Wires

UPDATE 2-Court dismisses challenge to Canada approval of Trans Mountain oil pipeline expansion

Rod Nickel and David Ljunggren

pipeline expansion@ (Adds quotes from decision, background on project)

WINNIPEG, Manitoba/OTTAWA, Feb 4 (Reuters) - Canada's Federal Court of Appeal on Tuesday dismissed a challenge to the approval by Prime Minister Justin Trudeau's government of the Trans Mountain oil pipeline expansion, clearing some uncertainty from the project.

The court said in a written decision that the government held "reasonable and meaningful" consultations with indigenous groups as required by law.

Congested pipelines have forced the Alberta provincial government to curtail production to reduce a glut in storage that has weighed on prices and led to layoffs.

Ottawa bought the 67-year-old pipeline, which runs from Alberta to the British Columbia coast, in 2018 to ensure expansion proceeded. The project, which is under construction, would nearly triple capacity to 890,000 barrels per day by the third quarter of 2022.

"The evidentiary record shows a genuine effort in ascertaining and taking into account the key concerns of the applicants, considering them, engaging in two-way communication, and considering and sometimes agreeing to accommodations," the court's three-judge panel wrote.

"Contrary to what the applicants assert, this was anything but a rubber-stamping exercise."

The legal duty for governments to consult indigenous people on resource projects does not amount to a veto, the panel said.

The parties have 60 days to appeal the decision to Canada's Supreme Court. There is at least one other legal challenge underway.

Four indigenous groups alleged in court in December that Ottawa delayed sharing key information and listened half-heartedly to concerns. Trans Mountain Corp countered that the groups did not bargain in good faith.

A Canadian court ruled in August 2018 that Ottawa had failed to properly consult indigenous people, prompting the government to redo consultation before reapproving the expansion in June 2019. In September, the Court of Appeal agreed to hear fresh concerns that the government fell short again.

Indigenous concerns include potential spills and harm to an endangered killer whale population.

The Trans Mountain expansion is one of three projects, along with TC Energy Corp's Keystone XL and Enbridge Inc's Line 3, that have been stalled for years.

On Monday, Line 3 cleared key hurdles before a Minnesota regulator. (Reporting by Rod Nickel in Winnipeg, Manitoba and David Ljunggren and Steve Scherer in Ottawa; Editing by Lisa Shumaker and Steve Orlofsky)