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Lawsuit claims $3.4 billion in damages after Alberta’s reversal on coal policy changes

Thursday, July 14, 2022 @ 9:58 AM | By Ian Burns

Alberta has been hit with a $3.4-billion lawsuit arising from its decision to put the brakes on plans to change a decades-old policy on coal development in the Rocky Mountains.

In March, the provincial government announced it was reversing its plan to scrap a 1976 policy which placed limitations on coal development on the eastern slopes of the Rockies after meeting strong resistance from environmentalists, ranchers and First Nations. The plan, which was made without public consultation, could potentially have led to significantly-increased coal exploration in the province.

But Cabin Ridge Holdings and Cabin Ridge Project Ltd., which were in the process of developing a metallurgical coal mine in the eastern slopes, are saying the province “substantially and unreasonably” interfered with their development rights through its change in position, which included an indefinite moratorium on coal exploration and development on the land they were planning to use. The companies say this amounts to a de facto expropriation of its mineral rights and coal leases, and they are also seeking monetary compensation under the doctrines of private nuisance and unjust enrichment, arguing the province has benefited from payments Cabin Ridge made on things like environmental monitoring and maintenance activities.

The companies are seeking damages in the amount of $3.441 billion for “loss of net present value” of the property or, in the alternative, restitution of $56 million, which is the amount it spent to acquire and develop the property. In a statement, the Cabin Ridge companies claim the mine would have generated approximately 500 direct jobs during operations and about $2 billion in taxes and other revenue for the provincial and federal governments.

“The Cabin Ridge companies will continue to pursue all remedies available to them, including through the Alberta justice system,” the statement said. “They respect the Alberta justice system and do not intend to provide further comments as the legal proceedings take their course.”

Most coal leases in the province are held by the Crown, but the Cabin Ridge project includes approximately 5,000 hectares of privately owned “freehold” mineral rights. Drew Yewchuk, staff lawyer at the University of Calgary’s Public Interest Law Clinic, said Alberta has a regulation which gives compensation for companies who find their coal leases pulled out from under them, but noted the regime does not apply to freehold land.

“That does put Cabin Ridge in a different situation than some other leaseholders who have this statute, which benefits them in they can get compensation but also harms them in that they are pretty clearly limited to that compensation,” he said. “However, none of Cabin Ridge’s claims seem likely to succeed to me.”

Yewchuk said the de facto expropriation rule has been raised a few times in Alberta law but hasn’t come up much since the 1980s, so the question of whether it even exists for the land in question isn’t clear.

“Democratic governments are allowed to make changes to zoning and planning laws which might impair the use of property, but they don’t pay out an expropriation cost unless the law specifically says how much it is and how it is calculated. And Cabin Ridge doesn’t have one of those,” he said. “It would not make sense if every time the government makes a decision that makes someone’s property worth less, they have to pay them the difference — part of the risk assumed by all businesses, and some extent all people, is that future government decision-making is going to reduce the value of some of their assets.”

Representatives from Alberta’s Ministry of Energy did not respond to a request for comment.

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