When is an Old Project a New Project (or Vice Versa)? The Strange Case of Grassy Mountain
On September 6, 2023, the Alberta Energy Regulator (the “AER”) received a coal exploration and deep-drilling permit application (the “Applications”) from Northback Holdings Ltd. (formerly Benga Mining Ltd.) (“Northback”). The Applications are for a proposed coal development in Crowsnest Pass, known as the Grassy Mountain Coal Project (the “Project”).
More specifically, the deep-drilling permit is explained as being for the purpose of drilling “to depths deeper than 150 metres and no deeper than 550 metres on a combination of Crown land and Northback’s privately owned land, commencing on October 15, 2023.”
October 15, 2023, has now passed, and there has been no apparent decision from the AER with respect to Northback’s Applications for the Project. It is unclear what the status of the Applications is and whether, with its Project commencement date of October 15 having passed, Northback intends to proceed with the Project this year.
The Project was first proposed by Benga Mining in 2015 and would have seen the construction and operation of an open-pit, metallurgical coal mining project in the Crowsnest Pass region of southwestern Alberta. At the time, it was estimated that once built, the Project would be able to produce up to 4.5 million tonnes of processed coal each year.
However, on June 17, 2021, the Joint Review Panel (“JRP”) of the Alberta Energy Regulator and the Impact Assessment Agency of Canada (“IAAC”) rejected the Project, concluding that the Project would result in significant adverse environmental effects that would not be outweighed by the Project’s modest positive economic impacts. Further information on this point can be found in our previous 2021 article on the subject: Grassy Mountain and the Limits of Adaptive Management.
Benga applied for leave to appeal this decision to the Alberta Court of Appeal (see: Benga Mining Limited v Alberta Energy Regulator, 2022 ABCA 30), but the Court of Appeal denied the application. A subsequent effort by Benga to seek leave to appeal to the Supreme Court of Canada also failed (see: Benga Mining Limited v Alberta Energy Regulator, et al, 2022 CanLII 88683). All avenues for reviving the Project seem to have been explored, and the reality is that the Project was not approved.
In the meantime, as Benga was attempting to overturn the JPR’s denial of the Project, Alberta’s coal policy landscape was shifting drastically. On March 2, 2022, the then Minister of Energy, Sonya Savage issued Ministerial Order (MO/002/2022) (the “Ministerial Order”) to the AER under s 67 of the Responsible Energy Development Act, SA 2012, R-17.3 (“REDA”). The Ministerial Order walked back the Government of Alberta’s 2021 decision to revoke the 1976 Coal Development Policy (“Coal Policy”), which had placed limitations on coal exploration and mining in the eastern slopes of the Rockies. The Coal Policy prohibited coal development in “Category 1” lands, severely restricted development on “Category 2” lands, and allowed for some development on Category 3 and 4 lands.
Under the Ministerial Order, the AER is required “to ensure” all new applications for coal mining exploration and/or development would not be accepted, including on Category 3 and 4 lands, with two exceptions:
3) With the exception of lands subject to an advanced coal project or an active approval for a coal mine, all approvals (as defined by REDA) for coal exploration or development on Category 3 and 4 lands in the Eastern Slopes shall be suspended and no new applications will be accepted until such time as written notice is given by the Minister of Energy and/or Minister of Environment and Parks.
The Ministerial Order provides specific definitions for both an ‘active coal project’ and an ‘advanced coal project’. An ‘active coal project’ is defined as a project with a license under the Coal Conservation Act, RSA 200, c 17 (the “CCA”). An ‘advanced coal project’ is defined as a ‘project for which the proponent has submitted a project summary to the AER for the purposes of determining whether an environmental impact assessment is required.’
THE NEW APPLICATION
It is clear that the applied-for Project (exploratory deep drilling) has not received a license under the CCA, and therefore cannot be considered an ‘active coal project’. Consequently, the AER could only accept and approve Northback’s Applications if the Project is considered an ‘advanced coal project’ under the Ministerial Order.
However, there is no evidence on the record that Northback has submitted a project summary. It would appear instead that Northback is relying on Benga’s previous project summary, which was submitted on November 10, 2015, when Benga filed an environmental impact assessment (EIA) application for the Grassy Mountain Project with the AER and the Canadian Environmental Assessment Agency (the “CEAA”). An updated EIA application was subsequently submitted on August 15, 2016.
It is worth noting that the original Benga application was submitted under sections 10(1)(b) and 23 of the CCA and sought approval for both a proposed coal mine and a coal processing plant. The original Benga application was thus concerned with the construction and operation phase in the life cycle of coal development, and the activities that would have been authorized by that application’s approval required an EIA by operation of section 44(1)(a) of the Environmental Protection and Enhancement Act, RSA 2000, c E-12 (“EPEA”) and the Environmental Assessment (Mandatory and Exempted Activities) Regulation, Alta Reg 111/1993. Northback’s deep-drilling application, on the other hand, is submitted under section 10(1)(a) of the CCA, which deals with the exploratory phase of coal development. Accordingly, the Northback deep-drilling permit application can arguably be characterized as relating to a discretionary activity under section 44(1)(b) of EPEA and thus not necessarily requiring an EIA (and, therefore, a project summary). Indeed, it would be unusual for an EIA to be required for an exploration program.
As noted, the original Grassy Mountain Application was denied in 2021, therefore it is unclear how Northback is able to rely on the previously submitted project summary in support of its new application. Not surprisingly, the Ministerial Order is silent on whether or not a project proponent is permitted to rely on a previously submitted project summary for new project applications.
Interestingly, a spokesperson for the AER has stated, in response to questions on the validity of relying on a previously denied application’s project summary, that “Northback previously submitted a project summary and an Environmental Impact Assessment Report (EIA report)…. While that project summary and EIA was submitted for its previous coal mine applications (Benga Grassy Mountain), that project summary and EIA can be used for any future applications for coal development.” No authority was cited by the AER in support of the proposition that the old project summary can be used for the new application.
Generally speaking, when a project is denied by the AER the denial is stated to be without prejudice to the applicant’s right to re-apply for approval of the same or similar project. However, the existence of the MO changes that. In addition, having a right to re-apply is very different from saying that in the new application the proponent can simply rely on the original (denied) application. Logically, if all a proponent did in the new application was rely on the old (denied) application, there would be no reason to expect a different outcome. Put simply, it seems illogical on its face to characterize the Project as an ‘advanced coal project’, given that the original project was denied by the AER in 2021.
As a matter of law, the doctrine of functus officio holds that once a decision-maker has made a decision regarding an issue, they lack any power to re-examine that decision. The Supreme Court of Canada has held, in Chandler v Alberta Association of Architects, 1989 CanLII 41 (SCC), that the doctrine of functus officio applies to administrative proceedings before tribunals such as the AER.
On the one hand, it is clear that in considering Northback’s application, the AER is not being asked to revisit its decision to deny the original Benga application. And it would be an error of law for it to do so. On the other hand, since the AER cannot revisit its denial of the Benga project it is worth asking on what basis it believes Northback can “use” Benga’s project summary in considering the new application?
The Benga Project Summary was submitted in respect of a specific project (development of the Grassy Mountain mine), in a specific proceeding. That proceeding is long since complete. The AER will have to explain why it is valid to rely on a project summary filed 8 years ago by a different proponent for a different project.
For further information regarding the post above or any other environmental, energy, or regulatory matter, please contact any member of our Energy, Environmental, and Regulatory Practice Group.