UPDATE 2-U.S. court rejects Stone aide's challenge to special counsel Mueller

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 Robert Mueller's 2017 appointment by the Justice Department as special counsel heading the Russia investigation. 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 served on him by Mueller, who is investigating potential conspiracy between Trump's 2016 campaign and Moscow.

Miller's case marked the third legal challenge to Mueller's authority that has failed so far, including efforts by Paul Manafort, Trump's former campaign chairman who has been convicted on a series of charges and pleaded guilty to others, and a Russian company accused of meddling in the election. Miller is a one-time aide to Stone who has worked for other political campaigns in the past.

In Miller's challenge, 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 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. "Special Counsel Mueller effectively serves at the pleasure of an Executive Branch officer who was appointed with the advice and consent of the Senate," the three-judge panel concluded. "Miller's contention that Special Counsel Mueller is a principal officer under the Appointments Clause thus fails."

Paul Kamenar, Miller's attorney, said he is disappointed in the decision and is still weighing whether to appeal it, either to the full appellate court or to the Supreme Court. "The fact that the court took over three months to decide this appeal after oral argument ... demonstrates that this was a serious and substantial challenge," Kamenar said.

STONE FACES CHARGES 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.

Mueller is preparing to submit to Attorney General William Barr a report on his investigation, a probe that has cast a cloud over Trump's presidency. Trump has called the Mueller probe a witch hunt. He and Russia have denied collusion. Russia has denied election interference.

A federal judge previously rejected Manafort's bid to get an indictment against him dismissed by arguing that Mueller's appointment ran afoul of Justice Department rules on installing special counsels. Manafort is due to be sentenced next month in two related cases for crimes ranging from bank and tax fraud, to conspiring against the United States and witness tampering.

A judge separately rejected Russian company Concord Management and Consulting LLC's effort to win dismissal of an indictment secured by Mueller that alleges it helped fund a propaganda operation to sway voters in the 2016 election. Concord, like Miller, argued that Mueller's appointment violated the Constitution, but the judge ruled Mueller's appointment was lawful.

Miller's legal challenge is the only one that made it to the appellate court. Concord's attorneys filed a brief and participated in oral arguments in support of Miller's claim. (Reporting by Lawrence Hurley and Sarah N. Lynch; Additional reporting by Mark Hosenball; Editing by Will Dunham)