State's assessment represents its second go-round with the Canadian company.
It rejected a permit from TransCanada, last year, saying the route through Nebraska was too risky for the state's Sand Hills Region, a landscape of natural beauty. And it endangered the Ogallala Aquifer, which provides water to farmers and ranchers to raise livestock and grow crops.
TransCanada came up with a new route, but the EPA said, it misses the mark.
"The alternative route in Nebraska has avoided most of the impacts to the Sand Hills Region, but still crosses the Ogallala Aquifer," the agency assessed.
In its public reaction Monday, State indicated that the EPA's criticism was business as usual. It also anticipated public protest.
"The State Department has always anticipated that in preparing a Final Supplemental EIS it would conduct additional analysis and incorporate public comments received on the Draft SEIS," said press spokesman Patrick Ventrell.
Keystone XL opponents have aligned themselves principally behind the greenhouse gas (GHG) issue, as the EPA acknowledged in Monday's letter to State:
"It is this difference in GHG intensity -- between oil sands and other crudes -- that is a major focus of the public debate about the climate impacts of oil sands crude."
Obama's own former deputy press secretary is leading the charge to push the president to stop the pipeline.
Bill Burton quit his job before the 2012 election to head up the super PAC Priorities USA, which worked for the president's reelection. In January, he joined the PR firm Global Strategy Group as an executive vice president.
He is now representing a new coalition, "All Risk, No Reward," which opposes Keystone XL. It goes after the additional greenhouse gases but also showcases the damage causes by spills to Americans in the heartland.
Another group, 350.org, which wants to bring down carbon dioxide levels in the atmosphere below 350 parts per million, is soliciting letters of protest to the state department.
Nebraska's Republican governor Dave Heineman has approved the project, and Nebraskan congressman Lee Terry has called for the Keystone XL's construction in a Republican radio address.
The pipeline "is primed to give our economy a shot in the arm and make energy more affordable -- and it won't cost the taxpayers a dime," he argued.
Terry spoke a day after an apparent pipeline rupture in the Arkansas town of Mayflower in late March, about 20 miles north of Little Rock.
Black torrents of diluted bitumen flowed through the community, forcing the evacuation of 22 homes.