One of the first tests of the newly minted Alberta Bill of Rights Amendment Act that received Royal Assent on December 5, 2024, will be five court cases set to commence in early 2025, where Alberta is being sued to the tune of $16 billion over alleged property rights violations dating back to former Premier Jason Kenney’s era.Five steel-making coal mining companies filed statements of claim with the Court of King’s Bench in Calgary back in 2023. They outlined their cases against the Government of Alberta for its de facto expropriation of their freehold coal rights and coal leases, and these are set to go to trial in April 2025.These five companies claim to have spent over $838 million between 2011 and 2021, under both Rachel Notley’s NDP and Jason Kenney’s UCP governments, to acquire, explore and develop their respective southwestern Alberta Rocky Mountain Foothills coal assets. Regardless, the Kenney UCP government revoked permits, declared an Indefinite moratorium on any further coal development and flip-flopped on their position on reactivating 100 year old moth-balled steel-making coal mines.This political maneuver by Kenney’s UCP in 2021 was reminiscent of his reversal on the UCP’s position on the constitutionality of vaccine passports in that same year. Most would agree the UCP’s pulling a 180 on these fundamental conservative values was a knee-jerk reaction to polls that showed a significant swing in voter sentiment to the left during the COVID lockdown period.In other words, the UCP reversed its coal policy to appease environmentalists and political opponents, prioritizing short-term political gain over long-standing legal agreements and property rights.The province’s abrupt halt of any coal mining development resulted in the deprivation of private property and the companies’ ability to develop their projects. This was a surprising turn of events for a conservative party that has long held itself out as a champion of a stable business environment, protecting private property rights and basing our economy on sensible resource development.I believe that the UCP constituency associations which rebelled against Kenney’s leadership in 2023, and who initiated the Alberta Bill of Rights Amendment Act to include stronger provisions on property rights, did so in part because they viewed this as unjust treatment of those steel-making coal development companies who had their coal leases and freehold coal rights effectively expropriated.I am of the school of thought that views the UCP’s treatment of these steel-making coal development companies under the Kenney government, as analogous to the loss of income from forced closures during the COVID lock-downs of 2020 to 2021.Note that business owners in Alberta who faced economic losses due to forced closures are now legally certified to proceed as a class action and can sue the provincial government collectively for damages. Furthermore, any lawsuits to follow will also affect the plaintiffs themselves, as the subsequent lawsuits will be paid for by the Alberta government — funded by the taxpayer. The wording in the Alberta Bill of Rights Amendment Act specific to property rights is very clear:If an individual or entity is deprived of the enjoyment of their property, this would need to be authorized by law.If government takes property, this taking would need to be authorized by law and government would need to provide just compensation.We should be worried about the potential $16 billion financial hit that Alberta taxpayers could receive as result of these lawsuits. In fact, Minister Brian Jean said himself during a media conference on December 20th that the government cannot expropriate freehold coal rights without paying fair compensation.Likewise, I am concerned that Premier Smith could bear the brunt of the voter blow back if the plaintiffs are awarded even a fraction of the $16 billion outlined in their statements of claim.We can be certain that if the Government of Alberta takes a multi-billion dollar hit due to these court cases, the Alberta NDP under Naheed Nenshi will leverage this to their advantage.So, what should Premier Smith’s cabinet decide on this matter?First, there needs to be an out-of-court settlement expedited with the plaintiffs, where just compensation is provided for the expropriated coal leases and freehold coal rights. This will minimize tax payers exposure, and show investors Alberta is once again serious about attracting foreign investment.Second, expedite the land use framework for this nascent industry. The government was told by the Coal Committee in late 2021 to do this work. Here we are three years later and Minister Jean says it will be another year before any new regulations or legislation is prepared.Priority should be given to those projects that were designated as “Advanced Projects.” These include existing moth-balled, steel-making coal mine workings that have operated off and on again in the Crowsnest Pass region over the past century.An example of a designated “Advanced Project ” would be Northback Holding’s Grassy Mountain