'Carbon jail': SaskEnergy minister prepared for possible repercussions of not collecting carbon tax

Saskatchewan's natural gas utility could face hefty fines for not remitting the carbon tax to the federal government, and its executives may also face jail for failing to do so, federal legislation says.

Premier Scott Moe announced this week that SaskEnergy would not remit the carbon tax on natural gas starting Jan. 1, unless Ottawa exempts the fuel.

Legal professors say if SaskEnergy doesn't remit the charges, it could face big consequences.

"The stakes are actually quite high for failing to remit the carbon tax," Gerard Kennedy, a law professor at the University of Alberta, said Tuesday.

"But that is not to say that it would necessarily escalate to that."

Prime Minister Justin Trudeau announced last week the carbon tax would be exempt for three years on home heating oil to address affordability needs.

The move largely helps those in Atlantic provinces, where it's a main source for home heating.

Moe and Alberta Premier Danielle Smith have said the exemption is unfair and asked Trudeau to extend it to cover all other forms of heating, including natural gas.

Trudeau said Tuesday that Ottawa won't offer further exemptions, saying heating oil is far more expensive than natural gas and those who use it don't have other options readily available.

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The Greenhouse Gas Pollution Pricing Act says people and corporations that intentionally fail to pay the charge are to be fined an amount equal to 20 per cent of the charge that should have been paid. They would also receive a separate fine of at least $1,000.

Last year, SaskEnergy remitted $172 million in carbon tax to the federal government.

The legislation also says people could also face imprisonment for a term not exceeding six months.

It says every officer, director or representative of a corporation who "directed, authorized, assented to, acquiesced in or participated" in the offence would be considered guilty. It says a corporation's representatives would be liable to the punishment, even if they haven't been prosecuted or convicted.

Andrew Leach, an economics and law professor at the University of Alberta, said if SaskEnergy doesn't remit the charge, members of its executive would be on the hook.

"In blunt terms, Premier Moe has said 'pistols at dawn in the town square,' and he's rolled the CEO of SaskEnergy out there and said, 'here's my fighter,"' Leach said.

"The CEO of SaskEnergy will have to decide if their organization is willing to accept an order to disobey a federal law."

SaskEnergy did not immediately respond to a request for comment.

Dustin Duncan, the minister responsible for the Crown utility, said the province is looking at options, including legislation, to shield SaskEnergy executives or board members from facing punishment.

He said punishment would be shifted to the province.

"I guess if it comes to that point where somebody's going to carbon jail, that likely will be me," he said.

Duncan said provincial lawyers are exploring what the government could do, adding he plans to share more details in the coming days.

Leach questioned whether Moe can legally require a Crown corporation not to follow federal law.

"You can't have provincial legislation that compels non-compliance with federal law," he said.

"I would hope if you're the SaskEnergy CEO right now, your corporate counsel is in your office telling you what your options are should this order be actually forthcoming from the federal government."

Kennedy said he expects the issue to make its way to court if there's no resolution.

"It's fair to say Saskatchewan and the federal government are in a bit of a game of chicken," he said.

Eric Adams, a University of Alberta law professor, said courts retain discretion over penalties.

"I don't think anybody's getting hauled off in handcuffs on Jan. 2," he said.

"But these are serious matters, no question, and there may be some uncomfortable moments for the government-appointed board members in the months and weeks ahead."

On Tuesday, Ontario Premier Doug Ford said the carbon tax should be scrapped, and Manitoba finance minister Adrien Sala said Manitobans deserve fairness.

Smith told reporters Monday that Alberta won't follow suit with Saskatchewan, saying she doesn't want to put private natural gas companies in a position where they would be breaking the law.

"I would just prefer for the federal government to do the right thing, and give us a reprieve across the board in all provinces and all fuel types for the winter," she said.

The Opposition NDP in both Alberta and Saskatchewan also asked for Ottawa to exempt natural gas from the carbon tax.

-- This report by The Canadian Press was first published Nov. 1, 2023.