SAN FRANCISCO -- A federal appeals court on Tuesday ruled against a commercial oyster farm that has drawn national attention for its battle to continue operating at Point Reyes National Seashore in Marin County -- a critical decision that could result in the company being forced to close.

The 9th U.S. Circuit Court of Appeals in San Francisco denied a petition by the Drakes Bay Oyster Company to have its case reheard. The court's decision handed a major victory to environmental groups who note that Congress designated the area as federally protected wilderness in 1976. And it left the oyster farm with few apparent options, other than a last-ditch appeal to the U.S. Supreme Court.

Peter Prows, a lawyer for the oyster company, said, "We are contemplating our next steps."

Environmental groups said the decision was long overdue.

"The court ruling affirms that our national parks will be preserved and that Drakes Estero is another step closer to being protected as wilderness for the American people," said Neal Desai, Pacific Region field director for the National Parks Conservation Association in San Francisco.

"Incredibly beautiful places like Drakes Estero need to be returned to their full splendor as Congress determined decades ago when the land was purchased by and for the American public. We have been waiting for this moment for more than 40 years."


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In November 2012, then-U.S. Interior Secretary Ken Salazar announced he would allow the oyster farm's 40-year lease with the National Park Service to expire.

In 1972, the federal government bought the land from Johnson Oyster Company for $79,200 and provided the 40-year lease. Drakes owner Kevin Lunny took over the lease in 2004, and although he knew it was set to expire in 2012, he sought an extension, enlisting the support of Sen. Dianne Feinstein and others.

The case ended up splitting Northern California environmental groups, and the oyster farm won the support of some prominent chefs and food advocates, including Alice Waters. The controversy deepened, however, when a group with links to the conservative Koch Brothers represented the oyster farm, drawing concerns from environmentalists that an oyster farm victory in the case could make it more difficult for the government to remove oil, gas, timber, cattle and other private businesses from ecologically sensitive public lands across the nation.

Lunny sued to force the government to continue the lease. He lost at the district court level, then in September, a three-judge panel of the 9th Circuit issued a similar ruling rejecting his case.

His petition to rehear the case argued that the review should be granted because the panel decision conflicted with precedent set by the U.S. Supreme Court and the 9th Circuit. But Tuesday the court denied that request.

Lunny was seeking a temporary injunction from the court to allow him to continue to operate until his lawsuit challenging the closure can be heard. Until legal issues are cleared up, the Inverness oyster farm remains open, although its legal options, and its days in operation, may be running out.

Wire services contributed to this report.