Coal company pushing for compensation from Alberta as court date approaches

A coal company suing the Alberta government is arguing that recent comments made by Alberta's energy minister back up 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 tied 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 late 2025.

As a part of that news conference, Energy Minister Brian Jean noted that freehold coal rights have existed in Alberta longer than Alberta has been a province.

"The government cannot expropriate freehold coal rights without paying fair compensation to the owners of those property rights," Jean said.

That statement caught the attention of Peter Doyle, the CEO of Montem Resources' Alberta operations, and Evolve's legal team, who felt it aligned with the upcoming court case.

"He plainly said … that the freehold property right or freehold coal rights that were taken or are being taken by the government have to be justly compensated," Doyle said in an interview. "That's all we're seeking."

When asked to comment on Doyle's view, a spokesperson in Jean's office wrote that it "was not appropriate for government to comment on this or any other matter as it goes through the courts."

"The Government of Alberta has filed a statement of defence denying the allegations. We continue to respect the judicial process," the statement reads.

Coming to court in April

Four separate statements of claim, to be heard at the same time this April, allege 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 up mountains to more mining in 2020 but later reversed course on those plans after a period of public outcry. 

The companies involved in the April trial are Cabin Ridge Holdings Ltd. and Cabin Ridge Project Ltd.; Atrum Coal Ltd., along with its subsidiary, Elan Coal Ltd.; Black Eagle Mining Corp.; and Montem.

A fifth company, Northback Holdings, launched a damages claim in June 2024, which will be heard separately. Combined, the five companies are seeking north of $15 billion in damages.

Northback said it was unable to comment on any matters before the court at this time.

The companies' allegations have not been tested in court.

Doyle said he was "very disappointed" with how the process had played out.

"We've invested earnestly under a system of regulatory processes that we understood well. Those have been changed. These are our property rights, they've been taken from us, and we need to get just compensation to stop our legal action," he said.

Doyle added that his investors are "very, very disappointed at what has occurred."

"When a regulatory system and a political system over the top of it is in shambles like it is, then, no, I don't think investors are at all eager to come in here," he said. "In fact, I'd say that certainly our investors are not going to reinvest in Alberta until they're compensated."

In a statement of defence filed in May 2023 in Court of King's Bench of Alberta, the provincial government asked for the action to be dismissed with costs.

"In response to the statement of claim as a whole, [His Majesty the King] denies that it has constructively expropriated any of the plaintiff's property, committed any tortious acts against the plaintiff, or was unjustly enriched, as alleged in the statement of claim or at all, and states that, at all material times, it acted in an appropriate manner through its servants, employees, or agents," it reads.

Compensation challenges

Nigel Bankes, an emeritus professor of law at the University of Calgary, specializes in natural resources and energy law. He said the companies are claiming they're entitled to massive amounts of damages.

The claims are based on the supposed market value of the coal, or in the alternative, to the sunk costs put into the projects, he said.

"Those two measures of damages may be vastly 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 it's actually more favourable to claim compensation on the basis of sunk costs."

Privately owned coal rights can be expropriated with compensation based on market value, while leased rights can be cancelled on the basis of cost-based compensation.

Since the minister has not exercised either of these powers, to succeed in their lawsuits, companies must prove the government gained an advantage from the policy and left them with no reasonable use for their property, Bankes said.

"One of the challenges here is that it's not clear that the government had its eye on the ball, in the sense of thinking about exposure to compensation," he said.

However, if companies can repurpose the land, their claims weaken, he said. 

Adding to the uncertainty, the law around such matters isn't that clear in Canada yet.

Alberta's new coal policy is set to include rules to ban new open-pit coal mining in the Eastern Slopes but not "advanced" projects. More details are expected in late 2025.

Meanwhile, one of the "advanced" coal projects is Northback's long-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.