LINCOLN, Neb. -- A Nebraska judge on Wednesday struck down a law that allowed the Keystone XL pipeline to proceed through the state, a victory for opponents who have tried to block the project that would carry oil from Canada to Texas refineries.
Lancaster County Judge Stephanie Stacy issued a ruling that invalidated Nebraska Gov. Dave Heineman's approval of the route. Judge Stacy agreed with opponents' arguments that the law passed in 2011 improperly allowed Mr. Heineman to give Calgary-based TransCanada Corp. the power to force landowners to sell their property for the project. The judge said the decision to give TransCanada eminent domain powers should have been made by the Nebraska Public Service Commission, which regulates pipelines and other utilities.
A spokeswoman for Nebraska Attorney General Jon Bruning said the state will appeal.
Judge Stacy's decision could cause more delays in finishing the pipeline, which is critical in Canada's efforts to export its growing oil sands production. It also comes amid increased concerns about dangers of using trains to transport crude oil after some high-profile accidents, including a fiery explosion in North Dakota last month and an explosion that killed 47 people in Canada last year.
A spokesman for pipeline developer TransCanada said company officials were disappointed and disagreed with the decision, which came in a lawsuit filed by three Nebraska landowners who oppose the pipeline. The company planned to review the ruling before deciding how to proceed.
"TransCanada continues to believe strongly in Keystone XL and the benefits it would provide to Americans -- thousands of jobs and a secure supply of crude oil from a trusted neighbor in Canada," spokesman Shawn Howard said.
The proposed pipeline route would cross through Montana, South Dakota, Kansas, Oklahoma and Texas, which have already approved their segments, and company officials have previously argued that cutting through Nebraska was the most direct, practical way to transport the oil. A reroute around Nebraska could bring more states into the mix and would lead to further expensive delays.
For the Nebraska Public Service Commission to act, state lawmakers may have to pass a new pipeline-siting law. If they do, it's not yet clear how long the five-member PSC might take on the issue, or whether it would approve the pipeline. Staff members were still reviewing the ruling Wednesday, said Angela Melton, the commission's attorney.
Dave Domina, the landowners' attorney, said in a statement that the ruling means TransCanada has "no approved route in Nebraska." He added: "TransCanada is not authorized to condemn the property against Nebraska landowners."
The Keystone XL would carry 830,000 barrels of oil daily from Canada to Texas Gulf Coast refineries. In its latest environmental analysis, the U.S. State Department raised no major environmental objections to the $7 billion pipeline. Foes disagree, saying the pipeline threatens ground- and surface water and would disrupt soil in the Nebraska Sandhills, a region of grass-covered dunes used as ranchland.
The Nebraska Legislature in 2011 gave Mr. Heineman the ability to approve the route after landowners complained that the pipeline posed a threat to the Sandhills. The governor approved a new route that went around an area designated as the Sandhills, although opponents insist that it still traverses the delicate soil.
Mr. Domina said the ruling means that the governor's office has no role to play in the pipeline, and decisions within the state must be made by the Public Service Commission. The commission was created in 1890s to prevent governors from granting political favors to railroad executives who wanted to expand through private property.
The decision on a federal permit still rests with President Barack Obama.
Pipeline opponents called Wednesday's ruling a victory for landowners.
"TransCanada learned a hard lesson today: Never underestimate the power of family farmers and ranchers protecting their land and water," said Jane Kleeb, executive director of the anti-pipeline group Bold Nebraska.