An environmental group failed Wednesday in its bid to overturn a jury's verdict that it defamed a Southern Arizona rancher and had to pay him $600,000.

The three-judge panel rejected arguments by the Center for Biological Diversity that it had a right to charge that James Chilton operated his Arivaca ranch in a way that damaged the public lands on which he was grazing his cattle. Judge William Brammer, writing for the unanimous court, rejected arguments by attorneys for the group that its statements were privileged.

Attorneys for the Tucson-based organization also argued that the statements and some photographs published on the group's web site and in a news release were substantially true -- meaning that Chilton could not contend he was libeled.

But Brammer said jurors heard the claims of both sides and concluded the information was false or at least misleading. And he noted the group admits that four of its 21 photographs do not even depict public lands.

The appellate judges also rebuffed claims the $500,000 in punitive damages was excessive, particularly because the Center is a non-profit organization. He said there is no evidence that the organization cannot pay the award.

In fact, the organization's 2005 annual report shows revenue of $3.5 million -- most of that from grants and membership -- and expenses of $2.4 million, even after center paid $500,000 of the award following last year's verdict; the $100,000 balance is covered by insurance.

Kieran Suckling, the organization's policy director, vowed an appeal to the Arizona Supreme Court.

Suckling said the appellate judges ignored his organization's arguments that the photos -- the heart of the defamation case --were absolutely protected by the First Amendment because they were part of an appeal filed with the U.S. Forest Service.

"The Court of Appeals punted all the free speech arguments,'' he said.

Brammer, however, said the Center's attorneys did not properly raise those issues at last year's trial in Pima County Superior Court. Suckling said the appellate judges were relying on a "technicality'' and "ducked the question.''

The fight surrounds the decision by the Forest Service to give Chilton a 10-year renewal of his grazing permit for 21,500 acres of public land. The Center for Biological Diversity appealed that decision, posting on its web site a link to that appeal as well as the 21 photographs part of that appeal.

It was those photographs that caused the biggest stir, several of which showed what appeared to be denuded grazing land, a situation the Center said was due to overgrazing.

But Kraig Marton, Chilton's lawyer, presented his own photographs at the trial which depicted a more wide-angle view of the scene, photos Marton said prove that the Center's own photos were deliberately misleading.

Suckling said the photographs cannot be judged by themselves because were part of the Center's appeal to the Forest Service

challenging the effect of cattle on the land. He also said the fact that some of the photos were taken of Chilton's cattle on private land -- not land at issue in the permit -- is irrelevant.

The appellate court upheld the punitive damage award because the judges said there was evidence of malice on the part of the Center and Andrew Schneller, who had been a staffer, who took most of the photographs.

Brammer specifically cited one photo of two cows on private land "lying on a dry and barren field,'' with a caption saying the area had been "completely denuded.'' The judge said the clear implication was that all the damage had been caused by Chilton's cattle.

But he noted that there had been a three-week long festival on the land which ended a couple of weeks before. And Chilton presented evidence there were cars and all-terrain vehicles at the site.

Brammer said because Schneller had been at the festival, a jury could conclude he had "actual malice'' in taking the photos as proof of damage by Chilton's cattle.