Disappointing that it has been cut, but it has been out of use for years. I presume it is cheaper to pump water up from the Birmingham level to the Wolverhampton level or into Rotton Park Reservoir than it is to maintain the feeder.
But Act of Parliament to abandon it? Surely not since, firstly it never was a navigable waterway, and secondly as under the '68 Transport Act it was not listed as a Commercial or Cruising waterway, if it is a waterway, then it is a Remainder waterway which BW/CRT can deal with in the most cost effective manner, which they appear to have done.
Sustrans are not responsible for cutting it, even if they are involved with the cycleway project. The work has most likely been funded by the local authority and carried out with the agreement of CRT (as landowner). So it is to these two organisations that your ire should be directed.