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The Bush administration cannot legally detain a U.S. resident it believes is an Al Qaeda sleeper agent without charging him, a divided federal appeals court ruled Monday. The court said sanctioning the indefinite detention of civilians would have "disastrous consequences for the Constitution -- and the country."

In the 2-1 decision, the 4th U.S. Circuit Court of Appeals panel found that the federal Military Commissions Act doesn't strip Ali al-Marri, a legal U.S. resident, of his constitutional rights to challenge his accusers in court. Al-Marri is the only person being held as an enemy combatant on U.S. soil.

The court also ruled the government must allow al-Marri to be released from military detention.

• Click here to read the decision (pdf).

"To sanction such presidential authority to order the military to seize and indefinitely detain civilians, even if the President calls them 'enemy combatants,' would have disastrous consequences for the Constitution -- and the country," the panel said in its opinion.

"This is (a) landmark victory for the rule of law and a defeat for unchecked executive power," al-Marri's lawyer, Jonathan Hafetz, said in a statement Monday. "It affirms the basic constitutional rights of all individuals -- citizens and immigrants -- in the United States."

Al-Marri has been held in solitary confinement in the Navy brig in Charleston, S.C., since June 2003. The Qatar native has been detained since his December 2001 arrest at his home in Peoria, Ill., where he moved with his wife and five children a day before the Sept. 11, 2001, terrorist attacks to study for a master's degree.

Federal investigators found credit card numbers on his laptop computer and charged him with credit card fraud. Upon further investigation, the government said, agents found evidence that al-Marri had links to Al Qaeda terrorists and was a national security threat. Authorities shifted al-Marri's case from the criminal system and moved him to indefinite military detention.

Al-Marri has denied the government's allegations and is seeking to challenge the government's evidence and cross-examine its witnesses in court. He also has said that President Bush has no legal standing to imprison someone indefinitely by declaring him an enemy combatant.

Lawyers for al-Marri argued that the Military Commissions Act, passed last fall to establish military trials after a U.S. Supreme Court ruling, doesn't repeal the writ of habeas corpus -- defendants' traditional right to challenge their detention.

The Bush administration's attorneys had urged the federal appeals panel to dismiss al-Marri's case, arguing that the act stripped the courts of jurisdiction to hear cases of detainees who are declared enemy combatants. They contended that Congress and the Supreme Court have given the president the authority to fight terrorism and prevent additional attacks on the nation.

The court, however, said in Monday's opinion that the MCA doesn't apply to al-Marri, a legal U.S. resident who wasn't captured outside U.S. soil, detained at Guantanamo Bay or on other foreign soil, who has not received a combatant status review tribunal.

"The MCA was not intended to, and does not apply to aliens like al-Marri, who have legally entered, and are seized while legally residing in, the United States," according to the court's majority opinion, written by Judge Diana G. Motz.

The court also said that the government failed to back up its argument that the Authorization for Use of Military Force, enacted by Congress immediately after the Sept. 11 attacks, gives the president broad powers to detain al-Marri as an enemy combatant. The act neither classifies certain civilians as enemy combatants, nor otherwise authorizes the government to detain people indefinitely, the court ruled.

Though Bush lacks the power to order al-Marri's military detention, the court said its ruling doesn't mean al-Marri should be set free. Instead, he can be returned to the civilian court system and tried on criminal charges.

"But the government cannot subject al-Marri to indefinite military detention," the opinion said. "For in the United States, the military cannot seize and imprison civilians -- let alone imprison them indefinitely."

The al-Marri case drew friend-of-the-court briefs opposing the government's position from libertarians and liberals, including former Attorney General Janet Reno, several other former Justice Department officials and 29 U.S. law school professors.

The case, which is expected to reach the Supreme Court, could help define how much authority the government has to indefinitely detain those accused of terrorism and to strip detainees of their rights to challenge the lawfulness or conditions of their detention.