The international pipeline is a top priority for the new Republican-led Congress, which is eager to confront the White House on this and other issues.
For the president, it is a years-long dilemma that has him caught between environmentalists seeking to kill the project and some in his own party who call it a needed boost to the economy.
Obama has been able to delay a decision while the Nebraska courts deliberated a dispute over the state's approval process for the pipeline's route. But with Friday's developments, pressure built earlier than expected toward a veto fight — one of many likely to come between the president and the new Congress.
Neither side showed signs of backing down. Emboldened by a Nebraska Supreme Court ruling Friday that lifted one of the last construction hurdles, Republicans all but taunted the president to quit standing in the way of the project, first proposed six years ago.
"President Obama is now out of excuses for blocking the Keystone pipeline," said Speaker John A. Boehner (R-Ohio). "It's time to start building."
"Hallelujah!" said Majority Leader Kevin McCarthy (R-Bakersfield), citing the court's decision on the House floor. "We've got good news for the president."
Shortly after, the House easily passed a Keystone bill, 266 to 153, with support from 28 Democrats. The legislation, which seeks to remove the president's power to approve Keystone, is expected to be passed by the Senate once debate begins next week and it clears an expected Democratic filibuster.
The White House doubled down on the president's promise to veto the bill, arguing that Obama would not be rushed into a decision by a Congress trying to make an end-run around the formal review process.
"We are going to let the process play out," said White House spokesman Eric Schultz, traveling with Obama in Tennessee. "If presented to the president, he will veto the bill."
The president has reason to remain unfazed by the confrontation with the GOP. Congress, even with a Republican majority, does not appear to have the votes necessary to override a veto.
Though he almost never utilized his veto pen when Democrats had majorities in Congress, Obama warned Republicans even before the November election that he would not hesitate to buck their initiatives.
Republicans see the coming veto standoffs as an opportunity to shine a spotlight on the differences between the parties. Only twice before in his presidency has Obama vetoed bills. Both were minor issues — one essentially a budget technicality.
Proposed by TransCanada Corp., the pipeline has been under review by the State Department, but last spring the president postponed a decision while the legal process in Nebraska was underway. On Friday, the White House declined to comment on how quickly a decision could be made.
As gas prices have tumbled over the last six months, the long-running debate over the ambitious pipeline has become more of a political exercise than a practical one.
The $5.3-billion project, one of the largest infrastructure projects proposed for the U.S., would carry oil from the tar sands of Canada through the nation's heartland and, after connecting with existing segments, to the Gulf Coast. Much of the oil would be exported.
Opponents warn that building more capacity for the oil industry will continue dependence on fossil fuels and worsen global warming. But supporters argue that development of the pipeline will wean the country from foreign oil suppliers and create needed domestic jobs.
"With the stroke of a pen, the president can create thousands of jobs by approving KXL," said Jack Gerard, president of the American Petroleum Institute.
Both views have shortcomings. According to estimates, the project would initially create more than 42,000 jobs, including about 3,900 for construction, but permanent jobs would be far fewer: Just 35 full-time positions are anticipated for operating the line, according to the State Department's assessment.
At the same time, the 830,000 daily barrels of oil expected to flow through the pipeline would have little effect on carbon emissions, according to the State Department review. Politically, the project has become a cause celebre on both sides, and was a factor in some states in the Democratic electoral losses last fall. Senate Majority Leader Mitch McConnell vowed the pipeline vote would be the first of the new Congress even before it was sworn in.
Next week's Senate vote will test McConnell's ability to lead his new majority, as he has promised a freewheeling floor debate with as many amendments as senators want to offer. Democrats already have a package of amendments ready — including one that would prevent the pipeline's oil from being exported and another that would require all steel, iron and other construction components to come from domestic manufacturers.
At its core, though, the debate is a brawl between the legislative and executive branches of government over which has responsibility for the project.
Congress rarely takes on a permitting role, but frustrations over the administration's delays pushed lawmakers to attempt to remove the president's decision-making authority and give it to the legislative branch.
"It is time to approve Keystone XL," said Russ Girling, president and chief executive of TransCanada.
But Nebraska rancher Randy Thompson, the lead plaintiff in the case to block the pipeline, expressed deep disappointment with the state Supreme Court's decision Friday.
"This has been tremendously upsetting for landowners in this process," said Thompson, during a call with reporters. "It's time for the president to put an end to this … thing, and let us get back to our lives and raising food for America."
Sierra Club Executive Director Michael Brune said the decision makes one thing clear: "President Obama has all he needs to reject this pipeline. We are looking forward to putting this debate to an end when the president rejects this pipeline once and for all."