Project. Area residents in the Crowsnest Pass voted 72% in favor of the Grassy Mountain Project on November 27th in a non-binding referendum. Clearly there is grassroots support for this project at the community level..WATCH: Jean says he is pleased with Crowsnest Pass coal mine referendum outcome .We should also take into account the potential these projects have in further diversifying our economy by growing our steel-making coal production. Case in point is steel-making coal mining in British Columbia represents a $12 billion per year industry. My analysis of publicly available statements of claim from these court cases shows that if these five steel-making coal companies are given a green light, there is the potential for an estimated 2,710 direct and 4,150 indirect jobs to be created. As these projects are not advancing and formal detailed projects descriptions have not been made public, we cannot precisely speak to potential annual revenues generated. However, considering the upper limits on coal resource of approximately two billion tonnes and an average mine-life of 30 years, it is fair to suggest these five steel-making coal producers could easily generate $6 billion per year in taxable and royalty producing income at current steel-making coal prices of $100 per tonne if they were simply given the opportunity..Figure 1. Canadian labuor productivity by sectorThese back of the envelope estimates are important, as they also allow a labor productivity ($/hour) estimate to be made, which using these values place a ball park value around $500 per hour. As shown in Figure 1, a labor productivity of $500 per hour is within range of the national average for the mining, and oil and gas sector in Canada, based off 2017 statistics. This point is of critical importance, as Canada’s GDP per capita is currently on a declining trajectory, so it is of national importance that we focus hard on advancing sectors with the highest labor productivities. With its attack on property rights, the UCP government has caused serious harm to our province’s reputation as a stable place to invest. I believe UCP constituency associations need to get ahead of these $16 billion lawsuits and impress on UCP leadership the need to settle these cases out of court. Beyond limiting further reputational and fiscal damage for the UCP and province, the ultimate carrot is upwards of 7,000 high paying jobs, a further diversification of the economy and kick starting what could possibly be the early stages of an Alberta steel manufacturing sector.
One of the first tests of the newly minted Alberta Bill of Rights Amendment Act that received Royal Assent on December 5, 2024, will be five court cases set to commence in early 2025, where Alberta is being sued to the tune of $16 billion over alleged property rights violations dating back to former Premier Jason Kenney’s era.Five steel-making coal mining companies filed statements of claim with the Court of King’s Bench in Calgary back in 2023. They outlined their cases against the Government of Alberta for its de facto expropriation of their freehold coal rights and coal leases, and these are set to go to trial in April 2025.These five companies claim to have spent over $838 million between 2011 and 2021, under both Rachel Notley’s NDP and Jason Kenney’s UCP governments, to acquire, explore and develop their respective southwestern Alberta Rocky Mountain Foothills coal assets. Regardless, the Kenney UCP government revoked permits, declared an Indefinite moratorium on any further coal development and flip-flopped on their position on reactivating 100 year old moth-balled steel-making coal mines.This political maneuver by Kenney’s UCP in 2021 was reminiscent of his reversal on the UCP’s position on the constitutionality of vaccine passports in that same year. Most would agree the UCP’s pulling a 180 on these fundamental conservative values was a knee-jerk reaction to polls that showed a significant swing in voter sentiment to the left during the COVID lockdown period.In other words, the UCP reversed its coal policy to appease environmentalists and political opponents, prioritizing short-term political gain over long-standing legal agreements and property rights.The province’s abrupt halt of any coal mining development resulted in the deprivation of private property and the companies’ ability to develop their projects. This was a surprising turn of events for a conservative party that has long held itself out as a champion of a stable business environment, protecting private property rights and basing our economy on sensible resource development.I believe that the UCP constituency associations which rebelled against Kenney’s leadership in 2023, and who initiated the Alberta Bill of Rights Amendment Act to include stronger provisions on property rights, did so in part because they viewed this as unjust treatment of those steel-making coal development companies who had their coal leases and freehold coal rights effectively expropriated.I am of the school of thought that views the UCP’s treatment of these