⚖️ Taxing carbon

To: Hearsay Readers

TODAY’S DOCKET

  • Provinces giving themselves a pass on federal rules

  • City of Calgary liable after median turns into ramp

  • Provinces grab the reins on zoning

  • It’s not looking good for Sam Bankman-Fried

DIVISION OF POWERS

Sask gets heated over carbon tax

Model home on radiator

Can provincial governments really opt out of federal legislation? First Alberta’s Sovereignty Act, now Saskatchewan’s musings about simply walking away from the carbon tax.

What happened: Last week, the federal government said it won’t charge a carbon tax on home heating oil for the next 3 years. Home heating oil is primarily used in Atlantic Canada, so everyone else is ticked.

But Saskatchewan might be the most ticked. Premier Moe says the province will protest by refusing to collect the carbon tax on natural gas used to heat homes. Take that Trudeau.

Yeah, yeah, I know how the carbon tax works. As fun as Moe’s idea sounds, it’s not as simple as just refusing to collect the carbon tax.

  • The federal legislation charges an added cost on fuels (the “tax”).

  • The tax is not directed at consumers — the companies distributing the fuel are the ones forced to pay. But those companies kindly pass the charge on to us.

  • There’s no requirement to collect the tax. Companies simply need to pay the federal government the calculated amount.

  • There are major penalties for refusing to pay. The directors, officers, and representatives of a non-paying company are held equally responsible, and they can face up to 6 months in jail.

Battle plan: Saskatchewan supplies natural gas to homes through a public utility, SaskEnergy. Moe’s plan is for SaskEnergy to stop making the required payments to the government — a pretty high stakes game of chicken for the execs at SaskEnergy.

But the Minister responsible for SaskEnergy, Dustin Duncan, is ready to make the ultimate sacrifice. He says the government is looking at ways to make Duncan personally liable for the carbon tax instead of SaskEnergy — he’s ready to go to “carbon jail” as a matter of principle. Hopefully he’s not surprised to learn we don’t have a special jail for carbon tax avoiders.

Looking ahead: Aside from throwing SaskEnergy or Dustin Duncan under the bus, do the provinces have any recourse? Alberta Premier Danielle Smith says the Supreme Court should take another look at whether the carbon tax is constitutional, now that the federal government is being unfair.

And you know what — she might have a point.

  • In 2021, the Supreme Court upheld the carbon tax after a constitutional challenge by the provinces. The Court said the federal government can create minimum national pricing standards to reduce greenhouse gas emissions.

  • That was a relatively narrow approval. The power is rooted in minimum national standards — you know, the kind that set a baseline and apply across the board.

  • The Court was clear the federal government can’t use the legislation to do anything “inconsistent with … reducing GHG emissions through the specific means of establishing minimum national standards”.

So, can the federal government effectively exempt some provinces from a tax on their home heating fuel? Maybe it’s just a policy choice the courts wouldn’t want to touch. But maybe treating provinces differently when it comes to home heating suggests the government has strayed too far away from minimum national standards. Justice Brown certainly tried to warn us about that in his dissenting carbon tax judgment:

[There is an] obvious possibility that the federal Cabinet will discriminate against provinces or industries in a way that has nothing to do with “establishing minimum national standards of GHG price stringency to reduce GHG emissions”

It seems like Saskatchewan and Alberta can at least make a credible constitutional argument if the federal government moves ahead with its narrow fuel oil exemption. Or maybe they’ll opt for the more poignant response and just ship Dustin Duncan off to carbon jail.

Meme of Fred Armisen scene from Parks and Recreation with text: withhold carbon tax? Right to jail

Parks and Recreation/NBC

HEARSAY ROUNDUP

Canadiana

🚧 The Alberta Court of Appeal held the City of Calgary responsible for letting snow pile up against a median. The snow created a ramp that allowed a vehicle to launch into oncoming traffic and cause a serious collision. Even though Alberta’s Municipal Government Act says cities are generally not responsible for inspection and maintenance, a city that learns about a roadway problem needs to take steps to fix it.

🏘 British Columbia tabled legislation that will force municipalities to allow multi-unit housing developments. The rules vary by location, but — at a minimum — every lot in the province will be allowed to have a secondary suite. In areas with strong transit access, the government is forcing municipalities to accept six-unit developments on lots that are currently zoned for single or duplex homes. It’s not just BC trying to solve the housing crisis by stepping on municipal toes — proposed Nova Scotia legislation would allow the province to approve any development without municipal consultation.

🗣 It’s still very difficult to stop someone from making defamatory statements in advance of trial. The BC Court of Appeal held that an injunction restricting free speech should be granted only if the statements are “manifestly defamatory”, it is “beyond doubt” the person making the statements has no defence, and there’s no other good reason to refuse the injunction.

Beyond the border

🎥 Scarlett Johansson is suing an AI developer for using a computer-generated version of her voice in an online ad. Expect more lawsuits like this one — celebrity dupes are becoming commonplace in the new world of generative AI.

💸 The jury in Sam Bankman-Fried’s crypto fraud trial started deliberating this afternoon. It’s not looking good for him — observers say he did a poor job on the stand and probably hasn’t made many friends on the jury.