WASHINGTON — The Obama administration has lost its argument that a potential threat to national security is a good enough reason to stop a lawsuit challenging the government's warrantless wiretapping program.

WASHINGTON — The Obama administration has lost its argument that a potential threat to national security is a good enough reason to stop a lawsuit challenging the government's warrantless wiretapping program.

A federal appeals court in San Francisco on Friday rejected the Justice Department's request for an emergency stay. The Obama administration, like the Bush administration before it, cited the so-called state secrets privilege as its defense. The government claimed national security would be compromised if a lawsuit brought by the U.S. chapter of an Islamic charity was allowed to proceed.

The case was brought by the Al-Haramain Islamic Foundation, a defunct charity that had a chapter in Ashland. It was led by arborist and peace activist Pete Seda, who was indicted in 2005 on money-laundering and tax fraud charges. Seda fled the country, but returned in November 2007 to face federal charges. He is awaiting an April 29 trial.

The decision by the three-judge appeals panel is a setback for the new Obama administration as it adopts some of the same positions on national security and secrecy as the Bush administration.

Earlier this month, Attorney General Eric Holder ordered a review of all state secrets claims that have been used to protect Bush administration anti-terrorism programs from lawsuits.

Yet even as that review continues, the administration has invoked the privilege in several different cases, including Al-Haramain.

The case began when the Bush administration accidentally turned over documents to Al-Haramain attorneys.

Lawyers for the defunct charity said the papers showed illegal wiretapping by the National Security Agency.

The documents were returned to the government, which quickly locked them away, claiming they were state secrets that could threaten national security if released.

Lawyers for Al-Haramain argued that they needed the documents to prove the wiretapping.

The U.S. Treasury Department in 2004 designated the charity as an organization that supports terrorism before the Saudi government closed it. The Bush administration redesignated it in 2008, citing attempts to keep it operating.

The 9th Circuit eventually agreed that the disputed documents were protected as state secrets. But the court ruled that the Oregon chapter of Al-Haramain could try to find another way to show it had standing to sue the government over domestic wiretapping.

A number of organizations, including the American Civil Liberties Union, tried to sue the government over warrantless wiretapping but were denied standing because they could not show they were targeted.