The good, the bad, and the ugly of the carbon-tax court win

ANALYSIS: The federal carbon tax has survived its first legal test, but at least two more are coming. So what does the Saskatchewan decision mean for its future?
By John Michael McGrath - Published on May 6, 2019
Regina Courthouse in Saskatchewan
The Court of Appeal for Saskatchewan last week determined that Ottawa had not overstepped its constitutional limits by introducing a national carbon price. (Masalai/wikipedia.org)

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The federal carbon tax that kicked in on April 1 in Ontario, Saskatchewan, Manitoba, and New Brunswick has survived its first legal test: the government of Saskatchewan had asked the highest court in that province to decide whether Ottawa had overstepped its proper constitutional limits by introducing a national carbon price — and, last week, the Court of Appeal said no, the tax on greenhouse-gas emissions is fairly within the federal government’s power.

There are, however, at least two more court decisions in the tax’s future: Ontario has a case currently before our own Court of Appeal, and, in any event, Saskatchewan premier Scott Moe has said that his government will take its case to the Supreme Court of Canada. And the Supremes themselves won’t actually have the last word: voters will effectively decide in this fall’s election whether they want a federal tax.

That said, various elements of the Saskatchewan court’s decision could well end up being relevant to Ontario and, eventually, to the Supreme Court hearings.

The good

The obvious good news, if you support strong national policy to address climate change, is that the federal carbon tax has survived its first rigorous judicial test. A majority on the court dismissed arguments from Saskatchewan that the government was overstepping its powers in a way that threatened to smother provincial jurisdiction. Saskatchewan had argued that the basic constitutional principle of federalism — that the national and provincial governments respect each other’s separate jurisdictions — should kill the tax. The court disagreed, saying that “the principle of federalism is not a free-standing concept that can override an otherwise validly enacted law. Rather, it is a value to be taken into account when interpreting the Constitution.” The court found that setting a minimum national threshold for carbon pricing meets the test of a “national concern,” one of the categories of federal power.

The majority also dismissed the argument that the carbon price was not a regulatory charge but a tax and that it therefore broke the Constitution’s rules on when a government can impose new taxes (an argument also presented in court by Ontario last month). The court found that, whatever we call it, the carbon tax isn’t a “tax” in the constitutional sense of the word, because its primary purpose is to prod the provinces into imposing their own price on greenhouse-gas emissions. In a perfect world, the feds wouldn’t collect any revenue from it at all.

The bad

The majority opinion may have found the carbon tax constitutionally legitimate, but the 3-2 decision reveals a divided court. If the Liberals in Ottawa were hoping for a slam-dunk, they didn’t get it. In their minority decision, the two dissenting justices didn’t dismiss the need for climate policy, and they didn’t even argue that no carbon tax could be constitutionally permissible. Instead, they said that the specific carbon price implemented in this specific manner stretches the Constitution in ways that can’t be allowed.

The two dissenting justices seemed to suggest that, instead of arguing for a novel “national concern” power, the feds could have achieved their purpose using already-settled areas of federal power: “Excise taxes and criminal legislation often have an objective of this nature. Furthermore, these are measures that come within [the federal] Parliament’s enumerated heads of power and therefore their use respects Canadian federalism.”

Obviously, these justices were in the minority in the Saskatchewan court. But it’s possible that there will be more likeminded jurists at the Supreme Court.

The ugly (or at least messy)

Ottawa may have swayed the court, but its arguments were kind of a mess, as the opinion reflects. The court explicitly rejected the specific “national concern” argument put forth by federal lawyers, who tried to disavow a broader definition of federal power (presumably thinking that a more modest one would be better able to survive judicial review). Instead of claiming the power to regulate all greenhouse-gas emissions everywhere in Canada, they tried to limit federal jurisdiction to the “national cumulative dimension” of GHG emissions. The majority basically found that this was a distinction without a difference: there’s no clear line between regulating one tonne of carbon-dioxide and 1 million, as far as constitutional powers go.

“All things considered, it is not possible to conclude ‘GHG emissions’ or, as Canada puts it in oral argument, ‘the cumulative dimensions of GHG emissions’ fall within federal jurisdiction by virtue of the national concern doctrine,” the majority declared.

The three justices were, however, convinced by arguments from British Columbia’s attorney general. B.C. contended that, under a more limited form of national concern, the feds had the power to set a minimum threshold for carbon prices countrywide.

That means that, if the carbon-price fight had been left to Ottawa alone, it might very well have died in court. The majority of justices didn’t accept the arguments for federal power as made by federal lawyers. Instead, it was the arguments from the one and only province on Canada’s side that carried the day. Climate advocates may want to send flowers to Victoria this week.

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