The State Department says it has not had enough time to assess whether the project, which would run through the Sand Hills area of Nebraska, is in the national interest. The State Department says it wants to see an assessment of alternative pipeline routes that would avoid the sensitive terrain.
Obama said his decision to deny the pipeline is due to a deadline imposed by Republicans in Congress.
"This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people," the president said in a statement Wednesday.
"In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security -- including the potential development of an oil pipeline from Cushing, Okla., to the Gulf of Mexico -- even as we set higher efficiency standards for cars and trucks and invest in alternatives like biofuels and natural gas."
TransCanada will be able to file another application for a permit for the pipeline, which would run from Alberta, Canada, to Texas.
A measure signed in December that extended taxpayer benefits gave the president until Feb. 21 to make a decision on Keystone. Republican leaders support the pipeline, saying it would reduce dependence on Middle East oil and create U.S. jobs. Environmentalists, critical of the Alberta oil sands industry, have been vocal in their opposition to the pipeline.
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