The three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit sided with prosecutors in their attempt to compel Time magazine's Matthew Cooper and The New York Times' Judith Miller to testify before a federal grand jury about their confidential sources.
"We agree with the District Court that there is no First Amendment privilege protecting the information sought," Judge David B. Sentelle said in the ruling, which was unanimous.
Floyd Abrams, the lawyer for both reporters, said he would ask the full appeals court to reverse Tuesday's ruling. "Today's decision strikes a heavy blow against the public's right to be informed about its government," Abrams said in a statement.
"This is terrible news for those journalists," said CBSNews.com Legal Analyst Andrew Cohen, "because now there are only really two legal options left: asking the full appeals court panel to take up the case and asking the Supreme Court to look at it. And neither of those two possibilities are likely."
In October, Judge Thomas F. Hogan held the reporters in contempt, rejecting their argument that the First Amendment shielded them from revealing their sources. Both reporters face up to 18 months in jail if they continue to refuse to cooperate.
The special prosecutor in the case, Chicago U.S. Attorney Patrick Fitzgerald, Fitzgerald hailed Tuesday's appeals court decision, saying it "affirmed that reporters do not have a First Amendment privilege to refuse to comply with a grand jury subpoena issued in good faith. ... We look forward to resuming our progress in this investigation and bringing it to a prompt conclusion."
Fitzgerald is investigating whether a crime was committed when someone leaked the identity of CIA officer Valerie Plame. Her name was published in a 2003 column by Robert Novak, who cited two senior Bush administration officials as his sources.
The column appeared after Plame's husband, former Ambassador Joseph Wilson, wrote a newspaper opinion piece criticizing President Bush's claim that Iraq had sought uranium in Niger. The CIA had asked Wilson to check out the uranium claim. Wilson has said he believes his wife's name was leaked as retaliation for his critical comments.
Disclosure of an undercover intelligence officer's identity can be a federal crime if prosecutors can show the leak was intentional and the person who released that information knew of the officer's secret status.
Cooper is a White House correspondent for Time who has reported on the Plame controversy. He agreed in August to provide limited testimony about a conversation he had with Lewis "Scooter" Libby, Vice President Dick Cheney's chief of staff, after Libby released Cooper from his promise of confidentiality.
Fitzgerald then issued a second, broader subpoena seeking the names of other sources.
Miller is facing jail for a story she never wrote. She had gathered material for an article about Plame, but ended up not doing a story.
Prosecutors have interviewed President Bush, Cheney, then-Secretary of State Colin Powell and other current or former administration officials in the investigation. Journalists from NBC and The Washington Post also have been subpoenaed.
White House press secretary Scott McClellan declined Tuesday to comment on the appeals court ruling. "We'll leave it to the courts to address that matter," McClellan said.
"The president has made it clear that he wants to get to the bottom of this matter," he said, adding that Mr. Bush also has urged anyone with information on the case to come forward.