The decision brings an end to a lawsuit that had threatened to hamper stem cell research after a district court judge blocked the taxpayer funding in 2010. But some observers expected the Supreme Court would decline the take the case after an appeals court ruled that the funding could continue.

U.S. law prohibits the NIH from funding the creation of human embryos for research or research in which human embryos are destroyed, but leaves room for debate over whether that includes work with human embryonic stem cells.

Opponents of such research, including many religious conservatives, have argued that it is unacceptable because it destroys human embryos.

Scientists hope to be able to use stem cells to find treatments for spinal cord injuries, cancer, diabetes and diseases such as Alzheimer's and Parkinson's.

Shortly after taking office in 2009, President Barack Obama issued an executive order that expanded federal funding for research involving human embryonic stem cells in hopes it would lead to cures for diseases. The administration limited the funding to research on stem-cell lines derived from embryos that come from fertility clinics and were going to be thrown away otherwise.

Two researchers who work with adult stem cells, James Sherley, a biological engineer at Boston Biomedical Research Institute, and Theresa Deisher, of Washington-based AVM Biotechnology, sued in 2009 to block such research. They argued that they were at risk of being squeezed out of federal grants for their own work with adult stem cells, which does not involve the destruction of embryos.

A federal judge in 2010 blocked the NIH from funding embryonic stem cell research, but a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit overturned that decision last year.

The appeals court recognized that the law was ambiguous but deferred to NIH's interpretation that it could fund research using stem cells from embryos that were not actually destroyed in the course of that research.

Asking the Supreme Court to review the case, the researchers said that the NIH had a duty to respond to over 30,000 public comments on the proposed guidelines before adopting them.

A lawyer for the researchers, Samuel Casey of the Jubilee Campaign Law of Life Project, expressed disappointment with the court's refusal to take the case. He also called on Congress to clarify the law to ban the spending of taxpayer funds on embryonic stem cell research.

A Justice Department spokeswoman declined to comment.

Tony Mazzaschi, a director at the Association of American Medical Colleges, said he was gratified but not surprised that the Supreme Court declined to hear the case. He said the researchers' petition raised narrow, procedural questions rather than the fundamental issue of whether the law allows NIH to fund such research.

"It's great news for the medical schools that really want to invest in this area of research," Mazzaschi said.

The case is Sherley v. Sebelius, U.S. Supreme Court, No. 12-454.

(Reporting by Terry Baynes in New York; Editing by Jackie Frank and Cynthia Osterman)

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