Alberta’s Highest Court Jams Smith’s Coal Plans

Premier Danielle Smith’s efforts to revive a contentious open-pit coal mining project owned by the litigious Australian billionaire Gina Rinehart have met a major legal hurdle.

Alberta’s Court of Appeal ruled this week that the Alberta Energy Regulator’s decision to turn a dead mining project — one rejected by regulators and the courts — into an “advanced coal project” is highly questionable and possibly an error in law.

As a consequence Justice Kevin Feth granted the Municipal District of Ranchland permission to appeal AER’s decision to let Northback Holdings apply for several licenses for renewed exploratory drilling on Grassy Mountain in the Crowsnest Pass.

Ranchland is a neighbouring area of wild fescue grasses and cattle ranchers that would be directly damaged by the mine.

It would also end the attempts by Rinehart and Smith to resurrect the controversial project which a majority of rural residents view as a threat to water security in arid southern Alberta.

The AER has argued in emails to The Tyee that just because provincial and federal regulators rejected the project in 2021 as environmentally and economically unsound, that decision didn’t prevent it from remaining in good standing with the regulator.

In other words the regulator believes there is no such thing as an out of bounds, cancelled project in a province that has long advocated for unfettered resource development — a position legal experts found extreme and anti-democratic.

So too did Justice Feth. He wrote, for example, that

“the AER did not explain why a project it previously rejected continues to be an advanced coal project or why a rejected project continues to be a ‘project’ under the Ministerial Order at all… I am satisfied that a serious, arguable point of law, having general importance, is established by this proposed ground of appeal.”

The justice’s decision echoed intense legal criticism about the AER’s arbitrary position on what constitutes an advanced coal project.

In many respects the AER’s behaviour even parodied Monty Python’s famous dead parrot sketch in which John Cleese tells a disgruntled customer that his dead parrot is not dead, “only resting.”

Legal regulatory expert Nigel Banks, a retired law professor at the University of Calgary, for example, told The Tyee last year that a dead parrot is a dead parrot and that Alberta government’s position was preposterously illegal.

“I don’t see how it can be legal. It was an advanced coal project. The application came before a joint panel review in 2020. The AER was part of that panel review. They denied the application in 2021. In my view there is no way it can be considered an advanced project. To me that’s the end of it. The AER should never have accepted the application.”

After a joint panel review unequivocally rejected Rinehart’s Grassy Mountain project, former UCP premier Jason Kenney’s government found its pro-coal mining policies under siege by ranchers, municipalities, musicians, conservationists and irrigators. As a result, the chastened government temporarily withdrew its embrace of Australian miners and issued a ministerial order banning further coal exploration and mining in the Rockies — home to Alberta’s critical watersheds in 2022.

But ever since then Gina Rinehart has fought back. She retired her mining company Benga only to create a new one in its place: Northback Holdings. She hired a new CEO and then employed a bevy of lawyers to contest the project’s rejection in three separate courts, unsuccessfully. (One appeal remains ongoing.)

At the same time the company applied for new exploratory drilling licenses on Grassy Mountain and began an extensive lobbying campaign with the Smith government to find ways to revive its open-pit mining plans.

Meanwhile Smith and her government have also sought to undermine the 2021 decision and 2022 ministerial order by openly supporting the Grassy Mountain coal project in a number of ways subtle and not so subtle.

Smith first interjected herself into the province’s messy coal politics by promising that she would ignore the regulatory decision and put the issue up to local referendum in the Crowsnest Pass while running for the leadership of the UCP.

Ever since then Northback Holdings has funded local projects such as a school lunch program as a way to ingratiate itself in the local community. (Hundreds of people in the historic Crowsnest region support renewed mining while thousands of people living downstream do not.)

Early this year Smith’s energy minister, Brian Jean, wrote a letter to the AER strongly suggesting that the agency consider the Grassy Mountain proposal as “an advanced project,” and exempt it from the 2022 ministerial order.

At the time many critics considered Jean’s letter an act of direct political interference in the workings of an allegedly independent agency. (In reality most Albertans regard the AER as a captured regulator that cheerleads resource developers of any ilk.)

Smith then interjected herself into the debate again by parroting Northback’s new claim that Grassy Mountain has to be mined in order to properly clean up the scars of previous mining efforts dating back to the 1960s. But reclaiming a levelled mountain top is impossible.

Craig Snodgrass, mayor of High River, called that corporate sales pitch preposterous. He explained that the old mining footprint occupies only 274 hectares of the mountain while Rinehart’s project would excavate an area nearly six times greater — 1,521 hectares — in the Oldman River watershed, resulting in serious selenium pollution downstream.

The scale of extraction being proposed by Northback also dwarfs all previous mining efforts on the mountain. Historical underground and surface mines on Grassy Mountain extracted 14 million tonnes of coal over a 55-year period from 1913 to 1968. Those developments left the mountain scarred but intact. Rinehart’s operation plans to extract 93 million tonnes over 23 years and disturb the headwaters of the Oldman River.

Rinehart’s Northback Holdings has now employed two different agencies to lobby the Smith government. In July, Crestview Strategy, a public affairs group specializing in “mobilizing public opinion” lobbied Smith and a half dozen ministries to “ensure elected and department officials understand all relevant aspects of the proposed Grassy Mountain steelmaking coal mining project and how it fits within the governments broader coal and economic development policies.”

In the last six months Michael Young, the CEO of Northback Holdings, participated in similar efforts.

Meanwhile Enterprise Canada, another lobby group representing Northback, has extended its contract until March 2025 to advocate on the company’s behalf.

Landowners and ranchers welcomed the Court of Appeal ruling.

“We are grateful that the Alberta Court of Appeal will hear arguments from our MD of Ranchlands that the Province’s energy regulator should not have accepted applications for Grassy Mountain,” said rancher Laura Laing in an email to The Tyee. “For the AER to proceed with public hearings on Northback’s coal exploration program despite the recent Alberta Court of Appeal announcement, in my opinion presents bias on the merits of the application on behalf of the Regulator. We are requesting that the AER postpone the Public Hearings for the Grassy Exploration program in due diligence and respect of legal and fair proceedings.”

Three critical questions will now be examined by the courts later this year:

Did the AER improperly shackle its authority in accepting Northback’s applications?

Did the AER make a mistake by relying on Brian Jean’s letter in interpreting the ministerial order?

Did the AER err in its legal interpretation of the term “advanced coal project” in the ministerial order?