Nedra Pickler / The Associated Press / April 17, 2009

WASHINGTON - A program to expand oil and gas drilling off the Alaska coast was canceled Friday by a federal appeals court that ruled the Bush administration did not properly study the environmental impact.

A three-judge panel in Washington found that the Bush-era Interior Department failed to consider the effect on the environment and marine life before it began the process in August 2005 to expand an oil and gas leasing program in the Beaufort, Bering, and Chukchi seas.

The appeals court ordered the department, now run by President Barack Obama's appointee Ken Salazar, to analyze the areas to determine environmental risks and potential damage before moving ahead with the program.

The seas are home to wildlife including polar bears, whales, seals, walruses and seabirds. The lawsuit was brought by three environmental groups that want to protect the ecosystem and the Native Village of Point Hope, Alaska, a tribe that lives off the wildlife on the Chukchi Sea coast.

The decision comes at a time when oil and gas producers are finding it increasingly difficult to find new reserves and boost production, at home and abroad. Output from the biggest U.S. oil companies has largely been in decline in the past few years.

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