* Boehner: "It's not finished yet"
* Reid: next 24 hours key
* Fate of Keystone pipeline provision still unclear
By Roberta Rampton and Richard Cowan
WASHINGTON, June 27 (Reuters) - U.S. congressional leaders said they were optimistic that final hours of talks on Wednesday on a two-year, $109 billion funding package for roads, bridges and mass transit would yield a deal, but warned their work was not yet finished.
Federal funding for highway projects is set to expire on Saturday, but it was still unclear whether lawmakers could reach a compromise on thorny details about environmental regulations and the Keystone XL crude oil pipeline.
If a deal falls through, lawmakers were expected to pass a short-term extension for current transportation funding levels.
"A lot of work that's gone into this, it's not finished yet. But it is clear that there are significant reforms in this bill," House of Representatives Speaker John Boehner told reporters.
The package would also include a one-year, $6 billion fix to prevent a doubling of interest rates for about 7.4 million students with Stafford loans to help pay their college costs.
"I'm cautiously optimistic that we can end this week tomorrow even, with a little bit of luck - but we may not be able to," said Harry Reid, the Senate Democratic leader.
"We have to see what happens in the next 24 hours, which will be key," Reid said.
Still up in the air is the fate of a House Republican demand to accelerate approval of TransCanada's Keystone XL pipeline as part of the bill.
President Barack Obama ruled earlier this year that more environmental reviews were needed for all but the southernmost tip of the 1,700-mile-long (2,736 km) pipeline, which would carry crude from Canada's oilsands to Texas.
Lawmakers have said that Reid and Boehner would determine whether the Keystone provision stayed in.
"Nothing's off the table until we file a bill tonight," said John Mica, the Republican chairman of the House Transportation Committee, who has led negotiations on the bill.
"Everything's in flux," Mica told reporters.
Republican Representative Bill Shuster, who is also part of the negotiating team, told reporters he did not know what would happen with Keystone.
But he added, "I don't believe they'll let it hold us up" in reaching a deal on the transportation bill.
Boehner said the deal would include "significant reforms" to streamline environmental reviews for certain highway projects, and reduce the number of programs in the highway bill, focusing spending on core transportation projects rather than directing money toward roadside landscaping and other ancillary programs.
Also unclear is whether lawmakers have reached a deal to ease proposed regulations for coal ash, a power-plant byproduct used in cement. On Tuesday, some lawmakers had said competing proposals had made resolution of the issue more difficult.
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