Remember constitutional fights? They’re back, thanks to the federal carbon tax

ANALYSIS: Battles over the Constitution have died down since the ’90s — but the fight over the federal government’s carbon tax could bring them back to the fore, writes John Michael McGrath
By John Michael McGrath - Published on Nov 09, 2018
Later this month, Attorney General Caroline Mulroney is expected to release Ontario’s factum in the case against the federal carbon tax. (Mark Blinch/CP)



Canadians of a certain age have developed a nervous twitch actuated by the word constitution, so be kind and don’t read this column aloud.

The battle over the role and jurisdiction of the fundamental structure of Canadian government has cooled off in the years since the Quebec referendum of 1995. There were occasional flare-ups under Prime Minister Stephen Harper over matters technical (the national securities regulator reference) and traditional (Senate reform, anyone?) — but there was nothing like the life-and-death battles of prior decades.

Well, that’s all set to change: the court battles that Saskatchewan and Ontario have launched against Justin Trudeau’s carbon-tax plan could permanently redefine the roles of the provinces and the federal government in Canada.

Ontario is an intervener in Saskatchewan’s reference (provincial and federal governments can basically submit constitutional questions to the courts outside the usual process, for speedier results), and it has also launched its own reference to the Ontario Court of Appeal. It hasn’t made its full arguments — its factum — public in either case, though it is expected to do so later this year. Here are just some of the thorny constitutional issues that provincial courts (and, almost certainly, the Supreme Court of Canada) will have to answer.

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What’s clear: A simple nationwide carbon tax would be bulletproof

It’s important to separate arguments about the carbon tax’s policy merits from arguments about its constitutionality: the courts are being asked whether the specific carbon tax that the feds are implementing is constitutional, not whether it’s a good idea.

Saskatchewan, for its part, has conceded that a straightforward nationwide carbon tax would be entirely within Ottawa’s powers to levy. The Constitution gives the feds the power of “raising of Money by any Mode or System of Taxation” — and a carbon tax that looked like, say, the federal sales tax (which is equal in all provinces, irrespective of any provincial sales tax) would be nearly immune to legal challenges.

But that’s not the carbon tax that Ottawa has built. The federal government is levying a carbon tax only in provinces that don’t already have carbon-pricing plans of their own, ones that comply with guidelines the Liberals have laid out. Saskatchewan is arguing that that’s not allowed.

Can Ottawa apply a carbon tax unequally?

Saskatchewan contends that Ottawa’s unequal application of its carbon tax is unconstitutional, since it effectively allows the federal government to reward or punish provinces based on decisions made within their jurisdictions.

“Such a proposition is fundamentally at odds with the very nature of our federation,” Saskatchewan’s attorney general’s office argues in its factum. “It represents the federal government taking a big brother or an ‘Ottawa knows best’ role which was never envisioned by the framers.”

It’s not a crazy point: the federal carbon tax has implications for all sorts of provincial concerns, from resource extraction to electricity regulation to land-use planning. As long as they don’t breach the Charter or other parts of the Constitution in doing so, provincial legislatures are supposed to be able to make policy without having to look over their shoulders at Ottawa.

But Saskatchewan also concedes that it’s appealing to an unwritten constitutional principle, not something in the text of Canadian law. And a court may decide that the Constitution’s broad but explicit language on taxation — “any Mode or System,” remember — trumps an unwritten principle.

The fact that Ottawa is tailoring its carbon-tax law to different provinces may, in fact, help that law survive the courts.

“As a matter of practical federalism, it has rarely been a problem for the federal government to seek to work co-operatively with the provinces,” says Carissima Mathen, vice-dean of the University of Ottawa’s law school. “So I would be surprised if the court seized on the federal government’s recognition that provinces may themselves seek to tax or regulate certain behaviour as a reason to rule against federal jurisdiction.”

Are carbon-dioxide emissions a “national concern”?        

Last week, Attorney General of Canada’s office responded to Saskatchewan’s arguments with a factum of its own. It argues that the federal Parliament has the authority to regulate and tax greenhouse-gas emissions because such emissions are a “national concern” — and it’s within Ottawa’s powers to preserve “peace, order and good government” throughout the land.

There are two potential problems with an appeal to the “national concern” doctrine, however. In 1997, in R v. Hydro-Québec, the Supreme Court considered whether federal environmental legislation was valid under the same doctrine. The court said no, in part because the power was so broad. In the words of Justice Gérard La Forest:

“Determining that a particular subject matter is a matter of national concern involves the consequence that the matter falls within the exclusive and paramount power of Parliament and has obvious impact on the balance of Canadian federalism.”

In R v. Hydro-Québec, the court still found that federal environmental law was valid — but as criminal law, not as a matter of national concern. In fact, the court explicitly warned against using that doctrine for environmental law, because the doctrine is so all-encompassing that it could allow the federal government to encroach upon provincial domains.

And even if the court were to agree with the feds this time, a strict reading of the national-concern doctrine would suggest that if carbon pricing fits the bill — and thus falls exclusively within federal jurisdiction — then provincial carbon-pricing regimes, such as those in British Columbia and Quebec, are unconstitutional. (Although that’s not what anyone, including the federal government, is arguing as yet.) reached out to several constitutional-law scholars to confirm this understanding of the national-concern doctrine. Nathalie Chalifour, co-director of the Centre for Environmental Law and Global Sustainability at the University of Ottawa, said subsequent decisions in Canadian law since 1997 — which have increasingly emphasized the need for a “co-operative federalism” that allows federal and provincial governments to work on problems concurrently — have made La Forest’s bright-line separation between federal and provincial jurisdictions unlikely to matter: the court could agree that greenhouse gases are a matter of national concern but redefine the doctrine to allow for provincial carbon taxes.

It seems that Ontario will argue greenhouse-gas emissions simply aren’t a matter of national concern. As the government put it, “The regulation of greenhouse gases does not become a matter of ‘national concern’ just because different provinces take different views as to the most effective method to regulate them.”

Attorney General Caroline Mulroney is expected to release Ontario’s factum in the provincial government’s reference later this month, with oral arguments scheduled for April 2019. Oral arguments in Saskatchewan’s reference are scheduled for February, and Ontario is also expected to file a factum in that case.

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