‘Monumental’ carbon tax case lands in court
Federal-provincial battle goes right to heart of Canadian Constitution
Legal experts, government officials and industry leaders will all watch this week as Saskatchewan and Ottawa head to court over the constitutionality of a federally imposed carbon tax.
The federal government is set to impose a carbon levy on provinces that do not have one of their own starting in April.
Ottawa’s price on pollution starts at a minimum of $20 a tonne and rises $10 annually until 2022.
The Saskatchewan Party government has always been opposed to the idea. The province says the tax would hurt the economy and feels its own plan for emissions reductions is sufficient.
Prime Minister Justin Trudeau has promised that most of the money from a national carbon price will be returned to Canadians through rebates and that it’s a necessary mechanism to fight climate change.
The Saskatchewan government has asked the province’s Appeal Court to rule on whether a federally imposed tax is constitutional and two days of hearings are to begin Wednesday.
“There’s no question that it’s a monumental decision in the life of the Canadian Constitution,” said University of Alberta law professor Eric Adams.
“The court hasn’t yet grappled explicitly with climate change as the background context to a constitutional question.”
In court filings, both Canada and Saskatchewan point to the Constitution to show that neither the province nor the federal government has explicit control over the environment, but that it overlaps both jurisdictions.
REGINA Saskatchewan and Canada are set to go head-to-head over the carbon tax at the province’s Court of Appeal on Wednesday, and their lawyers will have plenty of company.
Sixteen interveners are set to argue their positions over two days. Some are backing federal arguments, some prefer the provincial case, while yet others are offering novel arguments on whether Canada can impose its backstop fuel price and energy charges on Saskatchewan.
WHAT ARE THEY DEBATING?
The Saskatchewan government is asking its Court of Appeal for a legal opinion on whether Ottawa’s Greenhouse Gas Pollution Pricing Act is constitutional. It’s called a reference case. While not technically binding, both governments are near certain to comply with the outcome — unless the loser succeeds in kicking it up to the Supreme Court.
Then it happens all over again. The stakes are high. Canada has long said it’s committed to meeting emission targets under the Paris Accord (though it looks likely to miss). It argues a carbon tax — or what it prefers to call carbon pricing — is the most effective way to do it. Saskatchewan says the tax will harm its resource-based economy. Premier Scott Moe has made opposing it one of his signature issues.
WHAT DOES THE CONSTITUTION SAY?
The two sides disagree on that, obviously, or else there’d be little need for a reference case. But they’re better attuned on which parts of the constitution will decide the battle.
The environment doesn’t get a lot of attention in the constitution. It doesn’t appear anywhere in the vital sections that lay out federal and provincial powers. The environment has since been interpreted as a shared jurisdiction: both the federal and provincial government can play some role in regulating it.
What they can’t do, generally, is step on each other’s exclusive areas of jurisdiction. The federal government has the authority to regulate criminal law and inter-provincial trade and commerce, to name just two of its extensive powers. The provinces are supposed to have sole responsibility for regulating property, non-renewable resources and “all matters of a merely local or private nature.”
Ottawa gets everything that’s left over under its peace, order and good government power (abbreviated as POGG). But POGG is even more powerful than that. It allows the federal government to tread on provincial turf when needed to deal with a “national concern” or “national emergency.”
THE PROVINCES
The debate will centre largely on what whether the carbon tax falls on the provincial or federal side of the fence, and whether climate change is such a grave danger that Ottawa can step right over.
Saskatchewan and the feds will also spar over whether the carbon tax is a tax at all. Ottawa has extensive taxing powers, but Regina says the federal government can’t impose a tax selectively based on whether it likes provincial climate policy.
Federal lawyers are trying to parry that attack by claiming carbon pricing isn’t a tax at all, but a regulatory scheme.
That all remains to be argued in court, and three other provinces intend on making themselves heard.
British Columbia is the only province sticking up for the federal government. B.C. has had its own carbon tax, and argues in its court filings that the measure has been effective. But it says its efforts will be for nought if the other provinces can pollute at will.
That’s why it thinks POGG applies.
“Matters truly beyond provincial competence because of collective action dynamics must lie with Parliament,” it wrote in its submission to the court. “The people of Canada are not left without a means to address joint threats because one region might defect: our division of powers is not a suicide pact.”
Ontario and New Brunswick — two of the three other provinces targeted by the federal carbon backstop — are on the opposing side. Both argue that POGG can’t save the tax, which they view as unconstitutional.
New Brunswick calls the carbon tax a “deep intrusion” into matters usually under provincial authority. Ontario says it would “dramatically expand the scope of federal jurisdiction.”
Alberta’s government isn’t involved in the case, but its opposition party is. Not surprisingly, Jason Kenney’s party is siding with Saskatchewan against the tax.
THE ANTI-TAX CRUSADERS
Of all the non-governmental organizations intervening in the case, the Canadian Taxpayers Federation (CTF) comes closest to Saskatchewan’s own argument. Like the province, it views Ottawa’s “carbon price” as a tax — and the CTF sure doesn’t like taxes.
