Gov. Dave Heineman delighted supporters and deflated opponents of the proposed Keystone XL oil pipeline Tuesday when he approved a new route through Nebraska, saying the project represents a minimal environmental threat while holding substantial economic promise.

The governor sent a 2½-page letter to President Barack Obama and Secretary of State Hillary Rodham Clinton, explaining that Nebraska’s review of the new underground pipeline route found that it meets state standards.

“Construction and operation of the proposed Keystone XL pipeline, with mitigation and commitments from Keystone, would have minimal environmental impacts in Nebraska,” the governor’s letter stated.

Oil industry representatives, labor interests and some members of Congress praised the decision, hoping it will provide momentum for a project that stalled in Nebraska a year ago. The fate of Keystone XL now rests with the U.S. State Department, which is unlikely to announce a final decision before the end of March at the earliest.

“It is time to give it the final green light,” said U.S. Sen. Mike Johanns of Nebraska, one of the first elected officials in the state to insist on a new route. “I hope President Obama will swiftly approve the project so we can take a significant step forward in meeting our energy needs.”

But pipeline opponents said Heineman relied upon a flawed state review and should have demanded yet a different route to protect landowner rights and the state’s vast underground reservoir, the Ogallala Aquifer. They now call upon the president to reject the project.

Jane Kleeb of Bold Nebraska, an outspoken pipeline opponent, said the governor once stated he wanted the pipeline to avoid the aquifer, a requirement the new route fails to meet. The state’s analysis of the new 195-mile route through Nebraska says it still runs over part of the aquifer.

“It’s shocking that the governor would flip-flop this much,” she said.

The $7 billion Keystone XL pipeline would carry crude oil, steamed out of tar-sand deposits in Canada, some 1,700 miles to refineries on the Gulf Coast. It requires approval by the Obama administration because it crosses an international border.

Many elected leaders, environmentalists and landowners in Nebraska objected to the pipeline’s initial route through the eastern portion of the Sand Hills, fearing that a spill could quickly penetrate porous soils and contaminate underground water supplies critical for human consumption and agriculture.

Heineman’s approval letter came 19 days after the Nebraska Department of Environmental Quality completed a 2,000-page report that raised no serious red flags about the new route while touting the project’s economic benefits. For example, the agency estimated that the project will produce $418 million in economic benefits and up to $13 million in property tax revenue in its first year full year of operation.

A similar analysis released last week by a pro-pipeline group predicted an even larger economic impact. Opponents have called the estimates inflated because the underlying data was provided by TransCanada Inc., the firm that wants to build the pipeline.

The governor’s decision also means that the company can begin negotiating with landowners for property easements. If negotiations fail, the company can then use the power of eminent domain.

Three landowners have filed a court challenge to the governor’s authority to grant approval to the route. Landowners along the proposed route have sued, arguing that a recent state pipeline law is unconstitutional because it gave the governor the review authority, rather than the Public Service Commission. In the past, the commission has reviewed and approved underground pipelines.

The lawsuit is pending in Lancaster County District Court, where it could be decided later this year.

The governor said Tuesday that he spoke to several landowners along the route over the weekend and called their concerns legitimate. As for the accusation that he flip-flopped, Heineman said his intent all along was to get the pipeline route out of the state’s most environmentally fragile areas.

“I understand that if you are opposed to it, like Bold Nebraska, you are going to say anything and everything on how to get this thing stopped,” Heineman said. “She (Kleeb) now has an opportunity to go meet her friend, President Obama, and let’s see what he does.”

The governor’s decision also paves the way for the State Department to release a draft supplemental environmental impact statement, which is expected soon. After a public comment period and a final environmental report, the State Department must decide whether the project is in the national interest before giving approval or denial.

A department spokeswoman said Tuesday that no deadline has been set for a decision, but one is unlikely before this spring.

During his inaugural address Monday, the president mentioned addressing climate change as a priority for his second term. The statement prompted widespread speculation that he may reject the pipeline because environmentalists say the mining of tar-sand oil contributes significantly to greenhouse gas emissions.

Kleeb said she sensed political motivations behind the governor’s announcement a day after the president’s speech.

“The only thing that’s changed is the governor thinks the president is going to deny the pipeline, and he couldn’t imagine being on the same side as this president,” she said, adding that her organization is planning a vigil next week outside the Governor’s Mansion.

Ken Winston with the Nebraska chapter of the Sierra Club also expressed disappointment with the governor’s decision. Among the flaws in the state’s review was a lack of a detailed determination of the spill risk, he said.

“We’re going to have to say the state did the wrong thing and didn’t do their job,” he said.

Pro-pipeline groups such as Americans for Prosperity-Nebraska, the American Petroleum Institute and the Consumer Energy Alliance applauded the governor’s decision Tuesday. And the state’s congressional delegation also voiced support.

“I join my Nebraska colleagues in calling on the president to serve as a partner in moving this critical project forward instead of simply standing in the way,” said U.S. Sen. Deb Fisher, R-Neb., whose former state legislative district is crossed by the route.

Russ Girling, president and chief executive officer of Trans-Canada, paraphrased Heineman’s letter as he made a pitch to federal officials.

“Keystone XL is the most studied cross-border pipeline ever proposed,” he said. “It remains in America’s national interests to approve a pipeline that will have a minimal impact on the environment.”