SAN FRANCISCO – The Obama administration has until Friday to convince a federal judge not to levy sanctions against the government for "failing to obey the court's orders" in a key NSA wiretapping lawsuit.

U.S. District Judge Vaughn Walker is threatening (.pdf) to summarily decide the 3-year-old lawsuit in favor of the plaintiffs, and award unspecified monetary damages to two American lawyers who claim their telephone calls were illegally intercepted by the NSA under the Bush administration. The lawyer represented a now-defunct Saudi charity that the Treasury Department claimed was linked to terrorism.

If it survived appeal, such a ruling would be a blow to the government, but it would fall far short of deciding the important question the case asks: Can a sitting president, without congressional authority, create a spying program to eavesdrop on Americans' electronic communications without warrants, as George W. Bush did in the aftermath of the 2001 terror attacks?

The San Francisco case began when the government accidentally sent the plaintiffs documents that showed their overseas communications with Al-Haramain Islamic Foundation officials were intercepted without warrants. The pair sued, but were forced to return the document because it was marked "top secret."

The Justice Department, under the Bush and Obama administrations, has repeatedly maintained that the lawsuit should be dismissed because it threatens to expose state secrets.

But after years of legal wrangling, Walker decided in January that the documents were admissible, and ordered the government to craft a protective order that would allow the plaintiff's counsel to review the documents in secret, without them being disclosed to their clients or the public. A similar process has been applied to lawyers representing Guantanamo Bay prisoners.

This month the Obama administration refused to comply with Walker's order. The government is "refusing to cooperate with the court's orders because, they assert, plaintiffs' attorneys do not 'need to know' the information that the court has determined they do need to know," Walker wrote Friday.

The refusal came after the 9th U.S. Circuit Court of Appeals declined to override the judge. Until Walker directly orders the government to turn over the classified document to the plaintiff lawyers, the appeals court will not consider hearing the case. In defying the court order, the government urged Walker to go ahead and order the release of the secret documents to the lawyers, so the Justice Department could appeal. But Walker declined that invitation to become the nation's first judge to disclose data the government has classified as a state secret.

Now Walker has given the Justice Department until Friday to explain why he shouldn't sanction the government by simply deciding the entire lawsuit in favor of the plaintiffs.

A hearing on the matter is set for June 3.

Walker is the same judge overseeing a class-action lawsuit targeting the nation's telecommunication companies of being complicit in Bush's once-secret spy program. Congress, with the vote of then-Sen. Barack Obama, legalized the spy program last summer.

That legislation allows electronic eavesdropping of Americans without obtaining a warrant if the subjects of the wiretap are communicating overseas with somebody believed connected to terrorism.

No such congressional authority was in place when lawyers Wendell Belew and Asim Gafoor's telephone calls were intercepted in 2005. The United States had designated the Al-Haramain charity a terror organization.

The legislation authorizing the spy powers also immunized the telcos from being sued for their part in Bush's eavesdropping program. Walker is entertaining a constitutional challenge to the immunity legislation.

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