Aug. 12 (Bloomberg) -- A federal appeals court today upheld the dismissal of a lawsuit accusing U.S. Vice President Dick Cheney, former White House political adviser Karl Rove and former Cheney aide I. Lewis Libby of illegally conspiring to reveal the identity of a CIA agent.

The U.S. Court of Appeals for the D.C. Circuit said a trial judge was correct to dismiss the suit by Valerie Plame, who worked at the Central Intelligence Agency's headquarters in Virginia, and her husband, former U.S. Ambassador Joseph Wilson. They sued the three and former Deputy Secretary of State Richard Armitage in July 2006.

Plame and Wilson accused the four men of violating their constitutional rights by leaking Plame's identity to the media in retaliation for a New York Times opinion piece by Wilson that questioned the Bush administration's basis for going to war in Iraq.

The decision ``allows outrageous government conduct to go unpunished,'' said Melanie Sloan of Citizens for Responsibility & Ethics in Washington, a watchdog group that represented Plame and Wilson. She said the group is considering asking the full D.C. Circuit to review the case and an appeal to the U.S. Supreme Court.

Libby attorney William Jeffress of Baker & Botts in Washington said the decision was ``not a surprise.'' Justice Department spokesman Charles Miller declined to comment.

It is a federal crime to knowingly reveal a covert CIA operative's identity.

Exempt from Law

The appeals court, in the 2-1 decision written by Chief Circuit Judge David Sentelle, said that because Congress exempted the offices of the president and vice president from a federal law protecting the privacy of individuals, the court wouldn't create any additional remedy. In addition, the panel said any suit would involve the disclosure of sensitive intelligence information.

Circuit Judge Judith Rogers dissented, saying she thought many of the claims should be allowed to proceed. The other judge on the panel was Karen LeCraft Henderson. Sentelle was named to the court by President Ronald Reagan; Henderson by President George H.W. Bush and Rogers by President Bill Clinton.

Wilson's op-ed article in July 2003 said President George W. Bush's administration twisted intelligence on Saddam Hussein's pursuit of nuclear weapons to justify the invasion of Iraq.

Libby was convicted by a federal jury in March of obstructing a Justice Department probe into the leak of Plame's identity. Bush commuted Libby's sentence on July 3 while leaving the conviction intact. No one has been charged with illegally leaking Plame's identity.

The case is Plame v. Cheney, 06-1258, U.S. District Court, District of Columbia (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Cary O'Reilly in Washington at caryoreilly@bloomberg.net.

Last Updated: August 12, 2008 16:10 EDT