A federal appeals court returned litigation over the New York Police Department’s stop-and-frisk policy to a lower court Friday for a potential settlement between civil liberties groups and the city.

The 2nd U.S. Circuit Court of Appeals also refused to let police unions replace the city to continue the appeal over a judge’s finding that police sometimes discriminate against minorities with the crime reduction tactic.

The appeals court’s decision was issued weeks after the city withdrew its challenge to a court-appointed monitor and other steps in order to rewrite the stop-and-frisk policy, with new Mayor Bill de Blasio saying the city wanted to ensure there was no discrimination.

In a statement, the city’s law department said: “The court of appeals recognized the city’s interest in resolving the case, which we now intend to do in the district court.”

Christopher Dunn, associate legal director of the New York Civil Liberties Union, said the decision “clears away the last hurdle to our being able to move forward with the de Blasio administration to settle the litigation and start the important task of reforming stop-and-frisk.”

He added: “With this ruling, the appeals court has made clear that it does not intend to stand in the way of this reform process.”

Police unions had asked to take over the appeal, saying the finding of discrimination by U.S. District Judge Shira A. Scheindlin unfairly tainted the 35,000-person police force, the nation’s largest. Scheindlin was removed from the case last year after the appeals court said she ran afoul of the code of conduct for U.S. judges by misapplying a ruling that allowed her to take the case and by giving media interviews during a trial last year.

The appeals court refused to let the unions replace the city and continue the appeal. The court said the unions could try to intervene in place of the city before a district judge first and then could appeal any rejection.

In its decision, the 2nd Circuit said the appropriateness of letting police unions continue the appeal “could well bear on settlement negotiations.” It said the lower court was “better positioned to deal with the complexities that might arise during multifaceted settlement negotiations in which a variety of interests must be accommodated.”

The ruling seemed to sit well with the police unions.

“Our mission has always been to gain a seat at the table in order to protect our members’ rights and reputations,” said Patrick J. Lynch, president of the Patrolmen’s Benevolent Association.

Stop and frisk has been around for decades, but recorded stops increased dramatically in the past decade to an all-time high in 2011 of 684,330, mostly of black and Hispanic men. To make a stop, police must have reasonable suspicion that a crime is about to occur or has occurred, a standard lower than the probable cause needed to justify an arrest. Only about 10 percent of the stops result in arrests or summonses, and weapons are found about 2 percent of the time.

Baher Azmy, legal director of the civil liberties group Center for Constitutional Rights, which had argued on behalf of those challenging the stop-and-frisk tactics, said the 2nd Circuit’s action meant that the litigation “has largely concluded.”

“We look forward to working with affected communities and the city toward achieving lasting reforms to the NYPD’s stop and frisk practices,” he said. “This city will be a better place for it.”

(AP)