Canada review of Trans Mountain pipeline flawed, lawyers argue

Canada failed in its duty to consult First Nations and other groups on the Trans Mountain oil pipeline expansion, and therefore the approval of the C$7.4 billion ($5.9 billion) project must be overturned, lawyers for project opponents argued at the launch of a judicial review on Monday.

A decision against the Kinder Morgan Canada Ltd project would send it back into regulatory review, a move that would cause lengthy delays and could derail the project.

Shares of Kinder Morgan Canada fell 1.91 percent to C$16.99 on Monday on the Toronto Stock Exchange. Parent company Kinder Morgan Inc's shares were also down slightly at midday in New York.

The Trans Mountain expansion would nearly triple the capacity of an existing pipeline from Alberta to British Columbia's west coast and significantly increase crude tanker traffic.

Pipeline opponents' lawyer Elin Sigurdson argued the Canadian government did not provide "meaningful consultation" with First Nations and other groups, and neglected to adequately review certain environmental issues.

Those failures meant the government's approval was "not a decision made in the public interest."

Lawyers for the opponents will present arguments over the next few days, with company and government solicitors to respond starting on Thursday. The hearings are to run for two weeks.

It is rare for Canada's judiciary to review pipeline approvals. The last such review, heard in 2015, helped kill Enbridge Inc's Northern Gateway pipeline.

The suit, in Canada's Federal Court of Appeal in Vancouver, was brought by environmental and aboriginal groups, and coastal municipalities. On the other side are Kinder Morgan, the federal government and energy regulator, the National Energy Board.

The government has called the export of natural resources a "fundamental" responsibility, and said it has considered environmental concerns and views of affected aboriginal people in approving the project.

Kinder Morgan has said it went through extensive consultations with aboriginal groups and communities along the expansion's path and remains dedicated to engaging them.

While there is no firm deadline for rendering a judgment, the court announced its decision against Northern Gateway in June 2016, about eight months after hearings ended.

Regardless of its outcome, any decision is likely be appealed in Canada's Supreme Court.

(Reporting by Ethan Lou in Calgary and Julie Gordon in Vancouver; Editing by Jim Finkle and Susan Thomas)