UPDATE 1-U.S. court rejects challenge to special counsel's appointment

A U.S. appeals court on Tuesday rejected a challenge brought by an associate of Roger Stone, the indicted long-time advisor to President Donald Trump, to the legality of the Justice Department's 2017 appointment of Special Counsel Robert Mueller. In doing so, the U.S. Court of Appeals for the District of Columbia Circuit upheld a lower court's decision to hold Andrew Miller in contempt for refusing to comply with a grand jury subpoena that was served on him by Mueller, who is investigating potential conspiracy between Trump's 2016 campaign and Russia.

The court concluded that Mueller's appointment by Deputy Attorney General Rod Rosenstein, the Justice Department's No. 2 official, was lawful under the Appointments Clause of the U.S. Constitution that lays out presidential powers on appointing certain public officials. Miller's lawyer had argued that the appointment was unlawful because Mueller was not named by the president and approved by the U.S. Senate. That argument depended on Mueller being viewed as what is known as a "principal officer" who must be confirmed by the Senate.

The appeals court agreed with the Justice Department that Mueller is an "inferior officer," a lower-level official who is under the direction of Rosenstein like other government lawyers. Stone, a self-proclaimed "dirty trickster" and Republican political operative for decades, pleaded not guilty on Jan. 29 to lying to Congress, obstructing an official proceeding and witness tampering, charges brought by Mueller's team.

The Mueller probe into Russia's role in the 2016 U.S. presidential election and possible collusion between Moscow and the Trump campaign threatens Trump's presidency. Russia has denied it interfered in the election. Trump and Moscow also have denied collusion. Trump has called the Mueller probe a witch hunt.

(Reporting by Lawrence Hurley; Editing by Will Dunham)