What you need to know about the Ontario Court of Appeal’s carbon-tax decision

ANALYSIS: Ontario’s highest court has declared the federal carbon tax constitutional. So what does that mean — and what comes next?
By John Michael McGrath - Published on June 28, 2019
Ontario court
The Ontario Court of Appeal issued a ruling Friday declaring Ottawa’s Greenhouse Gas Pollution Pricing Act constitutional. (Colin Perkel/CP)

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Ontario’s highest court has rendered its verdict on the fate of Canada’s carbon tax, declaring Ottawa’s Greenhouse Gas Pollution Pricing Act constitutional. As was the case in the Saskatchewan Court of Appeal’s April decision, the judges were split: four upheld the law, and one (Justice Grant Huscroft) dissented. The Courts of Appeal in two provinces have now found that the federal government has the authority to impose national regulations regarding the “minimal national standards” on carbon prices and their stringency.

Of course, most observers expect that this case will eventually be heard by the Supreme Court of Canada — albeit not before the next federal election, in October. That said, the ruling is a clear victory for carbon-price advocates.

“This is the nail in the coffin for the provincial premiers fighting carbon pricing,” says Stewart Elgie, a commissioner at Canada’s Ecofiscal Commission, a group that promotes market- and price-based environmental policies. “Two provincial appeal courts have upheld the federal law, and it’s likely the Supreme Court of Canada will do the same.”

The four justices who upheld the constitutionality of the law roundly rejected the arguments that Ontario’s lawyers made in court. They accepted the federal government’s claim that establishing national standards for greenhouse-gas emissions is a matter of “national concern” (a more limited claim to power than the one it made in Saskatchewan) and dismissed the assertion by Ontario and Saskatchewan that, because it can be amended by regulation and not legislation, the carbon price amounts to an unconstitutional tax, thereby violating the principle of “no taxation without representation.”

In his dissent, Huscroft said that even the more limited claim to power would compromise provincial sovereignty.

“I appreciate that federalism concerns seem arid when the country is faced with a major challenge like climate change. As long as something gets done, it may seem unimportant which level of government does it,” Huscroft wrote. “But federalism is no constitutional nicety; it is a defining feature of the Canadian constitutional order that governs the way in which even the most serious problems must be addressed…”

At Queen’s Park, the opposition criticized the Progressive Conservative government for allocating $30 million to its judicial battles with Ottawa (and the federal Liberals) over climate policy.

“Doug Ford is wasting piles of Ontario’s money on an expensive court challenge that’s nothing more than a political stunt and a blowhard talking point,” said NDP energy and climate-change critic Peter Tabuns. “But the real danger in Doug Ford’s actions is that he is literally spending Ontario’s money to undermine the battle against the climate crisis.”

Liberal MPP Nathalie Des Rosiers — herself a former law-school dean at the University of Ottawa — concurred, encouraging the new minister of environment, conservation and parks to drop the fight with Ottawa.

“Instead of burying their heads in the sand by focusing on sticker gimmicks, Ford’s Conservatives need to listen to experts and advocates, put a price on pollution and ensure Ontario is on the right side of history,” Des Rosiers said in a release.

No such luck: on Friday afternoon, the government announced it indeed intends to appeal the decision to the Supreme Court of Canada.

“We know, as do the people of this province, that the federal government's carbon tax is making life more expensive for Ontarians and is putting jobs and businesses at risk,” Premier Doug Ford said in a news release. “We promised to use every tool at our disposal to challenge the carbon tax and we will continue to fight to keep this promise."

Elgie, who argued for the constitutionality of the federal carbon tax at the Court of Appeal, says there are two important differences between the Ontario and Saskatchewan decisions: first, he says, the Ontario ruling more clearly explained why greenhouse-gas pollution rises to the level of a “national concern” and allows the federal government to regulate in an area nobody thought to include in the text of Canada’s Constitution in 1867.

But he also points to a second, and potentially farther-reaching, part of the decision, in which the court gives clear permission for “regulatory charges” that aren’t geared simply toward cost-recovery for various government programs. If the price of the regulatory charge is itself doing the work of regulating an activity — the way carbon prices do, by making high-carbon-dioxide goods and services more expensive — the Ontario Court of Appeal says that they pass muster and aren’t unconstitutional taxes.

“This is important because market-based approaches are often the most cost-effective way to address environmental problems,” says Elgie. “Not just climate change, but air pollution, solid waste, water pollution. This decision allows both levels of government to use pricing and market-based approaches as a way to regulate environmental problems.”

If, that is, the Supreme Court of Canada agrees.

Correction: An earlier version of this article indicated that Stewart Elgie is the executive chair of Canada’s Ecofiscal Commission; in fact, he is a commissioner. TVO.org regrets the error.

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