At the same time, a former State Department official said he expected President Barack Obama would approve the 1,700-mile pipeline system that would transport petroleum products from Canada and the northern United States to Texas Gulf Coast refineries.
EPA Assistant Administrator for Enforcement and Compliance Cynthia Giles said in a letter the State Department failed to adequately support its two fundamental conclusions supporting the project, which environmentalists have vowed to stop.
Those conclusions were that building a pipeline would have a negligible effect on climate change and that Canada would develop the oil sands whether the $7 billion pipeline is built or not.
Oil sands are loose sand or partially consolidated sandstone saturated with a thick, dense form of petroleum known as bitumen, which looks and smells like tar.
The Keystone project would carry millions of barrels of bitumen a week from Alberta, north of Montana.
Giles also questioned the department's conclusion Canada would simply transport the bitumen by rail and other means if the pipeline weren't built.
She said the department didn't realistically assess alternative pipeline routes and, overall, provided "insufficient information" to adequately judge the project.
The EPA would not consider signing off on the pipeline unless more complete studies are performed, she said in her letter to the top State Department officials overseeing the pipeline permit process.
The letter, which came on the final day of the public comment period, was posted on the EPA website at tinyurl.com/EPA-KeystoneXL.
The State Department is determining if the project is in the national interest because it crosses an international border.
Secretary of State John Kerry is expected to make a recommendation to Obama on the pipeline as early as this summer.
A senior State Department official told The New York Times the department was working closely with the EPA and would take its concerns into consideration.
At the same time, former State Department official David F. Gordon said Obama would almost surely approve the pipeline.
"I would say the chances are about four-to-one," the department's policy planning director in the George W. Bush administration told The Globe and Mail.
Domestic political considerations -- particularly with House Republicans -- make approval all but inevitable, Gordon told the Toronto newspaper.
In addition, "at least half the Democrats in Congress are very sympathetic to allowing this to go through," said Gordon, head of research at the Eurasia Group political risk consulting firm.
The State Department's positive assessment, despite EPA criticism, is advance notice of Obama's likely approval, he said.
"He's creating the political environment that minimizes the cost to him politically of signing on to this," Gordon said.
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