It argues that Saskatchewan has poor “energy affordability,” with families struggling to heat their homes or drive to work.
“A carbon tax will increase the costs of these essential energy goods, and will thus drive even more Saskatchewan families closer to, or further into, energy poverty,” it says.
But that, in itself, is not a constitutional argument. The CTF combines those points with a claim that carbon taxes aren’t effective in reducing energy use, since Saskatchewan residents have few alternatives. In the view of the CTF, that means carbon pricing isn’t about affecting behaviour, but collecting revenue. In other words, it’s a tax.
From there, the CTF takes up another provincial line. Only Parliament can impose taxes, but it was left to the federal cabinet to decide where the carbon tax would apply to Saskatchewan under delegated authority.
FARMERS TAKE OPPOSING VIEWS
One other group is set to make the affordability case: Farmers.
Ottawa has exempted the agricultural sector from the carbon tax on fuel, but the Agricultural Producers Association of Saskatchewan (APAS) says that’s not good enough. It warns that the tax will be paid by those who sell fertilizers, herbicides, seed and other vital inputs.
“It is impossible for farmers to pass on increased costs to purchasers of their products,” the association’s filing says. “Their profit margins simply shrink or disappear altogether.”
But APAS isn’t taking the same tack as the taxpayers. It seems to agree with Ottawa that the carbon tax is regulation, just not the kind of regulation the federal government can impose. It argues that the feds are stepping into the province’s right to manage “intra-provincial trade and commerce” and “local property and civil rights.”
In other words, it’s on the wrong side of the fence.
Other farmers are taking Ottawa’s side, however. The National Farmers Union (NFU) is part of a group of mostly pro-environment interveners who’re defending the tax. The union believes climate change could bring increasingly unpredictable weather that will cost farmers far more than they’ll pay for more expensive insecticide.
“Which is more disruptive to a family farm: the possibility of slightly increased cost or a failed harvest because of drought or hail?” the group’s lawyer asks.
ENVIRONMENTALISTS TO TAKE MULTI-PRONGED APPROACH
The court has six separate filings from environmental groups. While all view climate change as real and devastating, they seem to be taking a divide-and-conquer approach to constitutional analysis.
The David Suzuki Foundation begins by calling climate change an “existential struggle.”
That allows the group to rely on POGG, which, it will be recalled, allows Ottawa to step in during a national emergency.
“The warming climate has already unleashed floods, wildfires and other extreme weather events on Canadians,” the foundation writes. It only sees more disaster ahead.
Two other climate groups see ample wiggle room for Ottawa, even without resorting to POGG. The Canadian Environmental Law Association and Environmental Defence Canada say the carbon tax can be viewed as an exercise in criminal law, a clear federal power.
All an act needs to get there is a “valid criminal law purpose,” as well as prohibitions and penalties. In their view, the carbon tax ticks all those boxes.
The Intergenerational Climate Coalition puts more emphasis on what are called constitutional principles.
Saskatchewan uses that strategy itself, saying the constitution (and the all-important POGG) must be interpreted in light of the principle of federalism that underlies it. But the coalition counters that there are other principles, just as fundamental.
It points to minority rights. Children are one minority, it says, as are those who haven’t yet been born.
“A commitment to protect youth and future generations lies at the heart of our constitutional project,” its lawyers write.
“Future generations have no votes today. They have no say in the decisions that determine our GHG emissions, but they will be forced to bear the heaviest environmental, economic, and health burdens from those emissions.”
A VIEW FROM DENESULINE TERRITORY
The most innovative argument may come from the Athabasca Chipewyan First Nation, a Denesuline band with traditional territory in northern Saskatchewan.
It doesn’t focus on provincial or federal powers, or even on minority rights.
Instead, it reinterprets the idea of a national emergency to include a First National emergency. Climate change may be bad for southerners, but the Denesuline believe it will be far worse for their traditional lifestyle.
“It threatens to push Aboriginal peoples past the edge of survivability into oblivion,” they argue.
The band’s filing points to estimates from Environment and Climate Change Canada that suggest parts of their territory could see temperature increases of up to 7.1 C by 2020. They say that could dry up their river corridors, thaw out their winter roads and put pressure on the caribou herds they’ve hunted for millennia.
“Will ACFN’S Rights to hunt, fish, and trap still be exercisable if climate change is left unchecked?” their submission asks. If not, that would be a violation of their treaty rights, which are protected under Section 35 of the constitution.
The Denesuline say their identity is tied up with those practices. Climate change could present them with an impossible choice: give up their lifestyle, or court poverty and starvation.
“The Aboriginal peoples who live in the North are tough — but they are not invincible,” their filing says.
Saskatoon or suburban Edmonton cannot be their home, the submission adds. For the Denesuline, the prospect of losing their culture counts as a national emergency.
A carbon tax will increase the costs of these essential energy goods …