The Sturgeon Lake Cree Nation’s lawsuit over a water license for a planned $70 billion artificial intelligence data center in Alberta will proceed after a court rejected an attempt to dismiss the case.
An Alberta court ruled last week that O’Leary Digital Limited cannot halt the lawsuit because it is not a party to the case and failed to prove it would be directly affected. The company argued it should be included since it plans to build the data center, which would use water from the Smoky River for cooling.
Court rejects company’s claim of direct impact
The lawsuit, filed in October 2025, targets the Alberta government and the Municipal District of Greenview. Both received a water license earlier that year allowing diversion of six million cubic meters from the Smoky River. Sturgeon Lake Cree Nation (SLCN) claims the province did not properly consult them before granting the license, which sits near reserve land.
Months after the lawsuit was filed, O’Leary Digital told the Court of King’s Bench of Alberta it was supposed to be the ultimate beneficiary of the water license and should therefore be a party in the proceedings. The company noted that under Alberta’s court rules, lawsuits must be filed and served on “every person or body directly affected by the application” within six months of the decision being challenged. Because SLCN never served the lawsuit on the company, it argued the lawsuit failed to comply with this rule and must be dismissed.
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SLCN countered that it never knew about the company’s claim to the water license until the company asked the court to dismiss the lawsuit. The court agreed, calling the company’s connection to the license contingent and speculative. In its August 13 decision, the court stated O’Leary Digital had failed to prove it would be “directly affected” by SLCN’s lawsuit. The court also declined to grant O’Leary Digital intervenor status in the case.
License granted without consultation, First Nation says
The conflict began in 2023 when Greenview applied for a water license under Alberta’s Water Act to divert 24 million cubic meters from the Smoky River. The province initially required consultation with SLCN but later issued a preliminary certificate without ensuring it happened. Greenview then applied for a smaller license, and the province decided no consultation was needed.
In December 2024, Alberta, Greenview, and O’Leary Digital announced the data center project, highlighting the region’s natural resources. The following month, SLCN sent an open letter to Premier Danielle Smith asking for all documents related to the license. The government replied that no license had been issued yet.
When Greenview received the license months later, SLCN appealed to Alberta’s Environmental Appeals Board. O’Leary Digital did not participate in the proceedings and was never identified as an interested party. When SLCN asked O’Leary Digital for documents related to the proposed AI project, the company said it had not yet made a final decision about whether to move forward with the project and declined to hand over the documents.
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Legal experts say the case reflects wider tensions over Indigenous consultation in resource development, especially as AI infrastructure grows in rural areas.
Next steps in the case
A spokesperson for Alberta’s Minister of Justice declined to comment due to the ongoing case. O’Leary Digital’s counsel did not respond to requests for comment.
SLCN can now pursue its challenge in court.
