By Peter Henderson

SAN FRANCISCO, Dec 4 (Reuters) - A California oyster farm on Tuesday sued the federal government, challenging a U.S. Interior Department decision last week to end its 40-year lease on public land.

The suit by the Drakes Bay Oyster Company, located on land an hour north of San Francisco, pits environmentalists eager to create the first West Coast marine wilderness outside Alaska against sustainable and local agriculture groups who see the operation as striking the ideal balance between using and preserving nature.

The family-owned company on Tuesday sued Interior Secretary Ken Salazar, saying he based his decision to close down the operation on a faulty environmental impact statement.

"Secretary Salazar's decision was a final agency action in violation of the National Environmental Policy Act," the complaint reads in part.

The oyster farm site and surrounding ranches were sold to the federal government 40 years ago in exchange for long-term leases. Salazar said he would renew leases to cattle ranchers at Point Reyes National Seashore, but not the oyster farm.

Salazar told Kevin Lunny and his family the oyster lease on property in the Point Reyes National Seashore would end on Nov. 30, and he gave the family and employees 90 days to gather their belongings.

Interior Department spokesman Blake Androff said by email the government would review the complaint, and that Salazar made his decision "after careful consideration of the applicable law and policy." He declined to comment specifically on the case.

Environmentalist Neal Desai, associate director of the National Parks Conservation Association, said the family was trying to steal a national treasure. "This lawsuit is clearly an attempt to privatize the estero (bay)," he said by email.

Salazar's decision was preceded by a fight about whether the farm hurt local wildlife and what rules governed his action. Lawyers for Lunny and his company have derided the government's scientific efforts, and on Tuesday they argued Salazar ignored other reports.

A judge also will have to decide whether Salazar had to follow federal environmental impact statement procedures when making this decision. Both sides at various times in the process have presented varying views on the matter.

The farm is represented by non-profit government watchdog Cause of Action and law firm Stoel Rives. The suit submitted to U.S. District Court for the Northern District of California is Drakes Bay Oyster Company v. Salazar.

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