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Trans Mountain oil pipeline faces latest legal challenge in Canada court

VANCOUVER (Reuters) - The Canadian government-owned Trans Mountain oil pipeline expansion faces its latest legal hurdle in a federal court this week as indigenous groups appeal the pipeline’s expansion, arguing the government did not adequately consult them before approving it.

FILE PHOTO: Steel pipe to be used in the oil pipeline construction of the Canadian government’s Trans Mountain Expansion Project lies at a stockpile site in Kamloops, British Columbia, Canada June 18, 2019. REUTERS/Dennis Owen/File Photo

A three-day hearing begins on Monday at Canada’s Federal Court of Appeal in Vancouver, which agreed to hear concerns from the Coldwater Indian band, the Squamish Nation, the Tsleil-Waututh Nation and others that the government’s second consultation with them on the project this year was “window-dressing, box-ticking and nice-sounding words.”

The legal challenge is the latest setback for Trans Mountain, whose previous owners first proposed the expansion in 2013, as well as two pipeline projects proposed separately by TC Energy Corp TRP.TO and Enbridge Inc ENB.TO that would provide badly needed transport for Alberta's oil.

Congestion in Canadian pipelines has forced the Alberta government to order production curtailments this year.

The Trans Mountain expansion, referred to as TMX, would alleviate congestion by nearly tripling the pipeline’s capacity to 890,000 barrels of oil per day.

But the expansion has faced prolonged opposition from environmental activists and some indigenous groups, pitting them against the landlocked Alberta province, home to the world’s third-largest oil reserves.

The appeals have not stopped construction, which has been underway since late summer and accelerated this month.

But legal challenges have created a great deal of uncertainty, Mark Pinney, manager of market economics at the Canadian Association of Petroleum Producers, said by telephone.

“One thing the industry needs right now to help it through the difficult times is more certainty,” Pinney said.

In the lead-up to October’s federal election, in which e Prime Minister Justin Trudeau’s Liberals were running in part on their support of Canada’s indigenous population, the government offered no submissions to support its claim that the consultation had been meaningful.

This left the court to conclude that the appellants’ concerns met the standard for leave to appeal.

Should the appeal succeed, it would further erode investor confidence in the struggling Canadian oil industry and weaken Trudeau as he attempts to placate angry Albertans, who feel his party has not done enough to protect their main industry.

Stewart Phillip, grand chief of the Union of British Columbia Indian Chiefs, said the environmental concerns of indigenous communities have not been adequately addressed and “remain the bedrock” of their fight.

Canadian Environment Minister Jonathan Wilkinson told Reuters at the United Nations-hosted climate conference in Madrid on Wednesday that carbon emissions that would be produced by TMX have been accounted for in the Liberals’ plan to get Canada to net-zero emissions by 2050.

Reporting by Moira Warburton in Vancouver; Editing by Richard Chang

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