Supreme Court delivers blow to Alberta gov in $15 billion coal lawsuit — former minister ordered to testify

In a major legal setback for the Alberta government, the Supreme Court of Canada has declined to hear an appeal aimed at shielding former energy minister Sonya Savage from testifying in a $15-billion lawsuit brought by coal companies. 

The decision clears the way for Savage to be questioned under oath about the province's controversial reversal on coal mining policy, a central issue in what is shaping up to be one of Alberta's largest expropriation claims in decades.

The lawsuit, launched in 2023 by five coal companies, alleges that the Alberta government effectively expropriated their investments when it reinstated a decades-old coal policy in 2021, banning or severely restricting mining on the eastern slopes of the Rocky Mountains. 

Until now, the UCP had succeeded in keeping Savage — who was energy minister during the reversal — off the witness list. 

A lower court had previously ruled that the existing documentary record was sufficient to explain government decision-making. But that changed earlier this year when the Alberta Court of Appeal sided with the companies, finding that Savage was uniquely positioned to explain the motives and intent behind the policy shift.

In refusing to hear Alberta's appeal, the Supreme Court has effectively affirmed that ruling.

"There is no evidence in the record available to us to show there are persons equally well informed as former Minister Savage," wrote the appeal court justices, adding that other government witnesses had little direct knowledge or memory of the key decisions.

Former environment minister Jason Nixon — now serving in a different cabinet role — will not be required to testify.

The ruling is a clear defeat for the UCP government, which had fought to keep cabinet deliberations private. Critics say it raises fresh questions about how the government handled the coal file, particularly in light of strong public opposition from ranchers, environmentalists and First Nations communities.

The companies had acquired leases and invested millions after the United Conservative government under former premier Jason Kenney quietly rescinded the 1976 Coal Policy in 2020 in a move that triggered widespread public outrage and prompted a swift policy U-turn.

The plaintiffs — Cabin Ridge Project Ltd., Atrum Coal Ltd. and its subsidiary Elan Coal Ltd., Black Eagle Mining Corp., and Evolve Power Ltd. — argue the reversal rendered their lands useless, amounting to a "de facto expropriation."

They are seeking a combined $13.8 billion in damages, with a trial set to begin April 28 in Alberta's Court of King’s Bench.

Although Savage is no longer an MLA, her testimony is expected to be a flashpoint in the trial, with lawyers seeking to show that the policy reinstatement was politically motivated rather than rooted in objective land-use planning.

The case comes as the Alberta Energy Regulator (AER) weighs several contentious decisions on coal development, including the long-delayed Grassy Mountain project near Crowsnest Pass. 

That project — which was previously rejected by federal regulators due to environmental concerns — remains under review amid intense lobbying from industry and pressure from communities determined to protect the headwaters of Alberta's major rivers.

A decision on an application for an exploratory drilling program is expected before June.

Meanwhile, legal observers say the outcome of the expropriation case could set an important precedent on whether governments can be held financially liable for reversing decisions that dramatically affect industry investments even when those reversals reflect public will.

The current government, led by Premier Danielle Smith, has not commented on the ruling, citing the matter being before the courts. Energy and Minerals Minister Brian Jean's office has said only that it would review the Supreme Court decision.

The Western Standard has reached out for further comment.