Federal carbon tax law gets top-court grilling

Opening arguments heard Tuesday

OTTAWA • In a case that will further define the scope of the federal government’s power over provinces, the Supreme Court of Canada heard opening arguments on Tuesday about the constitutionality of the federal carbon pricing law passed in 2018.

The legislation created a “backstop” for carbon pricing by requiring provinces to meet a threshold through their own chosen method — or else have a carbon price imposed by Ottawa.

Provincial courts have heard three appeals of the legislation, and the results have been mixed. The Ontario and Saskatchewan appeal courts upheld the legislation, called the Greenhouse Gas Pollution Pricing Act. The Alberta appeal court concluded it was an unconstitutional intrusion of federal powers.

The case is now before the Supreme Court, which was originally scheduled to hear it in the spring but was delayed by the COVID-19 pandemic.

On the first of two days of oral arguments, the nine justices — each separated at their seats by plexiglass barriers — heard from lawyers representing Saskatchewan, Ontario and Alberta, who all oppose the legislation, and from British Columbia and the federal government, who support it.

“This legislation is an Ottawa-knows-best, big brother type of legislation: We’re going to tell you how to do it, and we’re going to tell you the means to do it,” argued Saskatchewan lawyer Mitch McAdam.

The case goes to the heart of Canadian federalism and how the powers are divided. The Constitution Act of 1867 doesn’t specify which level of government is responsible for the environment; over time, it has become an area of shared jurisdiction.

At issue is whether carbon pricing is subject to the

“national concern doctrine,” one of the legal methods by which the federal government can exercise jurisdictional power not explicitly granted to it.

Guy Pratte, a prominent lawyer brought in to argue the federal government’s case, told the justices that climate change threatens the world, that greenhouse gases are well-defined pollutants that contribute to it, and that such gases can’t be contained within provincial borders.

“The legal question that these facts present, which were unknown in 1867, is this: Does the Canadian constitution allow Parliament to enact, as a matter of national concern, legislation which establishes minimum national standards integral to nationwide reduction of greenhouse gases?” Pratte told the justices. “The Attorney General of Canada gives an unequivocal yes to that question.”

But the law’s opponents argued that the law goes far beyond simply establishing a minimum standard, and instead gives the federal government sweeping powers to regulate anything that produces emissions.

“It’s trying to regulate industrial policy, housing policy, municipal policy, how often you drive your car, how many widgets each factory produces, which industries are trade-exposed and therefore more important,” argued Josh Hunter, Ontario’s lawyer. “It is doing it for the purpose, I agree, of trying to mitigate climate change, reduce greenhouse gas emissions, but it does it through a very invasive measure that gives almost absolute discretion to the (federal cabinet).”

At least two Supreme Court justices, Malcolm Rowe and Russell Brown, appeared sympathetic to the argument that the law’s section on heavy emitters goes too far into sector-by-sector industrial policy, as opposed to simply setting a minimum national standard.

“Let’s say you’ve made a policy decision: The oilsands is over, there will be no more new oilsands project,” said Rowe at one point, speaking to B.C.’s representative. “You just build in costs for emissions for that sector — which you define yourself, the federal cabinet — and you define the cap and you put it at a level that (the projects) can’t make money. That’s known in my book as industrial policy, in addition to limiting greenhouse gas emissions ... The federal cabinet picks winners and losers among heavy emitters.”

But other justices pushed back strongly on the law’s critics — especially when Saskatchewan’s lawyer said the national concern doctrine is an illegitimate power grab by the federal government.

“The problem with this is, as I understand it, a systemic one,” Justice Michael Moldaver responded “If one province decides not to do it, if one province decides to go rogue, this will have an impact potentially on the whole of Canada and other provinces that are trying their best. And that cannot be guaranteed among the provinces. That seems to me to be the overriding critical concern here that allows the federal government, with all those context factors that I’ve mentioned, to come in and say: ‘You know what, this is a matter of national concern.’”

Justice Rosalie Abella made a similar point during an exchange with Ontario’s lawyer, and while sitting between plexiglass panels herself, made the point that provinces “don’t have plexiglass at their borders” when it comes to their emissions.

“The effect of not choosing to engage in strategies that are ultimately helpful to the rest of the country has enormous implications,” Abella said. “That’s why we have the national concern test.”

The hearing continues on Wednesday with arguments from third-party interveners in the case.

Guy Pratte