10/24/2011 03:30 EDT | Updated 12/24/2011 05:12 EST

Nebraska governor calling lawmakers into session to consider challenging oil pipeline's route

LINCOLN, Neb. - Nebraska's governor said Monday that he'll call a special legislative session for lawmakers to consider challenging the planned route of a massive transnational oil pipeline proposed by Calgary-based TransCanada Corp.

Republican Gov. Dave Heineman's decision means Nebraska, where the US$7 billion Keystone XL Pipeline project has faced some of its greatest resistance, doesn't want to just leave the matter to the federal government. The State Department, which has authority over the pipeline because it would cross the U.S. border, is expected to decide whether to approve a permit for the project by year's end.

Pipeline opponents, including a coalition of environmentalists, ranchers and landowners, sought the special session to consider a proposal that would have given the state control over the pipe's route. Lawmakers, however, said last week that the measure wouldn't likely survive a court challenge.

Heineman on Monday acknowledged the potential for a "legal minefield," but said the issue needs to be addressed and lawmakers will search carefully for a solution during the special session that will begin Nov. 1. The governor has said he supports the pipeline but opposes the 2,700-kilometre route, which would cut through part of the Ogallala aquifer, a massive water supply in Nebraska and seven other states.

The proposed pipeline would deliver oilsands oil from Alberta to refineries on the Gulf of Mexico. It would cross Montana, South Dakota, Nebraska and Kansas before connecting with TransCanada's (TSX:TRP) existing pipelines to move oil to Oklahoma and Texas.

Supporters say it could reduce U.S. dependence on Middle Eastern oil, while environmental groups say a spill could cause an ecological disaster.

Pipeline operator TransCanada last week offered new safeguards it said would limit the effect of a potential spill, but company executives maintained they cannot move the proposed route at this point in the federal permitting process.

With files from The Canadian Press