Carscallen LLP regulatory lawyers, Michael B. Niven, KC and Michael Custer, recently achieved success for their client, the Municipal District of Ranchlands No. 66 (the “Municipal District”) in the ongoing Grassy Mountain Coal Project (“Grassy Mountain”) matter. The background to the matter has been canvassed in a previous post. Briefly, Grassy Mountain is a controversial open-pit mountain top coal mine designed to produce metallurgical coal near Crowsnest Pass, Alberta and ship it overseas. Australian owned, Northback Holdings Corporation (“Northback”), owner of the Grassy Mountain coal leases, has repeatedly sought to develop the coal deposits on Grassy Mountain but has been met with vigorous opposition, both by the Courts and the public.

Sonya Savage, during her tenure as Alberta’s Minister of Energy, issued Ministerial Order 002/2022 prohibiting new coal applications on Category 3 and 4 lands, unless the lands are subject to an “advanced coal project”. Grassy Mountain is located on Category 4 land and the project had been previously rejected in 2021 by the Alberta Energy Regulator (“AER”) as being against the public interest.  An “advanced coal project” includes projects for which the proponent has submitted a project summary to the AER for the purposes of determining whether an environmental impact assessment is required.

In August and September, 2023, Northback submitted new Grassy Mountain coal exploration applications to the AER.  On November 16, 2023, Brian Jean, KC, the successor to Sonya Savage as Minister of Energy, wrote the AER stating that, based on his interpretation and understanding of the definition of “advanced coal project”, he was of the view Grassy Mountain met the definition. The Municipal District took the position that given the Grassy Mountain project had been rejected from its outset, with the matter going all the way to the Supreme Court of Canada for consideration, it was difficult to see how the project could be considered an “advanced coal project”.

Nonetheless, on February 22, 2024, the AER accepted Northback’s applications, set them down for a hearing and cited Brian Jean’s letter as carrying “significant weight” in its decision to direct a hearing.  The Municipal District thereafter applied for permission to appeal the AER’s decision to allow the hearings and was successful in the recent decision, Municipal District of Ranchland No. 66 v Alberta Energy Regulator, 2024 ABCA 274.

The Municipal District’s permission to appeal argument raises the importance of the rule of law in Canada. It illustrated the constraints of executive authority in Alberta and the AER’s obligation to be an independent body that does not renounce its discretion due to input from a Minister who provides their “opinion” of a matter. The Alberta Court of Appeal found that while it was clear that the AER did not treat Brian Jean’s letter as binding upon it, the AER did fail to engage in any “meaningful, independent analysis of the definition of an “advanced coal project” as defined in the Ministerial Order. The AER had relied “excessively” on what Brian Jean had indicated was his understanding and this was an error. The Court of Appeal granted permission to appeal on this ground of law advanced by the Municipal District.

The Court of Appeal granted permission to appeal on other grounds including the fact the Minister’s Letter constituted “guidelines” or “written notice” to the AER and that the AER relied on improper or irrelevant evidence in the weight it provided the Minister’s Letter. Finally, permission to appeal was granted on the issue that the AER erred in finding that an “advanced coal project” included projects which had been previously rejected by the AER.

This decision is an important reminder that the rule of law is alive and well in Alberta. The appeal of the AER’s decision will proceed before the Alberta Court of Appeal and further commentary will be provided at that time.

The Regulatory team at Carscallen LLP has experience before a wide variety of regulatory bodies and can assist your organization in navigating the complexities of the legislation and help in achieving the results you seek.