Doug Ford loses carbon tax court battle with Trudeau

Ontario's top court has upheld a key plank of the federal government’s climate change plan, delivering another blow to conservative premiers across Canada.

In a 4-1 ruling on Friday, the Ontario Court of Appeal concluded that it was within Parliament’s powers to put a price on carbon pollution and to collect revenues from polluters in provinces that fail to meet a national standard.

The Trudeau government introduced such a plan through legislation in April called the Greenhouse Gas Pollution Pricing Act.

In its ruling, the court dismissed arguments from Ontario Premier Doug Ford’s Progressive Conservative government. Instead, it agreed that federal politicians had the right "to legislate on matters that are of national concern for the 'Peace, Order, and good Government' of Canada."

The ruling is the second court decision to throw out efforts by conservative premiers to scuttle Prime Minister Justin Trudeau’s climate change plan. The Saskatchewan Court of Appeal also rejected the provincial government’s arguments against federal carbon pricing standards in a separate case that wrapped up on May 3.

The Ontario court said that climate change is a matter of "national concern" and that "the risk of non-participation by one or more provinces, permits Canada to adopt minimum national standards to reduce GHG emissions."

"The Act does this and no more," the court decision reads. "It leaves ample scope for provincial legislation in relation to the environment, climate change and GHGs, while narrowly constraining federal jurisdiction to address the risk of provincial inaction."

The 93-page decision found that provinces could not reduce greenhouse gas emissions on the scale that the climate crisis required. “Without a collective national response, all they can do is prepare for the worst,” the decision reads.

Federal Environment Minister Catherine McKenna celebrated the ruling, calling it “good news for every Canadian who believes that climate action is urgent,” while newly-appointed Ontario Environment Minister Jeff Yurek said the province was “disappointed” and would continue spending public money on the court battle by appealing to the Supreme Court of Canada.

“Ontario doesn't need a carbon tax to address climate change,” Yurek said in a statement.

(Saskatchewan Premier Scott Moe has also vowed to challenge the carbon tax in Canada's Supreme Court, which has tentatively been set for a Dec. 5 hearing.)

Lawyers and environmental advocates hailed the ruling as a landmark moment in environmental and constitutional legislation.

Athabasca Chipewyan First Nation Chief Allan Adam was “grateful” the court recognized the unique impact the climate crisis has on Indigenous peoples in Canada.

“Thugs like Doug Ford have no regard for the future of this planet or our children,” Adam said in a statement. “For the people of Canada’s north, the climate crisis is not an academic matter ⁠— it is an existential threat. The rapidly changing environment is making it increasingly difficult for us to continue living in a region where we have resided for ten millennia.”

Amir Attaran, the First Nation’s representative lawyer in the case, said the ruling was “the most far-reaching decision in Canadian history on the role of federal jurisdiction.”

“Never has a decision in Canada's history said that the setting of minimum standards is something the federal government can do in terms of environment,” said Attaran, who is part of the environmental law firm Ecojustice. “This is the most important environmental constitutional case ever in our history. This is the high water mark.”

Lisa Demarco, a Toronto environmental lawyer who represented the International Emissions Trading Associations in the case, said the ruling was “a seminal, authoritative decision specific to environmental law in Canada” that will be relied upon internationally.

“This (ruling) has the ability to stop the use of the law — the Constitution — to delay real and meaningful action on climate change by both federal and provincial governments,” she said.

Dr. Stewart Elgie, professor of law and economics at the University of Ottawa, agreed and added that this ruling was “the legal nail in the coffin of the Conservative premiers fighting carbon pricing.”

‘They are not taxes’: Ontario Court of Appeal

The federal government’s carbon pricing plan includes a levy on fuel and a separate system for heavy industrial emitters that sets a price based on the average emissions intensity of production in various sectors.

Ninety per cent of the revenues from the fuel levy will be returned to individuals and household via tax rebates — a household of four in Ontario gets $203 this year, according to Canada Revenue Agency — while the remaining 10 per cent will be given to businesses, schools, municipalities and other groups for further emissions-reduction efforts.

