A federal appeals court dealt a near-fatal blow to an Islamic charity's lawsuit challenging the US administration's warrantless wiretapping program, concluding that a key piece of evidence is protected as a state secret.
The lawsuit, filed by the Oregon-based US arm of the al-Haramain Islamic Foundation, alleged the National Security Agency (NSA) illegally listened to its calls.
The charity had wanted to introduce as evidence a top-secret call log they received mistakenly from the Treasury Department.
But the three-judge panel of the 9th US Circuit Court of Appeals said the log could not be used because it fell under the "state secrets" privilege invoked by the government, and without it, the court said, the foundation had little proof it was wiretapped.
The decision, which reversed a lower court ruling, was a victory for the White House, but it didn't entirely put the issue to rest.
The judges sent the case to the US District Court in San Francisco to determine whether the law governing the wiretapping of suspected terrorists trumps the state secrets law.
The foundation has been labeled a terrorist organization by the US government.
The appellate court's ruling also didn't resolve another lawsuit that more broadly challenges the warrantless wiretapping program.
An attorney for al-Haramain said he was pleased with the appellate court's ruling because it gave him another chance to bring a lawsuit under a different argument.
"This is back to the drawing board," lawyer John Eisenberg said. "My case is still very much alive and kicking."
The Department of Justice also applauded the court.
"The 9th Circuit upheld the government's position that release of this information would undermine the government's intelligence capabilities and compromise national security," Department of Justice spokesman Charles Miller said in a statement.
Al-Haramain lawyers voluntarily gave the top-secret document to FBI agents after the mistake was discovered.
The document was described by those who have seen it as an NSA log of calls it had intercepted between the foundation and its US lawyers.
The charity had argued that warrantless eavesdropping of telephone conversations between its directors and lawyers violated the Foreign Intelligence Surveillance Act, which established a secret court to issue top secret surveillance warrants authorized by a judge.
Earlier, a federal judge in Oregon ruled that the foundation's lawyers couldn't use the actual document to support their lawsuit but could use their memories of its contents to go forward.
The appeals court called that judge's ruling "a commendable effort to thread the needle," but said it still ran counter to the state secrets law, which precludes the disclosure of sensitive information in court that could jeopardize national security.
"Such an approach countenances a back door around the privilege and would eviscerate the state secret itself," Judge M. Margaret McKeown wrote for the panel. "Once properly invoked and judicially blessed, the state secrets privilege is not a half-way proposition."
In December 2005, the New York Times exposed the administration's warrantless wiretapping program.
That led to reports that the program included widespread interceptions of e-mail traffic and the secret collection of customer data from telecommunications companies without judicial permission.