The National Energy Board in Canada said inspectors last year determined pump stations for the Keystone oil pipeline in Manitoba and Saskatchewan didn't have alternative power supplies for emergency shut-down systems.
The company in July 2011 said mitigation measures were in place but it considered itself in compliance with national safety regulations. It applied for relief from the issue in May.
"The board has considered TransCanada's request and has decided to deny the relief," the energy board said in a statement.
In a statement Wednesday to United Press International, TransCanada said backup battery power sources were at the pumping stations.
"We also felt that closing the valves remotely enabled us to avoid constructing power generators and fuel tanks on-site at pump stations, something that could have a negative impact on greenhouse gas emissions and also could pose a spill risk to the environment as diesel fuel needs to be replaced annually," a spokesman said.
TransCanada aims to extend the pipeline through the Keystone XL project in the United States. The company has started construction on a domestic leg of the pipeline, but U.S. federal approval is needed for the section that would cross shared borders.
Keystone XL would carry so-called tar sands oils to southern U.S. refineries. The project is controversial because of the perceived environmental risks associated with Canadian crude oil, which is heavier and allegedly more corrosive than conventional crude.
The original Keystone oil pipeline system extends more than 2,000 miles from Alberta province to several U.S. destinations.
TransCanada has until Sept. 17 to address the NEB issue.