The Department of State said “State law primarily governs routes for interstate petroleum pipelines; however, Nebraska currently has no such law or regulatory framework authorising state or local authorities to determine where a pipeline goes.

“Taken together with the national concern about the pipeline’s route, the Department has determined it is necessary to examine in-depth alternative routes that would avoid the Sandhills in Nebraska in order to move forward with a National Interest Determination for the Presidential Permit.”

The Department has been conducting a review of TransCanada’s application for the proposed Keystone XL Pipeline project since 2008.

TransCanada President and Chief Executive Officer Russ Girling said “We remain confident Keystone XL will ultimately be approved. This project is too important to the US economy, the Canadian economy and the national interest of the US for it not to proceed.”

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Current plans for the proposed Keystone XL Pipeline involves a 2,673 km, 36 inch diameter crude oil pipeline starting from Hardisty, Alberta, and running southeast through Saskatchewan, Montana, South Dakota and Nebraska.

It will link up with a portion of the Keystone Pipeline that will be built through Kansas to Cushing, Oklahoma. The pipeline will then continue on through Oklahoma to a delivery point near existing terminals in Nederland, Texas, to serve the Port Arthur marketplace.

Fourteen different routes for Keystone XL were studied, eight that impacted Nebraska. They included one potential alternative route in Nebraska that would have avoided the entire Sandhills region and Ogallala aquifer, and six alternatives that would have reduced pipeline mileage crossing the Sandhills or the aquifer.

TransCanada said that it hopes this work will serve as a starting point for the additional review and help expedite the review process.

After obtaining additional information from the review, the Department of State will determine – in consultation with eight other agencies – whether the proposed pipeline is in the national interest, considering all of the relevant issues together.

Among the relevant issues that will be considered are environmental concerns (including climate change), energy security, economic impacts, and foreign policy.

The Department said that the review process could be completed as early as the first quarter of 2013.