Judge Morris is the latest jurist to block Mr. Trump's initiatives under administrative-law rule, claiming that his officials have cut corners in administrative processes to make political decisions.
Morris previously ruled against the State Department in August, saying it was obligated to "analyze new information relevant to the environmental impacts of its decision".
The 830,000 bpd pipeline will run from the Albertan oil sands through Montana and South Dakota, ending in Nebraska, where it would connect to the existing pipeline network that goes on to the Gulf Coast. It was also a blow to Trump, who approved the pipeline shortly after taking office in 2017 as part of a plan to boost US energy infrastructure.
A Montana federal judge's ruling that threatens to further delay TransCanada Corp.'s Keystone XL pipeline comes at one of the worst possible times for the Canadian oil industry.
"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.
Work can not proceed until the State Department completes a supplement to the environmental impact statement that complies with the National Environmental Policy Act and the Administrative Procedure Act, Morris ruled.
Since Donald Trump took office, progressive journalism has been under constant attack and companies like Facebook and Google have changed their policies to limit your access to sites like Truthout. "We remain committed to building this important energy infrastructure project", the company said in an emailed statement.
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.
The US stretch of line that needs to be built would be 875 miles (1,450 km) long.
Morris, in his ruling, said the analysis failed to fully review the effects of the current oil price on the pipeline's viability and did not fully model potential oil spills and offer mitigations measures. He also said he expected an appeal and that his administration would soon appoint new judges to the appeals court.
Other plaintiffs in the suit included The Center for Biological Diversity, Friends of the Earth, the Sierra Club, the Natural Resources Defense Council and Bold Nebraska.
"There is a clear economic need for the project and we wonder whether TransCanada will choose to pursue the project with a stronger backstop from shippers and/or various levels of government", Kwan said in a note.
"We have received the judge's ruling and continue to review it".