In an unprecedented move Rob Morgan, the CEO of the Alberta Energy Regulator, has bowed to intense bullying from an Australian-based coal company and cancelled a planned public hearing on a large underground project near the town of Grande Cache.

Critics say the decision challenges the AER’s credibility in its role regulating coal development in the province, which is ruled by a political party committed to fast-tracking resource development.

On Thursday, Morgan, a former oil and gas executive, announced in a letter that he had unilaterally decided to cancel the scheduled October public hearing for the Summit steelmaking coal project (Mine 14) after owner Valory Resources asked for a cancellation, claiming a public hearing was both unnecessary and frivolous.

In doing so Morgan reversed a procedural decision by the agency he heads. The AER had called for the hearing in response to public concerns about the scale of land and water use by the mine.

In the letter Morgan even admitted that his decision “is without precedent” but the right one.

‘Most ill-considered decision’

The cancellation of the hearing “gobsmacked” Nigel Bankes, a respected resource lawyer and retired University of Calgary professor who has monitored the activities and behaviour of Alberta’s controversial and scandal-plagued energy regulator for decades.

“In what is perhaps the most ill-considered decision of any regulator of any time, the CEO of the Alberta Energy Regulator (AER) claims to have the authority to overturn a decision of the adjudicative branch of the same agency. This is bad policy and bad law,” said Bankes.

“It is bad policy insofar as the AER is an agency that is struggling to escape the claim that it is subject to regulatory capture.”

Valory Resources describes itself as a Canadian company “with Australian leadership” largely based in Brisbane, including prominent resource lawyer Glenn Vassallo. It has been registered with the Australian Securities and Investments Commission since 2021.

It is also one of four Australian companies that sued the United Conservative Party government for nearly $16 billion after it opened up the Rockies to coal mining in 2020 but then reversed that decision in 2022 with a new coal moratorium due to massive public opposition and concerns about water security.

In response to those lawsuits the UCP government of Danielle Smith killed its coal moratorium this year and agreed to settle out of court with the four companies. It has since awarded settlements totalling hundreds of millions of dollars to two of the companies, Atrum and Montem.

Valory Resources, which congratulated the government on its decision to kill its coal moratorium earlier this year, has two coal projects in Alberta. The proposed Blackstone underground hard coking coal development is massive and comprises an area of about 140 square kilometres in Clearwater County near Red Deer.

The smaller Summit project would excavate about a million “clean metric tonnes” per year and employ 200 workers for about a decade.

The proposed mine is located on Grande Mountain, which is high in biodiversity and provides important habitat for a variety of wildlife including bears and caribou.

But Valory’s Australian leadership has long argued that a public hearing on the Summit project would create “significant uncertainty and unpredictability in Alberta’s regulatory regime” and wasn’t necessary.

Concerns raised by environmental groups weren’t relevant, added the company, because these groups didn’t live in the area and therefore were not “directly affected.”

But the Alberta Wilderness Association, which has nearly 10,000 members, replied that a public hearing was warranted due to a host of deficiencies in the company’s applications and given that impacts extend far beyond the mine site. Recent studies show that toxic pollutants from coal mining can travel 100 kilometres downwind and 500 kilometres downstream. Scientists with the Alberta government have repeatedly shown that even supposedly reclaimed coal mines that meet AER standards continue to pollute water downstream for decades with dismal regularity.

Valory’s pushback

When the AER granted the Alberta Wilderness Association the right to participate in Summit’s hearing last February, a rare move in Alberta, Valory again objected, raising “substantive issues.” Last June the company filed a motion with the AER to cancel the proceedings altogether.

In July Valory Resources penned an angry letter to Energy Minister Brian Jean, saying it was “disappointed with Alberta’s regulatory processes.” It also threatened to kill the Summit project if a public hearing proceeded.

The letter argued that there was no need for “expensive and time-consuming public hearings” given that local First Nations initially opposed to the development had reached settlements with Valory and that the local Municipal District of Greenview fully supported the development. Moreover, only two large “environmental advocacy groups” (the Alberta Wilderness Association and Canadian Parks and Wilderness Society) opposed it, the company said.

Because proponents typically pay the costs of interveners in AER’s public hearings, Valory also warned the government it was not prepared “to pay environmental advocacy groups to participate in an unnecessary hearing so that they can advance their anti-coal development agenda.”

The forceful letter also accused the AER of “delaying jobs in Grande Cache and construction of Mine 14 by holding a public hearing only because of requests by two environmental advocacy organizations…. This is something we expected from the previous federal government, and we are dismayed to see such a position taken by an Alberta regulator.”

