A federal judge in Montana halted construction of the Keystone XL oil pipeline on Thursday on the grounds that the USA government did not complete a full analysis of the environmental impact of the TransCanada project.
The ruling by Judge Brian Morris of the US District Court for the District of Montana dealt a stinging setback to Trump and the oil industry and served up a big win for conservationists and indigenous groups.
Environmentalists and tribal groups cheered the ruling by a US district judge in Montana, while President Donald Trump called it "a political decision" and "a disgrace".
TransCanada had recently announced plans to start construction next year, after a State Department review ordered by Morris concluded that major environmental damage from a leak is unlikely and could quickly be mitigated.
Since its conception, the pipeline has sparked a backlash from environmentalists and indigenous peoples who say it violates historical treaty boundaries and would bring environmental problems.
The proposed Keystone XL 1,179-mile pipeline would carry up to 830,000 barrels of crude oil per day from the Canadian province of Alberta to the USA state of Nebraska and down to oil refineries on the Texas Gulf Coast.
In 2015, the Obama administration rejected construction of the pipeline, saying it would detract from America's global leadership on issues related to climate change.
"This is a complete repudiation of the Trump administration's attempts to evade environmental laws and prioritize oil company profits over clean water and wildlife", Jared Margolis, senior attorney with the Center for Biological Diversity, said in a statement.
"The [State] Department must supplement new and relevant information regarding the risk of spills", Morris wrote.
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The Sture terminal is a major tanker port, with nearly 25% of Norway's oil production passing through the facility. The ship had previously been part of an escort convoy which seized chemical weapons from Syria back in 2013.
Also on Thursday, a federal appeals court ruled that President Trump can not immediately end the program, DACA, that shields from deportation young undocumented immigrants who were brought to the country as children.
An appeal of the decision is highly likely, as the legal back-and-forth looks set to continue in the Court of Appeals for the Ninth Circuit.
The massive project remains one of the most controversial infrastructure proposals in modern American history.
The ruling is a major victory for environmentalist groups that sued to stop the project and for the Native American tribes that have protested against it for years.
The US stretch of line that needs to be built would be 875 miles (1,450 km) long.
US benchmark WTI little changed after the decision, trading down 0.1 percent. Morris said that review was inadequate.
"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", he continued.
Morris' order does not permanently extinguish hopes Keystone XL will go ahead, but it will require the administration to come up with a better explanation as to why it should proceed.