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The Supreme Court of Canada would never revisit its ruling from two years ago that the tax is constitutional. But other options are available for opponents of the tax

The Supreme Court of Canada in Ottawa. Photo by Sean Kilpatrick/The Canadian Press/File

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This story originally appeared in the What’s up with Alberta? newsletter, a joint project between the National Post, Edmonton Journal and Calgary Herald. You can sign up for the newsletter here.

The federal Liberal government has dropped the carbon tax on home heating fuel, which largely affects people in the Atlantic provinces, the effect being that the tax is now applied unevenly across the country.

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Alberta Premier Danielle Smith is wondering if this policy change means her government can go back to fighting the carbon tax in court because the exemption now means that Canadians are being treated unequally by the tax.

“If the federal government isn’t living up to the commitment of setting a single price across the country for everyone, then perhaps they’re not living up to the spirit of what the court determined and maybe that decision needs to have a revisit,” Smith said Monday. “So, if you’re going to have a federal government asserting that they have to have this power so everybody is treated equally and then they don’t treat everyone equally, it seems to me that that’s something we should go back to the court and ask them whether or not they want to reconsider whether this is an appropriate use of the federal power.”

In 2021, the Supreme Court of Canada ruled that the Liberal carbon tax was constitutional, following a challenge from a coalition of provincial governments. In a 6–3 decision it found that climate could be considered a national concern and that the federal government could therefore be justified in imposing a carbon tax.

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However, as far as Smith’s suggestion goes, the reality is that the Supreme Court just doesn’t revisit decisions, said Eric Adams, a constitutional law professor at the University of Alberta: “It’s a complete non-starter.”

“They don’t clarify. They don’t say ‘Oh, boy, circumstances seem like they’re changing, let’s look back at that decision again and issue new reasons or revise what we said.’ None of that is even remotely possible. Frankly, it’s just not the way the legal system works.”

But — new challenges can be initiated. And that option, potentially, exists for Smith.

Andrew Leach, a professor at the University of Alberta, pointed out that the specific order that will be issued giving an exemption to heating oil could be challenged, separately from the overall constitutionality of the carbon tax.

“You can always seek judicial review on, really, anything. The question is, is it likely to succeed?” said Leach.

When the Supreme Court ruled in favour of the carbon tax, it also contemplated whether the provinces might be capable of creating a series of agreements to set out a carbon tax, rather than a “pan-Canadian framework.” The court concluded a national standard was best, because “a failure to include one province in the scheme would jeopardize its success in the rest of Canada,” wrote Chief Justice Richard Wagner.

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If a province were to withdraw, Wagner wrote, it would “clearly threaten” the success of a national carbon tax because increased emissions from that province risked outbalancing emissions reductions in participating provinces. These are, Adams noted, probably more political considerations than a clear-cut legal opening for a new legal challenge.

Smith said she would be contacting Bennett Jones, the law firm that represented Alberta in its recent partial victory over the Impact Assessment Act, to see about going back to court on the carbon tax.

“I would rather this have a political solution,” said Smith.

As an aside, former premier Jason Kenney, who initiated the legal battle against the carbon tax in 2019, works as a senior adviser at Bennett Jones.

There’s clearly an emissions-related logic behind not carving out exemptions. If the carbon tax is reducing emissions from Atlantic Canada, dropping the tax is bound to increase them, and Canada’s emissions will increase overall, even if other provinces are still taxed on home heating fuel.

As has been widely noted, Atlantic Canadians tend to heat their homes with heating oil, which is getting the tax break, and it’s an emissions-intensive fuel, compared to natural gas, which isn’t getting a break, and is primarily used in Alberta and other provinces.

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But there is still the question of whether this policy shift by the federal Liberals might give Alberta an opening to again fight the carbon tax in court.

“The premier could, I suppose, send a reference case to her court of appeal saying, ‘Well, there’s now new information, we think the Supreme Court of Canada decision from 2021 should be overturned or the new facts suggest that that decision is no longer binding or relevant, what do you say?’” said Adams. “Then the Alberta Court of Appeal would have to answer that question and that then could be appealed back to the Supreme Court of Canada.”

“There would be very little appetite (for the courts) doing so within a handful of years of a particular judgment.”

But the carbon tax rules already have different exemptions and carve outs. Quebec gets to use its own cap and trade system, which imposes lower costs. And farmers don’t pay the carbon tax on their ‘purple gas’ that runs agricultural equipment.

In the Supreme Court dissents in the carbon tax ruling, the argument, Leach explained, was basically this: The carbon tax created an entire framework, but there’s the risk that the federal government, having given itself the power of that framework, could overstep, perhaps by introducing a wildly disproportionate carbon tax on one jurisdiction.

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But the courts, he said, are probably unlikely to allow specific policies to be litigated — and therefore decided — by the courts.

“The courts tend to leave policy questions like this to the political realm,” Leach said.

The carbon tax still applies broadly across Atlantic Canada on gasoline and diesel.

The constitutionality of the carbon tax, as determined by the Supreme Court of Canada, did not really consider the specificity of how the program is actually run so much as whether the federal government could impose a national carbon taxation framework in the first place.

“Those may be bad or good policy, it may be wise or unwise to make certain kinds of exemptions to certain kinds of fuels. But none of the constitutionality, in my view, rode on an idea of uniformity,” said Adams. “The particular decisions about how that carbon pricing should be set and on what fuels — those are properly political questions.”

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