The regulator, added the letter, was putting taxes, royalties and jobs “unjustifiably” at risk “by ignoring the extensive support for the Project and instead prioritizing the interests of two organizations that are staunchly opposed to coal development and resource development in general.” (Support for the mine is not as universal as the company claims.)

Nearly one month later Morgan basically accepted Summit’s arguments and issued a letter cancelling the public hearing.

Valory wrote to the AER complaining it was ‘delaying jobs in Grande Cache and construction of Mine 14 by holding a public hearing only because of requests by two environmental advocacy organizations…. We are dismayed to see such a position taken by an Alberta regulator.’ Photo via Grande Cache Chamber of Commerce.

Australian coal companies have a history of treating the Alberta Energy Regulator with active disdain after the UCP government secretly promised to open the doors to coal mining in the Rockies with low royalties and no red tape in 2020. When public opposition forced the government to reverse those promises, the companies, many backed by billionaires, went to the courts or engaged in open brawls with the regulator.

Australian billionaire Gina Rinehart, for example, wants to build an open-pit mine in the Crowsnest Pass. When her application was refused in 2021, she contested one regulatory decision after another in Alberta and federal courts. She has also sued the government for billions.

Montem Resources, another Australian firm, began an epic two-year brawl with the regulator and even threatened to sue individual members of the regulator when it raised questions about high levels of selenium pollution leaching off its site.

Four other companies, including Valory, then sued the government for restoring the mining moratorium in the Rockies, seeking more than $15 billion.To avoid a public trial that would have revealed the extent of backroom deals and lobbying made with aggressive Australian coal companies, the UCP government chose to settle out of court for hundreds of millions of dollars with no transparency.

A welcome mat to coal mining

As The Tyee documented, Valory was one of the first companies to entice investors with how friendly the Alberta government was to coal investment back in 2020. The company’s investor presentations included effusive letters of support from two Alberta cabinet ministers for a massive surface and underground project.

Underground mining doesn’t abuse the landscape as visibly as mountaintop removal but its impacts can be just as profound. Both surface and underground mining generate water pollution and climate-warming gases that can travel way beyond local sources. Other problems include the explosive release of methane gases, groundwater contamination, acid drainage from mine waste and ground subsidence resulting in extensive changes to vegetation and water flow.

Because many of these issues were largely unaddressed in Valory’s application to develop the Summit mine (Mine 14), both the Alberta Wilderness Association and the Canadian Parks and Wilderness Society sought to raise these deficiencies during a public hearing with the goal of establishing verifiable baselines for air, groundwater, surface water and biological diversity in the region.

The two groups also argued that the company should do a proper environmental assessment that addressed cumulative impacts, including selenium pollution overtime.

A toxicology report prepared by the Alberta Wilderness Association found that the company groundwater assessment lacked site-specific baseline chemistry data, didn’t account for seepage from coal waste piles on the surface, didn’t perform any groundwater modelling and didn’t include current problems such as recent upward trends in selenium, sulphate, boron and manganese pollution from other projects in the region.

“The Mine 14 Project application, in its current form, lacks the necessary detail, validation, and quantitative risk assessments to ensure environmental and human health protection,” concluded the report.

But that work will no longer get a public airing.

“Rob Morgan has now set a precedent whereby companies unhappy that they must be accountable to the public concerns through processes explicitly outlined under the Responsible Energy Development Act can avoid the process altogether,” charged the Alberta Wilderness Association in a press release.

“It is baffling that one man has unilateral power to cancel a public hearing on the request of a coal company, undermining all the other times the staff at the AER familiar with the project decided otherwise,” added Kennedy Halvorson, a conservation specialist with the association.

Under the administration of Premier Smith, the AER has lost all pretence of being an “impartial” regulator.

Smith even appointed David Yager, a personal friend and oil ideologue, to serve on its board and influence its policies and management. The government also instructed the AER, which rejected Rinehart’s Grassy Mountain project as economically unsound in 2021, to reconsider the terminated mine as an advanced project in 2024 and therefore exempt from any coal moratorium.

After AER executives met with that project’s executives this year, the regulator approved a highly controversial coal exploration permit.

Earlier this year the regulator quietly ended any limit on flaring toxic gases from oil and gas facilities in the province because industry consistently exceeded the ceiling of 670 million cubic metres for the last two years.

In 2024 the industry, due to rising production, flared off approximately 912.7 million cubic metres of natural gas.

The AER told Reuters it did so on orders from the provincial government, which, like the Trump administration, openly questions the science on climate change or denies its existence altogether. 

Teaser photo credit: Highway 40 through Grande Cache. By I, Qyd, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=2322175