The US Army has announced it will not grant a permit for the North Dakota Access Pipeline crossing.
In a statement, it said it will not allow an oil pipeline to cross under Lake Oahe on land it controls in North Dakota, which has been welcomed by protesters.
Assistant Secretary for Civil Works Jo-Ellen Darcy said the decision is based on a need to explore “alternate routes for the Dakota Access Pipeline crossing”.
Energy Transfer’s $3.7 billion (£2.88bn) oil project is expected to transport approximately 470,000 barrels of oil per day (bdp), with a capacity as high as 570,000bpd.
Last month the Army decided to delay its decision in order to carry discussions with the Standing Rock Sioux Tribe, whose reservation lies 0.5 miles south of the proposed crossing.
Tribal officials, Native Americans and environmental campaigners including US actress Shailene Woodley, who was arrested during a protest earlier this year, claimed the pipeline will contaminate waterways and desecrate sacred land.
US Secretary of the Interior Sally Jewell released a statement supporting the decision.
She said: “The thoughtful approach established by the Army today ensures that there will be an in-depth evaluation of alternative routes for the pipeline and a closer look at potential impacts as envisioned by NEPA [National Environmental Policy Act].
“The Army’s announcement underscores that tribal rights reserved in treaties and federal law as well as Nation-to-Nation consultation with tribal leaders, are essential components of the analysis to be undertaken in the environmental impact statement going forward.”