By Jonathan Stempel

NEW YORK (Reuters) - A federal appeals court ordered the U.S. Department of Justice to turn over key portions of a memorandum justifying the government's targeted killing of people linked to terrorism, including Americans.

In a case pitting executive power against the public's right to know what its government does, the 2nd U.S. Circuit Court of Appeals reversed a lower court ruling preserving the secrecy of the legal rationale for the killings, such as the death of U.S. citizen Anwar al-Awlaki in a 2011 drone strike in Yemen.

Ruling for the New York Times, a unanimous three-judge panel said the government waived its right to secrecy by making repeated public statements justifying targeted killings.

These included a Justice Department "white paper," as well as speeches or statements by officials like Attorney General Eric Holder and former Obama administration counterterrorism adviser John Brennan, endorsing the practice.

The Times and two reporters, Charlie Savage and Scott Shane, sought the memorandum under the federal Freedom of Information Act, saying it authorized the targeting of al-Awlaki, a cleric who joined al Qaeda's Yemen affiliate and directed many attacks.

"Whatever protection the legal analysis might once have had has been lost by virtue of public statements of public officials at the highest levels and official disclosure of the DOJ White Paper," Circuit Judge Jon Newman wrote for the appeals court panel in New York.

He said it was no longer logical or plausible to argue that disclosing the legal analysis could jeopardize military plans, intelligence activities or foreign relations.

The court redacted a portion of the memorandum on intelligence gathering, as well as part of its own decision. It is unclear when the memorandum or the full 2nd Circuit decision might be made public, or whether the government will appeal.

Allison Price, a Justice Department spokeswoman, said the department had no comment on the decision.

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David McCraw, a lawyer for the Times, said the newspaper is delighted with the decision, saying it encourages public debate on an important foreign policy and national security issue.

"The court reaffirmed a bedrock principle of democracy: The people do not have to accept blindly the government's assurances that it is operating within the bounds of the law; they get to see for themselves the legal justification that the government is working from," McCraw said in a statement.

Senators Patrick Leahy and Charles Grassley, the Democratic chairman and ranking Republican on the Senate Judiciary Committee, have also been seeking the legal rationale, and Grassley on Monday urged the Justice Department to start preparing to turn it over.

ALICE IN WONDERLAND

Monday's decision largely reversed a January 2013 ruling by U.S. District Judge Colleen McMahon in Manhattan.

She ruled for the administration despite skepticism over its antiterrorism program, including whether it could unilaterally authorize killings outside a "hot" field of battle.

"The Alice-in-Wonderland nature of this pronouncement is not lost on me," she wrote.

Civil liberties groups have complained that the drone program, which deploys pilotless aircraft, lets the government kill Americans without constitutionally required due process.

FOIA requests at issue in the 2nd Circuit case also focused on drone strikes that killed two other U.S. citizens: al-Awlaki's teenage son, Abdulrahman al-Awlaki, and Samir Khan, who was an editor of Inspire, an English-language al Qaeda magazine.

McMahon ruled one month before the Justice Department released the white paper, which set out conditions before lethal force in foreign countries against U.S. citizens could be used.

The conditions are that a top U.S. official must decide a target "poses an imminent threat of violent attack" against the United States, the target cannot be captured, and any operation would be "consistent with applicable law of war principles."

In a March 5, 2012 speech at Northwestern University, Holder had said it was "entirely lawful" to target people with senior operational roles in al-Qaeda and associated forces.

The Times has said the strategy of targeted killings had first been contemplated by the Bush administration, soon after the September 11, 2001 attacks.

On April 4, U.S. District Judge Rosemary Collyer in Washington dismissed a lawsuit against the government by the families of those killed in the drone strikes, saying senior officials cannot be personally liable for money damages "for conducting war.

The American Civil Liberties Union, which had filed its own lawsuit over the government's disclosure practices, said it plans in light of Monday's decision to return to the lower court to challenge the withholding of other documents related to targeted killings.

"This is a resounding rejection of the government's effort to use secrecy and selective disclosure to manipulate public opinion about the targeted killing program," ACLU Deputy Legal Director Jameel Jaffer said in a statement.

The case is New York Times Co et al v. U.S. Department of Justice et al, 2nd U.S. Circuit Court of Appeals, Nos. 13-422, 13-445.

(Additional reporting by Mark Hosenball in Washington and David Ingram in New York; Editing by Jonathan Oatis)