A coal company suing the Alberta government argues that recent comments made by Alberta’s Energy Minister support its claim for compensation.
Evolve Power Ltd., formerly Montem Resources Ltd., is one of five coal companies suing the provincial government for billions in damages linked to coal policy changes.
In December, the Alberta government announced it was developing new rules to shape the future of coal mining in the province, promising them by the end of 2025.
As part of that press conference, Energy Minister Brian Jean noted that coal freehold rights have existed in Alberta since Alberta was a province.
“The government cannot expropriate freehold coal property rights without paying fair compensation to the owners of those property rights,” Jean said.
That statement caught the attention of Peter Doyle, CEO of Montem Resources’ Alberta operations, and Evolve’s legal team, who felt it was aligned with the upcoming court case.
“He clearly said … that freehold rights or freehold rights to coal that were taken or are being taken by the government should be fairly compensated,” Doyle said in an interview. “That’s all we’re looking for.”
When asked to comment on Doyle’s opinion, a spokesperson for Jean’s office wrote that “it was not appropriate for the government to comment on this or any other matter as it goes through the courts.”
“The Government of Alberta has submitted a statement of defense denying the allegations. We continue to respect the judicial process,” the statement read.
He will arrive in court in April
Four separate statements of claim, which will be heard at the same time in April, allege that Alberta’s 2022 decision to change coal mining rules cost them financially and resulted in a “de facto expropriation” of their coal assets.
Such claims seek compensation on the basis that these coal mines would have gone into production and produced profits over their lifetime.
The Alberta government opened the mountains to more mining in 2020, but then reversed course on those plans after a period of public outcry.
The companies involved in the April lawsuit are Cabin Ridge Holdings Ltd. and Cabin Ridge Project Ltd.; Atrum Coal Ltd., together with its subsidiary, Elan Coal Ltd.; Águila Negra Mining Corporation; and Montem.
A fifth company, Northback Holdings, filed a claim for damages in June 2024, which will be heard separately. Together, the five companies are seeking more than $15 billion in damages.
Northback said he could not comment on any matters before the court at this time.
The companies’ accusations have not been proven in court.
Doyle said he was “very disappointed” at how the process had unfolded.
“We have invested seriously under a system of regulatory processes that we understood well. Those have been changed. These are our property rights, they have been taken away from us, and we need to get fair compensation to stop our legal actions.” said.
Doyle added that his investors are “very, very disappointed by what happened.”
“When a regulatory system and a superior political system are in ruins, then no, I don’t think investors are at all eager to come here,” he said. “In fact, I would say that certainly our investors are not going to reinvest in Alberta until they are compensated.”
In a defense brief filed in May 2023 in the Court of King’s Bench of Alberta, the provincial government requested that the action be dismissed with costs.
“In response to the statement of claim as a whole, [His Majesty the King] denies that he constructively expropriated any of the plaintiff’s property, committed wrongful acts against the plaintiff or unjustly enriched himself, as alleged in the statement of claim, or at all, and asserts that, at all material times, he acted in accordance with appropriate manner through its servants, employees or agents,” it reads.
Compensation challenges
Nigel Bankes, professor emeritus of law at the University of Calgary, specializes in natural resources and energy law. He said the companies claim they are entitled to huge amounts of damages.
The claims are based on the supposed market value of the coal or, alternatively, on the sunk costs invested in the projects, he said.
“Those two damage measures can be very different, right?” Bankes said. “They could go either way, in the sense that if there is no market for coal, then these properties have zero value and in fact it is more favorable to claim compensation on the basis of sunk costs.”
Private property rights to coal can be expropriated through compensation based on market value, while leased rights can be canceled through compensation based on costs.
Since the minister has not exercised any of these powers, to succeed in their claims the companies must show that the government gained an advantage from the policy and left them no reasonable use for their property, Bankes said.
“One of the challenges here is that it’s not clear whether the government had its eye on the matter, in the sense of thinking about exposure to compensation,” he said.
However, if companies can reuse the land, their claims are weakened, he said.
Adding to the uncertainty, the law on these matters is not so clear in Canada yet.
Alberta’s new coal policy will include rules to ban new open-pit coal mining on the eastern slopes, but not “advanced” projects. More details are expected in late 2025.
Meanwhile, one of the “advanced” coal projects is Northback’s controversial Grassy Mountain project in southern Alberta. Earlier this week, the Alberta Energy Regulator held public hearings tied to the mine to review exploration permits submitted by Northback.
