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.
Noting that former USA president Barack Obama had appointed Morris to the court, McConaghy said opponents of the pipeline had "shopped (the case) as best they could to find a pliant federal court judge who had some nexus to the project".
"An agency cannot simply disregard contrary or inconvenient factual determinations that it made in the past, any more than it can ignore inconvenient facts" in the present, Morris wrote, citing case law.
As a result, the number of people who will be genuinely surprised if the Keystone XL project-vetoed by the Obama administration and later revived by President Trump-ever sees the light of day is growing.
Trump could also either file an appeal or direct the State Department to conduct a new study, said Zachary Rogers, analyst at Wood Mackenzie.
Energy producers in the northern nation already are struggling with a shortage of pipeline space that has hammered prices for their crude, sending its discount to USA benchmarks to the widest on record in recent weeks. The pipeline would link up with an existing infrastructure in Nebraska, allowing 800,000 barrels of petroleum to flow to the Gulf refineries.
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Trump saw the move as a betrayal and frequently and publicly criticised Sessions for making the decision to recuse himself . Nevertheless he appealed to Republicans not "beholden" to Donald Trump to reign in any attempt to fire Mueller.
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Civil Aviation authorities in the United States and Europe were also being consulted for their help in the probe, he added. However, the Times noted, there has been no evidence of widespread problems with airspeed indicators in the Max 8 fleet.
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Opposition to the Keystone XL pipeline has centered on climate change concerns, as well as potential damage to endangered species and to local landowners, including native Americans, whose property would be dug up for the pipeline.
Under President Trump, the State Department wrote "there have been numerous developments related to global action to address climate change, including announcements by many countries of their plans to do so" since the Obama administration's decision two years earlier.
"And frankly, approving this project would have undercut that global leadership", he said, adding that the "biggest risk" the US faced was "not acting".
Morris said the government must provide "new and relevant information regarding the risk of spills".
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.
Keystone XL roused a major environmental protest movement during Barack Obama's presidency, leading to arrests outside the White House and promises by activists to harass construction along the pipeline's route. "It's not over for us, we're just going to keep on going ahead".
The State Department could try to address the deficiencies the judge indicated in the ruling, appeal the decision to a higher court, or Congress could try to pass a law enabling the project's construction.