The 1,897-kilometre pipeline would transport up to 830,000 barrels of crude a day from Alberta and Montana to facilities in Nebraska.
Judge Morris also said State didn't properly justify approving the pipeline in 2017 under Mr. Trump after rejecting it in 2015 under Mr. Obama.
Although the decision does not permanently halt the pipeline's construction, it nevertheless comes as TransCanada, the Canadian company that owns Keystone, is preparing to start construction in Montana, shipping pipe to various locations throughout the state, the Great Falls Tribune reports.
"We keep killing it, and it keeps coming back from the dead", Dallas Goldtooth from the Keep It In The Ground campaign for the Indigenous Environmental Network said, as cited by CBC News.
The reversal required a "reasoned explanation" but instead the State Department discarded prior "factual findings", he said. New tar sands pipeline projects threaten Indigenous rights, put drinking water and communities at risk, accelerate the climate crisis and move us in the wrong direction.
Morris, a former clerk to the late Chief Justice William Rehnquist, was appointed to the bench by President Barack Obama. "Today, the courts showed the Trump administration and their corporate polluter friends that they can not bully rural landowners, farmers, environmentalists and Native communities".
Morris found that the USA government's use of a 2014 environmental review to justify issuing a presidential permit for construction of the cross-border pipeline violated the National Environmental Policy Act, the Endangered Species Act and the Administrative Procedure Act.
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While noting that Thursday's ruling does not completely terminate the Keystone project and that the "now ten-year battle is still far from over", Mark Hefflinger of Bold Alliance declared, "Farmers and our Tribal Nation allies in Nebraska, South Dakota, and Montana celebrate today's victory foiling the Trump administration's scheme to rubber-stamp the approval of Keystone XL". A presidential permit is required for infrastructure projects that cross worldwide borders.
It's meant to be an extension of TransCanada's existing Keystone Pipeline, which was completed in 2013.
The judge added that the Trump administration had not adequately accounted for potential declines in oil prices, which have been depressed since the crash of 2014, and which would have a major effect on the long-term viability of such a project.
McTeague believes Keystone XL has support across the political spectrum in the United States, but it only takes one judge to pause the project.
- The department "acted on incomplete information regarding" the potential damage to cultural resources in Indian territory along the route.
The ruling deals a major setback for TransCanada and could possibly delay the construction of the $8 billion, 1,180 mile pipeline.
"An agency cannot simply disregard contrary or inconvenient factual determinations that it made in the past, any more than it can ignore inconvenient facts when it writes on a blank slate", Morris wrote.