Carbon-tax law gives Ottawa power to regulate day-to-day lives of Albertans, lawyers argue

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The federal government’s carbon-tax law gives Ottawa the power to regulate the day-to-day lives of Albertans, lawyers for the province argued during the first day of a constitutional challenge of the levy.

Bureaucrats in Ottawa could dictate what cars Albertans drive and at what temperature they can set their thermostats, provincial lawyers told a panel of five judges from the province’s Court of Appeal on Monday. Alberta is the third province this year to test the constitutionality of the carbon-pricing regime after the highest courts in Ontario and Saskatchewan concluded that the federal program is lawful.

Those two provinces have appealed their cases to the Supreme Court of Canada, which has set hearings for mid-March.

Peter Gall, a lawyer for Alberta Premier Jason Kenney’s government, told the judges that the federal law destabilizes Canada’s constitutional system. “It would greatly distort and alter our constitutional system, our balance of power between the federal government and the provinces,” he said.

Advancing similar arguments as those put forward by the lawyers from Ontario and Saskatchewan in their ultimately unsuccessful challenges of the law, Mr. Gall warned that Ottawa could use its authority under the carbon tax to chip away at provincial powers. The federal government could then regulate much of Canadian life.

“If you uphold this legislation, you’re opening the door to exactly that type of thing,” he said. “Not just the piecemeal regulation of those matters, but wholesale regulation.”

The federal government has justified the carbon-tax law, which is at the centre of Prime Minister Justin Trudeau’s climate plan, under a section of the Constitution that allows Ottawa to step in over issues of national concern. The law allows provinces to create their own climate plans, but imposes a federal tax on those that fail to meet Ottawa’s requirements.

The federal carbon tax will be imposed on Alberta’s consumers on Jan. 1 after Mr. Kenney scrapped his predecessor’s provincial plan. The Premier established a carbon tax on industrial emitters, which was approved by Ottawa.

The federal government said on Monday that a family of four in Alberta will receive an $888 income-tax rebate in 2020, funded by the carbon tax. Albertans will receive the largest rebate under the federal program, nearly twice the amount an Ontario family will receive.

Mr. Gall argued in court that the provinces are capable of facing climate change alone and should be free to adopt weaker rules than Ottawa’s standard if economic conditions require it. “It’s invasive in terms of taking away policy options that would otherwise be open to the provinces,” Mr. Gall said of the tax.

On Tuesday, lawyers for the federal government will face a panel of judges that spent much of the first day of hearings teasing out whether the court should focus narrowly on greenhouse gases or look more broadly at the law within Canada’s constitutional balance.

“The purpose of this to me is behavioural change, that is it,” Justice Jack Watson said while questioning Mr. Gall. “That’s what this law is about. It’s telling people what to do. It isn’t about regulating anything. It’s not a regulation. It’s a prohibition.”

The Alberta Court of Appeal that is hearing the province’s carbon-tax challenge saw one of its high-profile environmental decisions struck down earlier this year by Canada’s top court. The Supreme Court ruled in January that companies can’t walk away from their obligations to clean up oil wells. Environmental responsibilities come before repaying creditors when oil companies go bankrupt, the Supreme Court found, reversing a judgement by Alberta’s Court of Appeal that allowed energy companies to discard unprofitable wells in bankruptcy and keep profitable ones, forcing the wider industry or government to cover clean up costs.

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