Rae, who is on his final tour as leader, made the comments Thursday at a fundraiser in Saskatoon.
His comments come just one day after Saskatchewan Premier Brad Wall said federal NDP leader Thomas Mulcair was not acting in Canada's best interest by opposing the $7 billion pipeline.
Rae said he continues to have a good relationship with Wall and has been clear in the party's commitment to resource development in the West.
Calgary-based TransCanada Pipeline's (TSX:TRP) project would primarily carry bitumen from Alberta's oilsands to refineries along the U.S. Gulf Coast, but oil would also come from the Bakken formation, which Saskatchewan shares with North Dakota and Montana.
Wall said the pipeline would increase Saskatchewan's oil revenue by $300 million.
"It's in our national interest to see that these resources are developed in a truly and deeply sustainable way," Rae said. "
"I agree with the state department view that says that there's no net environmental effect of building the pipeline in the United States."
After receiving the nod from Nebraska Gov. Dave, the pipeline's fate is now in the hands of the U.S. State Department and President Barack Obama.
"We've got to get our products to market here," Rae said. "We obviously need to continue to do a better job on the environment but that's no reason to come out against the pipeline."
Meanwhile, Rae's visit to Saskatoon marks one month before party faithful vote on a new leader. Liberal voters go to the polls on April 14.
The race is down to seven candidates after Marc Garneau withdrew on Wednesday.
While Garneau stepped down because he believes front-runner Justin Trudeau's victory is a "fait accompli," Rae said it is still anyone's race.
Also on HuffPost