A federal appeals court is refusing to reconsider its August ruling in which it said the federal government may spy on Americans' communications without warrants and without fear of being sued.

The original decision by a three-judge panel of the 9th U.S. Circuit Court of Appeals this summer reversed the first and only case that successfully challenged President George W. Bush's once-secret Terrorist Surveillance Program.

Without comment, the San Francisco-based appeals court announced Wednesday that it would not rehear (.pdf) the case again with a larger panel of 11 judges, effectively setting the stage for a Supreme Court showdown. The appeals court Wednesday also made some minor amendments (.pdf) to its August ruling, but the thrust of it was the same as before.

The case concerned a lower court decision in which two American attorneys — who were working with the now-defunct al-Haramain Islamic Foundation — were awarded more than $20,000 each in damages and their lawyers $2.5 million in legal fees after a tortured legal battle where they proved they were spied on without warrants.

They sued under domestic spying laws Congress adopted in the wake of President Richard M. Nixon’s Watergate scandal. The government appealed their victory, and the appeals court has dismissed the suit and reversed the damages.

The San Francisco-based appeals court had ruled that when Congress wrote the law regulating eavesdropping on Americans and spies, it never waived sovereign immunity in the section prohibiting targeting Americans without warrants. That means Congress did not allow for aggrieved Americans to sue the government, even if their constitutional rights were violated by the United States breaching its own wiretapping laws.

Congress authorized Bush's spy program in 2008, five years after the illegal wiretapping involved in this case.

The Bush spy program was first disclosed by The New York Times in December 2005, and the government subsequently admitted that the National Security Agency was eavesdropping on Americans' telephone calls without warrants if the government believed the person on the other end was overseas and associated with terrorism. The government also secretly enlisted the help of major U.S. telecoms, including AT&T, to spy on Americans' phone and internet communications without getting warrants as required by the 1978 Foreign Intelligence Surveillance Act, the law at the center of the al-Haramain dispute.

A lower court judge found in 2010 that two American lawyers' telephone conversations with their clients in Saudi Arabia were siphoned to the National Security Agency without warrants. The allegations were initially based on a classified document the government accidentally mailed to the former al-Haramain Islamic Foundation lawyers Wendell Belew and Asim Ghafoor.

The document was later declared a state secret, removed from the long-running lawsuit and has never been made public. With that document ruled out as evidence, the lawyers instead cited a bevy of circumstantial evidence that a trial judge concluded showed the government illegally wiretapped the lawyers as they spoke on U.S. soil to Saudi Arabia.