The 2nd U.S. Circuit Court of Appeals said precedent set by the U.S. Supreme Court prohibits it from upholding the ruling.
The lower court ruling was issued earlier this year by Judge Jed S. Rakoff in a case involving two men charged in a drug-murder conspiracy.
Rakoff said in July that the federal death penalty law as it was written "denies due process and, indeed, is tantamount to foreseeable, state-sponsored murder of innocent human beings."
Rakoff ruled that the death penalty was unconstitutional because too many innocent people have been executed before they could be exonerated.
In a 35-page decision, the appeals court said the argument "that execution deprives individuals of the opportunity for exoneration is not new at all — it repeatedly has been made to the Supreme Court and rejected by the Supreme Court."
"There is no fundamental right to a continued opportunity for exoneration throughout the course of one's natural life," the appeals panel in Manhattan said.
It means that if there are going to be any meaningful changes of course when it comes to the death penalty it is going to have to come from the Supreme Court itself, said CBSNews.com Legal Analyst Andrew Cohen, and that's not likely to happen. It is fairly clear from recent court rulings that there is very little support on the High Court to wipe out the death penalty completely, even as the justices tinker with it on the margins.
The appeals court noted that since 1878 the Supreme Court has upheld death penalty statutes based upon the Constitution's due process clause and the Eighth Amendment.
In 1972, it said, the Supreme Court first expressly acknowledged the argument that capital punishment might deprive innocent people of the ability to exonerate themselves.
In that case, "Furman vs. Georgia," all nine justices found that the use of a particular state death penalty statute was so arbitrary that it violated the Eighth Amendment, yet only two members of the court were willing to hold the death penalty unconstitutional, the appeals court said.
"This would have been a huge development had the federal appeals court affirmed what the trial judge ruled earlier this year," said Cohen. "Then you would have had a court just below the U.S. Supreme Court declaring the death penalty in and of itself unconstitutional. But that didn't happen and the federal death penalty is back in good stead in all of the states covered by the 2nd U.S. Circuit Court."