The focus of the Keystone XL debate has shifted from a fierce lobbying war in Washington to Lincoln, Nebraska, where the state’s Supreme Court has been asked to weigh a legal challenge to the pipeline.

The U.S. Department of State, which is responsible for reviewing whether the project is in the nation’s interest, said April 18 that it would delay making a recommendation until legal questions about the way the route was approved through the prairie state are resolved. That could spare President Barack Obama from having to decide on a project that splits supporters of his in the environmental and labor movements before an important congressional election in November.

“Once again, the administration is making a political calculation instead of doing what is right for the country,” Terry O’Sullivan , general president of the Laborers’ International Union of North America, said in an email. “It’s clear the administration needs to grow a set of antlers, or perhaps take a lesson from Popeye and eat some spinach.”

If the seven-member state Supreme Court upholds a lower court decision, TransCanada Corp. (NYSE: TRP), the Calgary-based company that wants to build Keystone, will need to apply to the Nebraska Public Service Commission. The commission, by law, has seven months for its pipeline reviews.

“Effectively, this likely postpones the decision until after the U.S. midterm elections,” Robert Kwan , an analyst with RBC Capital Markets, a subsidiary of Royal Bank of Canada, said in a research note April 20.

TransCanada fell 3.3% to CA$49.62 as of 10:30 a.m. in Toronto, the biggest drop in more than two years.

The State Department said the possibility of a new route coming out of that process justified hitting the pause button. The announcement drew a strong reaction from all sides -- including pledges from congressional leaders to force a decision sooner by legislation.

“President Obama is going to try to prevent this project from going forward,” Sen. John Hoeven , a North Dakota Republican, said in an April 18 interview. “He’s trying to defeat it by delay.”

Hoeven said a bill he authored to require Keystone approval is about four votes shy of the 60 needed to advance legislation in the Senate. The announcement may put pressure on a half dozen colleagues, who support the line but have opposed his bill, to give the administration time to reach a decision.

Senate Democrats are trying to