Blood banks for years have been common sources of cash for the needy, and the brainy and/or beautiful are free to explore what their eggs or sperm might fetch in the marketplace.

But the Obama administration last week asked a San Francisco appeals court to overturn a recent decision that said bone marrow donors can be paid for what their bodies produce.

A unanimous three-judge panel last month ruled for a nonprofit group,, that wants to encourage bone marrow donations by offering $3,000 scholarships, housing allowances or charitable donations to those who are matched with blood disease patients.

Thousands of Americans die of various blood diseases each year because they cannot find matching bone marrow donors, said the organization’s president, Nashville lawyer Shaka Mitchell. Compensation could substantially increase the number of people who sign up to be a potential match, he said.

But the group’s plans ran afoul of the National Organ Transplant Act, which includes bone marrow among the organs and body parts that cannot be sold. Penalties include fines and imprisonment for up to five years.

The marrow donors group — represented by the Arlington-based libertarian nonprofit Institute for Justice that is ever-ready to test the regulatory powers of government — filed a constitutional challenge.

Advances in medical technology, the group said, had made the extraction of the hematopoietic stem cells found in bone marrow essentially as easy as blood donation.

When the transplant act was written in 1984, marrow extraction was painful. Needles thick enough to suck out the fatty marrow were inserted into a donor’s anesthetized hip bones, and the cells were taken from the marrow.

Today, a process called apheresis is used about 70 percent of the time. Donors are injected with a medication that accelerates blood stem cell production so there are more cells in the bloodstream. The donor sits for hours in a recliner as a machine collects the “peripheral” blood stem cells and recycles the blood back into the donor.

The donor group said the application of the organ transplant law violated the equal-protection clause, because there is no rational basis for government to treat donors undergoing apheresis differently from blood or sperm donors.

But the three-judge panel said there was no reason to reach the constitutional question. It is up to Congress if it wants to include blood marrow in its list of items that cannot be sold, the court said. But the apheresis method extracts only blood and thus there is no prohibition on paying for it, the court said.

“It may be that ‘bone marrow transplant’ is an anachronism that will soon fade away” as the blood extraction method replaces needle-extraction of bone marrow, Judge Andrew J. Kleinfeld wrote, “much as ‘dial the phone’ is fading away now that telephones do not have dials.”

The Justice Department and the National Marrow Donor Program have moved quickly to try to get the decision overturned.

“The panel’s ruling rests on legal errors of exceptional importance, threatens to disrupt current patient care and undermines Congress’s clear policy of encouraging voluntary bone marrow donations,” the Justice Department said in asking the full U.S. Court of Appeals for the 9th Circuit to rehear the case.

The donor registry, which last year matched 5,000 patients with unrelated donors, said in a statement that the decision could have “unexpected and disastrous consequences” for patients.

The panel’s decision in Flynn v. Holder noted that there are obvious reasons for prohibiting selling organs or even blood marrow cells, which requires a precise genetic match. “Congress might have been concerned that every last cent could be extracted from sick patients needful of transplants, by well-matched potential donors making ‘your money or your life’ offers,” the opinion said.

The donor registry said its experience is that “a donor system that relies on the human desire to help others is far superior to one that focuses on self-gain.”

Mitchell and Institute for Justice lawyer Jeff Rowes got both more and less than they wanted from the 9th Circuit decision. Mitchell said the ruling indicates that his group could directly pay donors rather than offering scholarships or charitable donations.

Rowes, meanwhile, said he had hoped the court would look at the constitutional question and whether the government had a rational basis for including bone marrow in its list of organs. His group is eager for the Supreme Court to weigh in on that test, which he said is “code for the government gets to do whatever it wants.”

Depending on what the 9th Circuit does with the government’s appeal, he still might get the chance.