A federal appeals court Tuesday rejected Drakes Bay Oyster Company's bid to stay in business in the Point Reyes National Seashore, backing the Interior Department's decision to terminate the company's commercial shellfish operation.

On a 2-1 ruling, the 9th Circuit U.S. Court of Appeals in San Francisco held that the oyster company operated by the Lunny family was "not likely to succeed" in proving that former Interior Secretary Ken Salazar erred in refusing to renew the company's permit to operate in the federally protected waters of Drakes Estero.

The appellate court panel, in a summary of its 50-page decision, said that the company "failed to raise a serious question about the Secretary's decision" and also failed to show "that the balance of equities weighed in its favor."

Judges M. Margaret McKeown and Algenon L. Marbley ruled against the oyster company. Judge Paul J. Watford dissented.

The ruling followed a May 14 hearing in San Francisco on a case that drew national attention as the family-owned oyster farm challenged the federal government.

The judges denied farm operator Kevin Lunny's request for an order, known as an injunction, allowing him to do business pending a hearing on his lawsuit challenging Salazar's shutdown order issued in November.

The seven-year-old controversy over the oyster farm in the 2,500-acre estero has divided neighbors in West Marin County and gained congressional attention, with advocates for greater commercial use of public lands jumping in on Lunny's side.

The oyster company harvests $1.5 million worth of oysters a year from the estero.