The 9th U.S. Circuit Court Appeals in San Francisco turned down a bid by the Drakes Bay Oyster Co. to have its case reconsidered by an expanded 11-judge panel.
The oyster farm is challenging a decision by former Interior Secretary Kenneth Salazar in 2012 to refuse a lease extension. The decision, if upheld, would force the oyster farm to close and allow the site to return to wilderness.
Oyster farm owner Kevin Lunny said the company will now appeal to the U.S. Supreme Court, which is the last step available in the appeals process.
"We are requesting our case be heard by the U.S. Supreme Court," Lunny said in a statement.
"We are grateful for our thousands of supporters, partners, customers and patrons that have supported our small, family-owned farm for four generations. We remain committed to succeeding in our fight to remain open and serve our community," he said.
The oyster farm had asked the appeals court to have an expanded panel review a ruling in which a three-judge panel of the circuit court in September refused by a 2-1 vote to block Salazar's decision from going into effect.
The court said in an order today that the farm's request for a rehearing by an 11-judge panel had been forwarded to the full 27-member appeals court, and no judge on the court had called for a vote on whether to grant a rehearing.
The appeals court has allowed the farm to continue operating during its appeal, but after today's order takes effect, the farm would need a new stay from either the 9th Circuit or the Supreme Court to remain open while the high court decides whether to take up the case.
The private company grows oysters on 1,000 acres of submerged land in Drakes Estero, an estuary of Drakes Bay, and packages them on 1.5 acres of land along the shoreline. It says it produces more than a third of all oysters grown in California.
Kevin and Nancy Lunny bought the operation from a predecessor company in 2004 and took over a 40-year permit that expired in 2012.
The company sued the Interior Department in 2012 to challenge Salazar's decision. It appealed to the 9th Circuit after U.S. District Judge Yvonne Gonzales Rogers of Oakland declined to grant a preliminary injunction blocking the closure. The trial judge said Salazar had "complete discretion" to decide whether to renew the permit.
Neal Desai, a spokesman for the National Parks Conservation Association, said, "This is a strong ruling that affirms our national parks will be preserved.
"We've waited for 40 years and now it's time to return this gem to the wilderness for all Americans," Desai said.