A legal challenge to the Keystone XL oil pipeline keeps the focus on opposition as the review process heads to the state level, a market analyst said.

A coalition of environmental advocacy groups filed a lawsuit Thursday in federal court in Montana challenging U.S. State Department approval for the Keystone XL oil pipeline. The lawsuit charges the State Department with ignoring evidence that the heavier type of crude oil designated for the project is an environment threat.

Advocacy groups, led in part by the Sierra Club, say U.S. President Donald Trump thumbed his nose at the law with a hasty review of the project and not ordering an updated environmental impact statement for Keystone XL.

"The Trump administration broke the law by arbitrarily endorsing a permit to build the Keystone XL tar sands pipeline," Anthony Swift, Canada Project Director of the Natural Resources Defense Council, said in a statement.

The State Department under President Barack Obama shelved the project on environmental grounds. The latest EIS was completed in 2014, though the Trump administration said Keystone XL is in the national interest.

Sandy Fielden, the director of research, commodities and energy at Morningstar, told UPI the legal action could at the very least drive the narrative over the fate of the pipeline.

"The Sierra Club action keeps the environmental agenda in the headlines as the State Department's approval gave a boost to TransCanada's efforts to cross the finish line on Keystone XL," he said. "The focus will now turn to the Nebraska project review."

Fielden said after the State Department's permit was issued last week that Keystone XL planner TransCanada is facing additional market pressure given other regional pipeline projects in the works. For TransCanada to get shippers to commit, it now has to compete with a Kinder Morgan project to Vancouver and a planned network for eastern Canada.

TransCanada's project still needs vetting by the Nebraska Public Service Commission. Concerns by individual landowners could still thwart the process.

TransCanada was forced to revise the planned route already because of concerns about water supplies in Nebraska.

The company had no public statement on the U.S. legal challenge.

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