Canada court hears from Trans Mountain pipeline foes amid oil industry slump

VANCOUVER, British Columbia (Reuters) - A Canadian court began hearing arguments on Monday from indigenous groups who oppose the federal government’s plan to expand its Trans Mountain pipeline, a project aimed at easing the country’s severe oil transport bottlenecks.

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The three-day hearing is taking place in the Federal Court of Appeal in Vancouver, which agreed in September to consider concerns from the Coldwater Indian band, Squamish Nation, Tsleil-Waututh Nation and Ts’elxweyeqw Tribe that the government’s consultation with them this year was insufficient.

The legal challenge is the latest setback for Trans Mountain, whose previous owners first proposed the expansion in 2013. It is one of several stalled pipeline expansions proposed to ease congested export channels.

The Alberta government has curtailed production to prevent oil stocks from building up.

“Again First Nations have to go back to court in Canada to make them listen to us,” said Chief Lee Spahan of the Coldwater Indian Band, using the term commonly applied to Canadian indigenous communities.

The biggest concern of the Coldwater, located near Merritt, British Columbia, is potential contamination of drinking water, Spahan said, speaking at a news conference ahead of the hearing.

Other indigenous groups cited a lack of research into the impact of spills and threats to killer whales.

The Canadian government was determined to approve Trans Mountain’s expansion, based on public comments by Prime Minister Justin Trudeau and his ministers, and the fact that it purchased the project, Scott Smith, lawyer for Tsleil-Waututh, told court. The government initially withheld reports on the project’s impact and did not meaningfully discuss potential marine spills with indigenous groups, he said.

“It was unilaterally focused on, to use the minister of finance’s words, getting shovels into the ground,” Smith said.

The Canadian government is scheduled to present its case on Tuesday. A Canadian Natural Resources department spokeswoman said the government approved the project after meaningful dialogue with indigenous peoples, including new measures to accommodate their concerns.

The Trans Mountain expansion would nearly triple capacity to move 890,000 barrels of oil per day from Alberta to a port terminal near Vancouver, where it can be shipped to U.S. West Coast and Asian refiners.

Construction continues despite the court challenge.

In Ottawa, Finance Minister Bill Morneau said the government hopes to eventually sell Trans Mountain and is open to indigenous groups being involved as owners.

“Our objective overall is to make sure the indigenous people along the route can be engaged, (and) that there could be benefits ... for indigenous people more broadly.”

Ottawa bought the pipeline in 2018 from Kinder Morgan Inc's KMI.N Canadian unit when it appeared the company might abandon the expansion.

Reporting by Moira Warburton in Vancouver; writing and additional reporting by Rod Nickel in Winnipeg, Manitoba; additional reporting by Steve Scherer in Ottawa; Editing by David Gregorio and Bill Berkrot