On Friday, the Ontario court found that the federal carbon price serves as a backstop — a “charge” — and not a tax.

"The charges imposed by the Act are themselves constitutional. They are regulatory in nature and connected to the purposes of the Act. They are not taxes," the court concluded.

The decision also noted that the impact of the climate crisis on Indigenous communities is disproportionately severe.

“No one province acting alone or group of provinces acting together can establish minimum national standards to reduce GHG emissions. Their efforts can be undermined by the action or by the inaction of other provinces. Thus, the reduction of GHG emissions cannot be dealt with in a piecemeal manner. It must be addressed as a single matter to ensure its efficacy. The establishment of minimum national standards does precisely that" - Ontario Court of Appeal

Ontario and Saskatchewan are among four provinces led by conservative-leaning governments that are challenging the federal carbon pricing plan. The others are Manitoba and New Brunswick.

These four provinces declined to implement their own pricing schemes to meet the federal threshold for carbon emissions, forcing the federal government to step in with the “backstop” system. (Alberta is set to join this list in January, after newly-elected Premier Jason Kenney scraped the province’s carbon tax when he took power in May.)

The four dissenting provinces were also among the 14 interveners — along with Indigenous groups and environmental and business organizations — who lined up on different sides to debate the federal law.

Dissenting judge denies climate emergency

Ontario Premier Ford campaigned aggressively against the federal efforts to make polluters pay during his run for Progressive Conservative leader, repeatedly calling the carbon charge an illegal tax. The issue has been a staple of his government’s first year.

Ford’s $30-million legal challenge began weeks after it started cancelling climate change policies, enacted under the province’s previous Liberal government, such as its participation in an international cap and trade system with Quebec and California. The system set standards requiring polluters to pay for carbon emissions based on a price set by the market.

Ford also cancelled seven clean-energy programs that Ottawa had agreed to co-fund, through the Low Carbon Economy Fund, prompting Trudeau’s government to suspend plans to transfer the money to Ontario.

Friday’s ruling took note of this, and found that, in its arguments, the province did not suggest that the carbon tax would conflict with any existing or proposed emissions-reducing legislation or measures. “This is a good indication that the Act leaves generous room for provincial jurisdiction in relation to these matters and that the Act simply does what the provinces are constitutionally unable to do,” the court said.

In its ruling, the court confirmed that the environment “is not a ‘matter’ of exclusive jurisdiction, resting with one or other level of government. Legislatures and the courts have treated it as an area of shared jurisdiction.”

“Establishing minimum national standards to reduce GHG emissions is a new matter that was not recognized at Confederation,” the ruling says, before recognizing that it has now become a matter of national concern, “given the consequences of climate change.”

“The Act is the product of extensive efforts – efforts originally endorsed by almost all provinces, including Ontario – to develop a pan-Canadian approach to reducing GHG emissions and mitigating climate change. This, too, reflects the fact that minimum national standards to reduce GHG emissions are of concern to Canada as a whole. The failure of those efforts reflects the reality that one or more dissenting provinces can defeat a national solution to a matter of national concern" - Ontario Court of Appeal

In the only dissenting opinion, Ontario Justice Grant Huscroft says climate change did not amount to an "emergency,” and took issue with allowing the federal government to have comprehensive powers to regulate greenhouse gas emissions however they see fit.

"Carbon pricing is only one approach to addressing [greenhouse gas] emissions — one of many policy options that might be chosen, whether alone or as part of a broader strategy," Huscroft wrote. "There are many ways to address climate change and the provinces have ample authority to pursue them."

‘There is no dispute that global climate change is taking place and that human activities are the primary cause’

Friday’s majority ruling discussed in great detail how Canada has been “disproportionately impacted by global warming,” noting that “temperatures in Canada have been increasing at roughly double the global average rate,” which have in turn led to extreme climate events occurring across the country.

“There is no dispute that global climate change is taking place and that human activities are the primary cause,” the majority decision says, noting that the impacts of the climate crisis had served as “uncontested evidence” in the proceedings.

