As we previously wrote about here, Carscallen LLP was counsel to the Municipal District of Ranchland No. 66 (“MD Ranchland”), who along with several other participants successfully opposed the recent Grassy Mountain Coal Project (the “Project”) in a recent environmental review application for the Project.

Six months after the Project was denied by the Alberta Energy Regulator (“AER”), Project proponent Benga Mining Limited (“Benga”) and opponent participants of the Project were disputing who was responsible for paying the costs of the AER hearing. Although normally the AER issues its decision on costs within 90 days, in this case the Project hearing was unusually complex and it wasn’t possible for the AER to meet the 90 day guideline. 

The AER issued its Costs Order for the Project on December 23, 2021. Under s. 64 of the Alberta Energy Regulator Rules of Practice, the AER has broad discretion when deciding whether and how to award costs and considered all submissions made in the costs process, including Benga’s responses to each costs claim, and the reply submissions of the participants claiming costs.

Benga disputed costs claims of several Project participants 

Benga disputed its total costs obligation for the hearing, also claiming that some of the parties opposing the project owed Benga money. 

One argument made by Benga was that environmental nongovernmental organizations with the ability to fundraise should not be eligible for costs, given their mandate is to oppose industrial development. The AER rejected this argument, finding that “[t]here is no inherent reason that an organization with an explicit mandate to protect the environment should be ineligible to receive costs in an AER proceeding, and the factors guiding our decision-making on costs claims do not specify any such condition. Furthermore, to the extent that such groups were able to successfully fundraise, we accept that these funds were needed to support their participation costs, which exceeded the amounts claimed in their costs claim submission.”

In making its costs determination, the AER also noted in the Costs Order that:

• the hearing proceeding was highly complex and addressed a broad range of highly technical topics, and that each topic required in-depth analysis to understand the potential impacts of the project;

• the record for this proceeding was extensive, complex, and technical, beginning with an initial environmental impact assessment (“EIA”) in 2016 and supplemented by 12 addenda over the next four years, totalling approximately 24,000 pages (with hundreds of other relevant submissions also on the record at the time the notice of hearing was issued); and the record then grew further over the course of the public hearing, up until the close of the record on January 15, 2021;

• as acknowledged in the JRP Decision denying the Project, Benga’s EIA and 12 addenda were not well organized, and it was not always easy for participants to determine whether earlier analysis had been replaced or updated with later analysis (as happened on several technical issues).

Benga also argued that certain costs claimed by the participants (whether for legal fees or expert witness fees) were not directly necessary for their participation and were not proportionate to their role in the hearing. On this point, the AER found that “whether an

activity or information was “directly necessary” depends on whether the activity or information helped us understand the potential impacts of the project”.

Benga’s proposed “costs formula” rejected by the AER

In response to several costs claims, Benga proposed a formula it devised to evaluate whether the time claimed by counsel or expert witnesses was reasonable and proportionate to their role in the hearing, using a formula based on the ratio of the claimed hours to the time allocated by the AER to each participant at the hearing for their presentation of evidence and cross-examination. 

The AER rejected this proposed formula, being in agreement with the participants to whom such formula was applied by Benga, that “the formula was unreasonable and would not have allowed counsel and the expert witnesses to adequately prepare for and participate in the hearing in a manner that would help us understand the issues before us. The time allocation for presentation of evidence at the hearing does not necessarily reflect the importance of an issue, or the level of effort required to undertake an adequate analysis of the issue.”

Costs awarded to participants for the hearing 

Costs of over $600,000 were ultimately awarded by the AER to the following participants who submitted costs claims: the Coalition of the Alberta Wilderness Association and Grassy Mountain Group; the Canadian Parks and Wilderness Society – Southern Alberta Chapter; the Livingstone Landowners Group; the Timberwolf Wilderness Society; MD Ranchland; Barbara Janusz; and the Shuswap Indian Band. 

In making these awards, the AER found that generally, participants in this process acted responsibly, were efficient in the use of time allocated to them, and acted in good faith.

Benga sought permission to appeal the JRP Decision denying the Project to the Court of Appeal of Alberta. This application was heard in mid December 2021, which we wrote about here. If permission to appeal is granted, a full panel of the Court of Appeal will hear the appeal of the JRP Decision. 

CARSCALLEN LLP’S COMMERCIAL LITIGATION EXPERTISE

Carscallen’s team of experienced litigators has successfully represented clients at all levels of court and before tribunals in Alberta and Canada. Our extensive litigation experience allows us to focus on practical, common sense legal solutions to disputes. We represent public corporations, private enterprises and individuals and are adept at tailoring unique solutions to meet your needs and protect your interests. We have achieved regular and consistent success at trial and appellate levels of courts and before various tribunals, and we have a strong track record of effectively resolving disputes outside the formal legal process through mediations and arbitrations.

Please contact any member of our Commercial Litigation team with any questions you may have about any litigation-related issues.