Opinion: Ontario should argue the federal carbon tax is primarily a regulatory scheme focused on generating revenue and redistributing wealth
By Jim Karahalios
It’s no surprise Ontario Premier Doug Ford’s government lost its constitutional challenge of Justin Trudeau’s Greenhouse Gas Pollution Pricing Act at the Ontario Court of Appeal. Instead of going to court to fight against carbon taxes, or carbon pricing, as Doug Ford had promised, the Ford government fought for its very own carbon pricing plan as a suitable replacement.
Trudeau’s act is vulnerable to a constitutional challenge because it creates a permanent intrusion on provincial jurisdiction that can only be justified by satisfying the Peace, Order and Good Government (or POGG) provision of the constitution.
The act creates a regulatory scheme that allows the federal cabinet to set a carbon price to be imposed on sales of most combustible fuels (in Part One of the act) and emissions of designated industrial facilities (in Part Two).
In determining whether the act satisfies POGG, first the court had to settle on the true meaning, purpose, and legal effect of the legislation (or in legal terms its “pith and substance”).
The Ford government argued the act’s pith and substance was to use carbon pricing to “regulate greenhouse gas emissions” and conceded that this was a matter of national concern.
This cast the narrative for the rest of the legal analysis in the federal government’s favour. Not surprisingly, the federal government agreed with Ontario’s characterization.
It was a bizarre position for the Ford government to take, considering it contradicts everything Ford has said about carbon pricing and carbon taxes: that they are a “cash grab” that will “do nothing for the environment.”
After thus conceding pith and substance in the federal government’s favour, Ontario’s case hinged on trying to satisfy the court its own “made-in-Ontario” carbon-pricing plan, a watered-down carbon copy of Trudeau’s plan, would meet the federal act’s emission reduction targets.
This was a strategic error that handcuffed the Ford government in the rest of its legal arguments under the POGG analysis. It made Ontario’s legal strategy appear dishonest at worst or contradictory at best.
Ford calls his replacement carbon pricing plan “Industrial Emission Performance Standards.” It does not include a fuel charge as in part one of the federal act; instead, it promises to apply Trudeau’s carbon price on industrial facilities, as in part two, though on a greater number of facilities.
In taking this approach, the Ford government was in effect trying to persuade the court to accept the application of a less stringent carbon price in Ontario than Trudeau’s act requires, but one that is more stringent than imposing just part two of Trudeau’s act alone.
Unfortunately, this legal strategy fell apart when the majority of the court rejected the characterization of the act as being too broad. Without an alternative view offered from Ontario, four of the five judges made up their own narrower characterization based on the version already provided. Three judges settled on “minimum national standards to reduce GHG emissions,” while the fourth offered a slight variation.
Once the legislation was characterized in this manner, Ontario’s POGG challenge was doomed.
An alternative approach would have been for the Ford government to characterize the act as a regulatory scheme that primarily serves to generate revenue and redistribute wealth. This would have allowed for a comprehensive series of arguments to be put forward against it at every stage of POGG and would have answered the court majority’s most pressing concern on whether the remaining provinces would suffer adverse effects if Ontario did not participate in the national carbon pricing scheme.
The answer to that question is: no. Ottawa has promised that its carbon price will not exceed $50 per tonne, which carbon tax proponents have unequivocally stated is not high enough to achieve the federal government’s stated emission reduction targets.
Justice Huscroft, in his dissenting opinion, provided another observation that supports the argument that the act is not primarily designed to reduce greenhouse gas emissions. He pointed out that the federal government could have used other ways (such as its criminal law powers) to set emission limits without intruding on provincial jurisdiction.
Along with challenges from other provinces, Ontario’s case will now be considered by the Supreme Court of Canada.
If it is to have any chance of success, Ontario should align its legal strategy with Ford’s political rhetoric and stop arguing its watered-down copy of Ottawa’s carbon pricing plan is a suitable alternative to Trudeau’s carbon tax. It should instead argue the federal legislation is primarily a regulatory scheme focused on generating revenue and redistributing wealth, not reducing greenhouse gas emissions.
Jim Karahalios, a lawyer, holds a graduate degree in civil engineering, and is the founder of AxeTheCarbonTax.ca.