steel-making coal development companies under the Kenney government, as analogous to the loss of income from forced closures during the COVID lock-downs of 2020 to 2021.Note that business owners in Alberta who faced economic losses due to forced closures are now legally certified to proceed as a class action and can sue the provincial government collectively for damages. Furthermore, any lawsuits to follow will also affect the plaintiffs themselves, as the subsequent lawsuits will be paid for by the Alberta government — funded by the taxpayer. The wording in the Alberta Bill of Rights Amendment Act specific to property rights is very clear:If an individual or entity is deprived of the enjoyment of their property, this would need to be authorized by law.If government takes property, this taking would need to be authorized by law and government would need to provide just compensation.We should be worried about the potential $16 billion financial hit that Alberta taxpayers could receive as result of these lawsuits. In fact, Minister Brian Jean said himself during a media conference on December 20th that the government cannot expropriate freehold coal rights without paying fair compensation.Likewise, I am concerned that Premier Smith could bear the brunt of the voter blow back if the plaintiffs are awarded even a fraction of the $16 billion outlined in their statements of claim.We can be certain that if the Government of Alberta takes a multi-billion dollar hit due to these court cases, the Alberta NDP under Naheed Nenshi will leverage this to their advantage.So, what should Premier Smith’s cabinet decide on this matter?First, there needs to be an out-of-court settlement expedited with the plaintiffs, where just compensation is provided for the expropriated coal leases and freehold coal rights. This will minimize tax payers exposure, and show investors Alberta is once again serious about attracting foreign investment.Second, expedite the land use framework for this nascent industry. The government was told by the Coal Committee in late 2021 to do this work. Here we are three years later and Minister Jean says it will be another year before any new regulations or legislation is prepared.Priority should be given to those projects that were designated as “Advanced Projects.” These include existing moth-balled, steel-making coal mine workings that have operated off and on again in the Crowsnest Pass region over the past century.An example of a designated “Advanced Project ” would be Northback Holding’s Grassy Mountain Project. Area residents in the Crowsnest Pass voted 72% in favor of the Grassy Mountain Project on November 27th in a non-binding referendum. Clearly there is grassroots support for this project at the community level..WATCH: Jean says he is pleased with Crowsnest Pass coal mine referendum outcome .We should also take into account the potential these projects have in further diversifying our economy by growing our steel-making coal production. Case in point is steel-making coal mining in British Columbia represents a $12 billion per year industry. My analysis of publicly available statements of claim from these court cases shows that if these five steel-making coal companies are given a green light, there is the potential for an estimated 2,710 direct and 4,150 indirect jobs to be created. As these projects are not advancing and formal detailed projects descriptions have not been made public, we cannot precisely speak to potential annual revenues generated. However, considering the upper limits on coal resource of approximately two billion tonnes and an average mine-life of 30 years, it is fair to suggest these five steel-making coal producers could easily generate $6 billion per year in taxable and royalty producing income at current steel-making coal prices of $100 per tonne if they were simply given the opportunity..Figure 1. Canadian labuor productivity by sectorThese back of the envelope estimates are important, as they also allow a labor productivity ($/hour) estimate to be made, which using these values place a ball park value around $500 per hour. As shown in Figure 1, a labor productivity of $500 per hour is within range of the national average for the mining, and oil and gas sector in Canada, based off 2017 statistics. This point is of critical importance, as Canada’s GDP per capita is currently on a declining trajectory, so it is of national importance that we focus hard on advancing sectors with the highest labor productivities. With its attack on property rights, the UCP government has caused serious harm to our province’s reputation as a stable place to invest. I believe UCP constituency associations need to get ahead of these $16 billion lawsuits and impress on UCP leadership the need to settle these cases out of court. Beyond limiting further reputational and fiscal damage for the UCP and province, the ultimate carrot is upwards of 7,000 high paying jobs, a further diversification of the economy and kick starting what could possibly be the early stages of an Alberta steel manufacturing sector.
