Nebraska regulators deny TransCanada request to amend Keystone XL application

Nebraska regulators on Tuesday denied TransCanada Corp's request to retroactively amend its route application for the proposed Keystone XL pipeline project through the state, a potential setback to the company as it seeks to head off legal challenges to the approved path.

The state's Public Service Commission had approved a route for Keystone XL last month, but it was not for the preferred route cited in TransCanada's application. Instead the commission approved the company's "alternative mainline" route, a move opponents of the pipeline have said violated state statutes.

TransCanada filed a motion last month with the commission seeking permission to retroactively amend the route application, a move that a company official said was intended to prevent lawsuits.

Ken Winston, a lawyer for the Sierra Club, said he saw the commission's ruling on Tuesday as a win for pipeline opponents.

"The fact that they're having to consider an alternate route and that their motion was denied continues to make it more complicated for TransCanada. And any time it's more complicated, that's a victory for us," he said.

Attorneys for landowners opposing the pipeline also said Tuesday's ruling represented a major setback for the project.

"The PSC clearly recognizes that it voted on a route that was not in the TransCanada application as a route it wanted approved," said attorney David Domina. "TransCanada knows it is now in a position where it cannot go forward without a tremendous risk of reversal on appeal," he said.

TransCanada said in a statement that it would review the commission's decision to determine next steps for Keystone XL, and added that it believed the project remained economically viable.

"It is important to remember that this project has widespread support within the U.S. and Canadian federal governments, as well as state officials in Montana, South Dakota and Nebraska," the company said.

TransCanada shares were down 20 cents to $61.61 at midday.

(Reporting by Kevin O'Hanlon; Writing by Richard Valdmanis)