Army Corps spokesman Doug Garman said the agency was not commenting because the matter is still in litigation.
Government attorneys, backed by 19 states and numerous industry groups, had argued the cancellation would delay construction of pipelines used to deliver fuel to power plants and other destinations.
U.S. District Judge Brian Morris in Montana said in a pair of recent rulings in the Keystone case that Army Corps officials had failed to adequately consult with wildlife agencies before reauthorizing the permitting program in 2017. Its continued use could cause serious harm to protected species and critical wildlife habitat, he said.
A two-judge panel of the 9th U.S. Circuit Court of Appeals denied an emergency request to block Morris' ruling. They said in a one-page decision that the government, states and industry groups had not demonstrated sufficient harm to justify reviving the program while the case is still pending.
The issue could take months to resolve barring further court intervention.
In the absence of the nationwide permit, companies will have to apply for numerous individual construction permits on lines that sometimes cross hundreds of water bodies. That could cause delays of a year or more on more than 70 pending pipelines, increasing their combined costs by $2 billion, said Paul Afonso, chief legal officer for the American Petroleum Institute.
"It is completely inappropriate that the district court has singled out natural gas and oil companies to cut out of a long- established regulatory process," he said.