to the CRTC to implement the proposed regime, and it was not sufficient for the CRTC to find jurisdiction by referring in isolation to policy objectives in s. 3 and deem that the proposed value for signal regime would be beneficial for the achievement of those objectives.  Establishing any link, however tenuous, between a proposed regulation and a policy objective in s. 3 of the Act cannot be a sufficient test for conferring jurisdiction on the CRTC.  Policy statements are not jurisdiction‑conferring provisions and cannot serve to extend the powers of the subordinate body to spheres not granted by Parliament.  Similarly, a broadly drafted basket clause in respect of regulation making authority (s. 10(1)(k)), or an open‑ended power to insert “such terms and conditions as the regulatory body deems appropriate” when issuing licences (s. 9(1)(h)) cannot be read in isolation, but rather must be taken in context with the rest of the section in which it is found.  Here, none of the specific fields for regulation set out in s. 10(1) pertain to the creation of exclusive rights for broadcasters to authorize or prohibit the distribution of signals or programs or the direct economic relationship between BDUs and broadcasters.  Reading the Broadcasting Act in its entire context reveals that the creation of such rights is too far removed from the core purposes intended by Parliament and from the powers granted to the CRTC under that Act.

 

In the body of the decision, Mr. Justice Rothstein wrote:

[27] …    Jurisdiction-granting provisions are not analogous to general regulation making or licensing authority because the former are express grants of specific authority from Parliament while the latter must be interpreted so as not to confer unfettered discretion not contemplated by the jurisdiction-granting provisions of the legislation.
[28]             That is the fundamental point.  Were the only constraint on the CRTC’s powers under s. 10(1) to be found in whether the enacted regulation goes towards a policy objective in s. 3(1), the only limit to the CRTC’s regulatory power would be its own discretionary determination of the wisdom of its proposed regulation in light of any policy objective in s. 3(1).  This would be akin to unfettered discretion.  Rather,

. . . discretion is to be exercised within the confines of the statutory regime and principles generally applicable to regulatory matters, for which the legislature is assumed to have had regard in passing that legislation.  (ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140, at para. 50, per Bastarache J.)

 

 

Schemes of regulation which were approved in the past might have a higher burden of proof if they were challenged or imposed in the future. For example, cable companies  substitute  Canadian advertizing for American advertizing,  thus increasing the reach of Canadian advertizing when we watch a  program on a US channel. Some imaginative measures like this underlie the regulation of Canadian broadcasting. You will look in vain for specific mention of authority for them in the Broadcasting Act. Would such measures pass the new test?

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