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Altius Royalty Corporation et al. v. Her Majesty the Queen in Right of Alberta et al.

Jurisdiction: Alberta Court of Appeal


Principle law(s): Reduction of Carbon Dioxide Emissions from Coal-fired Generation of Electricity Regulations (SOR/2012-167)


Side A: Altius Royalty Corporation et al. (Corporation)


Side B: Her Majesty the Queen in Right of Alberta et al. (Government)


Core objectives: Whether, by virtue of requiring the phasing out of coal-fired electricity emissions, the defendants had de facto expropriated the plaintiffs’ royalty interest in coal from a coal mine in Alberta, Canada.


Summary
In this case, the plaintiffs, Altius Royalty Corporation, Genesee Royalty Limited Partnership and Genesee Royalty GP Inc., alleged de facto expropriation of their royalty interest in coal from the Genesee Coal Mine caused by the defendant federal government’s regulations prohibiting coal-fired electricity generation by 2030 and the agreement between the owners of Genesee Power Plant and the government of Alberta, also a defendant, for the provision of transition payments to the owners of such plant in exchange for ceasing coal-fired emissions from the plant by December 31, 2030. 

The case was first heard by a Master, who, among other things, granted the defendants’ motion for summary dismissal of the plaintiffs’ claim for de facto expropriation of its royalty interest (Altius Royalty Corporation v. Alberta, 2021 ABQB 3).

The plaintiffs have a royalty interest in coal produced from the Genesee Coal Mine in Alberta, which is dedicated to fueling the Genesee Power Plant. The plant generates coal-fired electricity for the City of Edmonton and elsewhere. The plaintiffs paid, collectively, $460 million for the royalty interest in the coal at the mine. 

In 2012, the federal government adopted the Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity Regulations (“2012 Regulations”) aimed at reducing greenhouse gas emissions from coal-fired electricity plants, which did not directly bind the Genesee Power Plant at the time. The 2012 Regulations permitted the plant to operate as it was from an emissions perspective until its power plant units would be deemed to end their useful life (estimated to be in 2039, 2044 and 2055) under the 2012 Regulations. The plaintiffs claimed that because the 2012 Regulations permitted the units to operate as they were from an emissions perspective for 50 years from their commissioning dates, a reduction in that ability entitled the plaintiffs to compensation. 

In 2015, the government of Alberta introduced its “Climate Leadership Plan” which aimed to phase out emissions from coal-fired electricity generation by 2030. The government of Alberta entered into an off-coal agreement with the owners of the Genesee Power Plant, where the owners agreed to end emissions from coal-fired electricity generation by 2030 and, in return, the government of Alberta agreed to pay certain transition payments. The plaintiffs alleged that by entering into the agreement with the Genesee Power Plant owners, the government of Alberta engaged in conduct that compensated the plant owners but excluded the plaintiffs. 

In 2018, new federal regulations came into force amending the 2012 Regulations (the “2018 Regulations”). The 2018 Regulations affected existing plants, including the Genesee Power Plant, and required that they meet the new emissions standards set out in the regulation by December 31, 2029. The plaintiffs alleged that, based on the 2012 Regulations, the plaintiffs had counted upon the royalty stream being available to 2039, 2044 and 2055. The plaintiffs alleged that the 2018 Regulations amounted to a constructive expropriation or “taking” by the federal government of its royalty interest in the coal after 2030. 

The Master found that the 2012 Regulations, as amended by the 2018 Regulations, was not a “taking” by the federal government and that the actions of the government of Alberta to enter into an off-coal agreement (and other actions) compensating the Genesee Power Plant owners did not amount to takings or actionable wrongs. These actions therefore did not create a cause of action in favour of the plaintiffs. For those reasons, the Master dismissed the plaintiffs’ actions. 

In reviewing the Master’s decision to grant summary dismissal of the plaintiffs’ claim for de facto expropriation, the Court determined whether the defendants had met the requirements for a finding of a de facto taking requiring compensation at common law: (i) an acquisition of a beneficial interest in the property or flowing from it and (ii) removal of all reasonable uses of the property. The Court found that the requirements had not been met, as there was no evidence that the defendants would, in some way, recover a freehold interest in the coal and that the defendants have an interest in keeping the coal in the ground (in its natural state). The Court found that the defendants’ interest was reducing Canada’s production of greenhouse gas emissions, as manifested in the Paris Agreement and the 2012 Regulations, as amended by the 2018 Regulations. The Court agreed with the Master’s finding that the defendants had proven on a balance of probabilities that there was no merit to the plaintiffs’ claim.

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