COMMENT: Saskatchewan, Ontario and the constitutionality of a national carbon price

Published 15:20 on September 27, 2018  /  Last updated at 15:23 on September 27, 2018  /  Americas, Canada, Carbon Taxes, Conversations, Views  /  No Comments

Having now each filed in court their arguments against the Canadian federal carbon price, Saskatchewan and Ontario have revealed their hands and their arguments are weak, writes Nathalie Chalifour, an associate professor at the Faculty of Law, University of Ottawa and a member of the Royal Society of Canada’s College of New Scholars.

Nathalie Chalifour is an associate professor at the Faculty of Law, University of Ottawa and a member of the Royal Society of Canada’s College of New Scholars

Having now each filed in court their arguments against the federal carbon price, Saskatchewan and Ontario have revealed their hands. It comes as no great surprise that their arguments are weak – most legal experts agree that Parliament is within its constitutional authority to implement a national carbon price under one or more subject matters, including taxation, criminal law and the national concern branch of peace, order and good government (POGG), which authorizes the federal government to legislate in areas not exclusively assigned to the provinces. Still, there are some interesting surprises in their arguments.

Saskatchewan, for instance, adopts a remarkably centrist view, stating that they would have no constitutional objection to Parliament imposing a uniform national carbon tax. What they object to is the flexibility built into the federal Greenhouse Gas Pollution Pricing Act (GHGPPA), which allows provinces to choose between carbon taxes and cap and trade systems, and the fact that the GHGPPA only applies as a last-resort “backstop” measure if provinces choose to adopt neither system themselves.

Given Saskatchewan’s unrelenting opposition to the federal government’s climate initiatives, its apparent comfort with a “one size fits all” national carbon tax is puzzling. Perhaps the province understands it is fighting a losing battle and revealing its preference for a national carbon tax instead of cap and trade. For Saskatchewan, the benefit of a national carbon tax is that provincially owned resources (such as SaskPower, the provincial utility, which is one of the province’s major emitters) are exempt from federal taxes. If the carbon price is justified as a national concern under POGG, the exemption would not apply.

Ontario argues that GHG emissions are not a matter of national concern because provinces are capable of regulating these themselves and are entitled to make their own choices, up to and including doing nothing. In saying this, Ontario is inadvertently supporting the case for federal jurisdiction. How?

Under the national concern branch of POGG, Parliament has jurisdiction to legislate on matters that have extra-provincial effects. GHGs are the quintessential global pollutants. As a signatory to the Paris Agreement, Canada has chosen to reduce emissions, in part, by implementing a national carbon price (on the basis of research and experience that suggests pricing carbon reduces emissions in a cost-effective way). If a province does not do its part to price carbon, that has implications for Canada achieving the national target. It also undermines efforts being made in those provinces that co-operate. Even if one does not like the tool of carbon pricing, courts do not second guess the wisdom of particular policy choices – rather, they evaluate whether the policy was enacted with authority.

Of course, national concern jurisdiction does not give Parliament carte blanche over broad areas such as “health” or “environment,” but it does authorize federal legislation on discrete, definable subject matters of national significance, including the mitigation of GHG emissions in line with international obligations. Ontario argues that the GHGPPA tries to regulate the “nearly limitless swath of human activity” that emits GHGs – but this statement misconstrues the legislation. The GHGPPA imposes a price on GHG emissions so that they better reflect the costs of those emissions for society (in line with the Organization for Economic Co-operation and Development endorsed polluter-pays principle). And the law was designed to minimize the impact on provincial autonomy by deferring to equivalent provincial laws and, if the backstop measure is needed, returning all revenue to the provinces. As long as there is no direct conflict with federal legislation, provinces are free to regulate (or not) the industrial activities of economic actors within their borders and their jurisdictional authority as they see fit. The enactment of the GHGPPA as a federal law is a textbook exercise in co-operative federalism.

In the end, it looks as if Saskatchewan and Ontario’s complaints are not really about the Constitution, but reflect a politically motivated, foot-stomping show of their unwillingness to do their part in the national and global effort to reduce GHG emissions. The fact that Ontario Premier Doug Ford is turning to the courts for help, when he recently stated he would override a court decision with the notwithstanding clause because he did not agree with the outcome, speaks volumes. Perhaps the biggest irony of all is that the federal government opted to use a carbon price because it is the policy favoured by economists and conservatives because of its efficiency. Yet it is the conservative-led provinces that are making the most noise about it. Meanwhile, these outlier provinces have left Canadian climate policy fragmented and bogged down in costly lawsuits.

This commentary was posted with the permission of Professor Chalifour.

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