Carbon tax headed to Supreme Court of Canada

The Greenhouse Gas Pollution Pricing Act is heading to the Supreme Court of Canada in late March. With three split appellate court decisions on the Act’s constitutionality, the carbon tax’s judicial record stands at eight justices to seven.

On February 24, the Alberta Court of Appeal bucked the trend of the Saskatchewan and Ontario rulings and in a 4/1 decision found the federal carbon tax to be unconstitutional. The majority of the court found the act was not an issue of national concern falling under Parliament’s authority for peace, order and good government (POGG), and called the act a “constitutional trojan horse.” It found that the pith and substance of the act was to regulate greenhouse gas emissions, and that giving the federal government exclusive authority over GHG emissions would conflict with the province’s jurisdiction to regulate its own natural resources.

“It's very interesting. If we look across the country now, we've basically got eight justices who have said that the greenhouse gas pollution pricing act is constitutional, and we have seven who have said it's not,” says Martin Ignasiak, a partner at Osler Hoskin & Harcourt LLP and national co-chair of the firm’s regulatory, environmental, aboriginal and land group.

“Looking at the majority decision in the Alberta Court of Appeal, and including Justice Wakeling’s concurring reasons, I think they provide compelling arguments as to why upholding the constitutionality of the act is really going to change the constitutional balance in the country on a go-forward basis,” he says.

In the Court of Appeal of Alberta’s Reference re Greenhouse Gas Pollution Pricing Act, 2020 ABCA 74, the Attorney General of Canada argued carbon pricing was justified under s. 91 of the Constitution Act, 1867. The section allows the federal government to make laws for the peace, order and good government of Canada in all matters not assigned exclusively to the provinces.

But the majority of Alberta’s appellate court found the regulation of GHG emissions fell under several exclusively provincial matters, including the authority of the province to make laws to manage and develop its natural resources, regulate pollution through its management of public lands and tax the consumption of pollution-causing products such as gasoline, Osler’s Ignasiak, Maureen Killoran, Jennifer Fairfax and Olivia Dixon wrote in a bulletin.

The Alberta court’s findings were in contrast to the Saskatchewan Court of Appeal decision from last May, in which the majority found the purpose of the carbon tax – “the establishment of minimum national standards of price stringency for GHG emissions” – fell under the Parliament’s POGG power.

The Ontario Court of Appeal ruled similarly in June. A majority of that court found climate change would have a “particularly acute” impact on Canada and “the need for a collective approach to a matter of national concern, and the risk of non-participation by one or more provinces, permits Canada to adopt minimum national standards to reduce GHG emissions.”

The Supreme Court of Canada will hear appeals of the Saskatchewan and Ontario Court of Appeal rulings this month. Attorney General for Saskatchewan v. Attorney General of Canada will be heard on March 24, and Attorney General of Ontario v. Attorney General of Canada on March 25.

The dissent from Ontario’s majority decision and the majority in Alberta were “fairly aligned” in their reasoning, as was Alberta’s dissenter and Ontario’s majority, Ignasiak says. He adds the Alberta court was correct in looking at environmental regulation, including GHG regulation, as a tool that can potentially be used by the feds to “fundamentally change the constitutional balance of power.”

The Supreme Court of Canada rulings on the references will be among “the most important decisions to come out of the Supreme Court,” he says.