President Obama has rejected the application for the Keystone XL Pipeline. And with that, Obama just handed Republicans a major battering ram to use against him on job-creation. Here’s the president’s full statement (via TransportationNation):

Earlier today, I received the Secretary of State’s recommendation on the pending application for the construction of the Keystone XL Pipeline. As the State Department made clear last month, the rushed and arbitrary deadline insisted on by congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment. As a result, the Secretary of State has recommended that the application be denied. And after reviewing the State Department’s report, I agree.

Rushed and arbitrary? The administration has had three years to reach a conclusion on the pipeline construction, while the Canadian government has sat around waiting by the phone. The only arbitrary deadline here is the one the administration proposed another two years down the line so that the president didn’t have to wade into a tough fight between labor unions and environmentalists during his reelection campaign.

But the administration’s decision won’t necessarily kill the pipeline for good, the L.A. Times reports. Efforts to build a Canadian oil transportation system may continue, though the project could resurface under a different name and identity:

TransCanada said it had already started to work with Nebraska authorities to find an alternative route. Once one has been determined, the environmental review could take about nine months, TransCanada said. …

TransCanada also might begin building the Keystone XL in pieces, Verrastro said. “They have spent millions of dollars on land rights and easements” along much of the route in the U.S., he said. “They could put these other parts in place. It’s a gamble.”

That’s probably how the White House wants this news to be spun, at least to assure the labor unions which have been clamoring for the thousands of jobs the pipeline construction would create. Of course, these stories aren’t likely to mollify the opposition to the Keystone XL, which comes from green groups that just don’t want additional oil pumped into the U.S. The State Department’s claim it needed to find an alternative route for the pipeline was just a way to buy time – environmentalists don’t care how the oil is transported, they just don’t want it here period.

The L.A. Times reports that TransCanada may end up pulling the Keystone XL application altogether at some point in the next few weeks:

Over the next six weeks, TransCanada could pull the Keystone application to avoid deepening the political fight over the permit and submit it later with a new route through Nebraska, said Frank Verrastro, director of energy and national security at the Center for Strategic and International Studies, a nonpartisan Washington think tank.

That would basically mean pressing the restart button of the application process, which could add another few years to the whole project. But TransCanada may not have another option – the Keystone XL issue will only become more politically-charged once the eventual Republican nominee starts using it to attack Obama’s job record during the general election. Laying low for the next year may be the best decision.