“The uncontested evidence before this court shows that climate change is causing or exacerbating: increased frequency and severity of extreme weather events (including droughts, floods, wildfires, and heat waves); degradation of soil and water resources; thawing of permafrost; rising sea levels; ocean acidification; decreased agricultural productivity and famine; species loss and extinction; and expansion of the ranges of life-threatening vector-borne diseases, such as Lyme disease and West Nile virus. Recent manifestations of the impacts of climate change in Canada include: major wildfires in Alberta in 2016 and in British Columbia in 2017 and 2018; and major flood events in Ontario and Québec in 2017, and in British Columbia, Ontario, Québec and New Brunswick in 2018. The recent major flooding in Ontario, Québec and New Brunswick in 2019 was likely also fueled by climate change" - Ontario Court of Appeal

According to the latest projections from Environment Canada, published last December, current policies aren’t enough to meet Canada’s target to slash emissions to 30 per cent below 2005 levels by 2030.

The ruling makes clear that the contested issue wasn’t about the science of climate change and its impacts. It agrees with statements by Ontario’s lawyers who argued during hearings in April that the case was about whether Ottawa's price on emissions would unbalance the “constitutional architecture” in Canada, by allowing the federal government to intervene in provincial powers.

The decision takes into account that the Saskatchewan Court of Appeal found in a 3-2 ruling that the Greenhouse Gas Pollution Pricing Act “falls within the legislative authority of Parliament. It is not unconstitutional in whole or in part."

In its 155-page decision, the Saskatchewan court ruled that establishing minimum national standards for a price on greenhouse gas emissions also falls under federal jurisdiction. The judges noted that Ottawa has the power to impose its carbon price under a section of the Constitution that states “Parliament can pass laws in the name of peace, order and good government."

Ontario’s ruling goes beyond this. The decision takes issue with the way both the province and the federal government defined the powers of the carbon pricing act, finding that neither provided a “persuasive” scope.

Ontario’s definition ⁠— “a comprehensive regulatory scheme for the reduction of greenhouse gas emissions from all sources in Canada” ⁠— was too broad, the court ruled. And Canada’s description ⁠— that the carbon price addresses “cumulative dimensions of GHG emissions” ⁠— was too vague and confusing, the court said.

“It’s very rare that you see a court actively rejecting both parties and relying on intervenors,” Demarco said in an interview.

“Legally, it provides some additional clarity and force on the test that you apply when the federal government is seeking to implement the ‘peace, order, and good government’-national concern clause to their policies,” she said. “It makes clear that, to use that section, you have to characterise it narrowly and you can’t upset the balance of power (between provinces and the federal government).”

Elgie, the University of Ottawa professor, said the ruling accomplished two competing goals: giving the federal government authority to deal with the international and national problem of climate change, but also allowing provinces to deal with it locally.

“This decision lets provinces pass their own laws tailored to their own circumstances as long as they meet the national standards,” he said. “It’s not about which side won. It’s a decision that allows both levels of government to play roles in their respective authorities and act on climate change.”

‘Rogue actor’

Ontario opposition leaders hope the decision will serve as a wake-up call to the Ford government.

“I hope that the new minister of the environment, conservation and parks will take this decision as a signal to change course on the environment,” said outgoing Liberal MPP Nathalie Des Rosiers in a statement. “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.”

Green Party Leader Mike Schreiner said he was “relieved the courts have struck down the premier’s attempts to make Ontario a rogue actor in the fight against the climate crisis.”

“So far the premier has done more to invite climate disaster than he has done to prevent it,” Schreiner said. “I invite the premier to finally jump on the bandwagon rather than blocking it at every turn.”

NDP energy critic Peter Tabuns said the ruling was a blow to the Ford government’s credibility.

“It is such a disturbing display of wrongheadedness when you don't take action on the climate crisis,” Tabuns told reporters Friday. “They clearly didn't understand the law. And they clearly have no difficulty with wasting money.”​​​​​​​

Editor's note: This story was updated multiple times on June 28, 2019 with additional quotes from the court decision, lawyers and politicians.