In a significant legal victory for the Obama administration, a federal appeals court today unanimously upheld U.S. EPA's landmark greenhouse gas regulations.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit said it has denied or dismissed challenges to four rules that are key components of the administration's effort to regulate greenhouse gas emissions.

The court denied the two industry- and state-backed petitions seeking invalidation of the so-called endangerment finding, the agency's original conclusion that greenhouse gases pose a health risk and should be regulated under the Clean Air Act, and the "tailpipe" rule that set greenhouse gas emissions standards for cars and light-duty trucks beginning with 2012 models.

The judges outright dismissed related petitions challenging two other regulations: the "timing" rule, which required that new controls of greenhouse gas emissions from stationary sources would be triggered Jan. 2, 2011, and the "tailoring" rule, which interprets the Clean Air Act in such a way that only major polluters are required to obtain permits for greenhouse gas emissions.

The court held two days of oral argument in February, after which most commentators agreed the court appeared likely to uphold the bulk of the rules, if not all (Greenwire, March 2).

Chief Judge David Sentelle, a conservative appointed by President Reagan, and Judge Judith Rogers and Judge David Tatel, both Clinton appointees, were the three judges on the panel.

In an unsigned 82-page opinion, the panel concluded that the endangerment finding and tailpipe rule were not "arbitrary and capricious" under the Administrative Procedure Act and that EPA's interpretation of the Clean Air Act "is unambiguously correct."

The court held that none of the petitioners had legal standing to challenge the timing and tailoring rules, meaning that the panel did not reach the merits of those claims.

Endangerment finding

On the endangerment finding, which EPA was required to complete following the Supreme Court's 2007 Massachusetts v. EPA ruling, in which the court held that carbon emissions could potentially be regulated under the Clean Air Act, the panel noted that EPA's finding was "consistent" with the high court decision and "is adequately supported by the administrative record."

Several of the claims were foreclosed by the language in Massachusetts v. EPA or in the Clean Air Act itself, including EPA's reliance decision to make a "science-based judgment" at the expense of considerations of how it would affect regulated entities, the panel concluded.

The court quoted the majority opinion in Massachusetts, in which Justice John Paul Stevens wrote that the George W. Bush administration's "laundry list" of reasons not to regulate greenhouse gases had "nothing to do with whether greenhouse gas emissions contribute to climate change."

The appeals court panel wrote that the Clean Air Act "speaks in terms of endangerment, not in terms of policy, and EPA has complied with the statute."

The court gave similarly short shrift to the suggestion that the agency had improperly relied on studies by the Intergovernmental Panel on Climate Change and others.

"This is how science works," the judges wrote. "EPA is not required to re-prove the existence of the atom every time it approaches a scientific question."

Ultimately, "petitioners are asking us to re-weigh the scientific evidence before EPA and reach our own conclusion," the panel noted. "This is not our role."

Other rules

In addressing the tailpipe rule, the judges again observed that some of their conclusions upholding the regulation were simply compelled by Massachusetts v. EPA. The challenge to that rule focused largely on how it triggered stationary source regulations.

The appeals court rejected a related argument that took issue with EPA's long-standing interpretation of the Clean Air Act as it affects stationary sources. After the oral argument, it appeared to be industry's best bet for at least a partial victory.

The groups argued that greenhouse gases could not be regulated via EPA's New Source Review/Prevention of Significant Deterioration program, known as PSD, because pollutants that can be regulated via the program are limited to the six covered by National Ambient Air Quality Standards, or NAAQS.

Among other things, the appeals court found that the phrase "any air pollutant" in the Clean Air Act is not limited to the NAAQS and does include greenhouse gases.

Lack of standing doomed the challenges to the tailoring and timing rules. Legal experts had speculated beforehand that the tailoring rule was most vulnerable to legal attack if the court had reached the merits.

Put simply, the petitioners failed to show that either of the rules had caused them any injury. In fact, the intent of the tailoring rule was to relieve the burdens on industry that would be imposed as a result of EPA's regulating greenhouse gases.

"Without the tailoring rule, an even greater number of industry and state-owned sources" would be subject to regulation, the court noted.

The fact that Congress could take action to relieve the regulatory burden on industry is irrelevant at this point, the court said, making reference to the difficulties any bill faces in becoming law.

Uphill battle for industry

The resounding nature of the court's decision delighted environmental lawyers, who say it leaves industry lawyers with few options.

They could petition the court of appeals to rehear the case, but Natural Resources Defense Council attorney David Doniger said that could be an uphill battle, particularly as the panel decision was unanimous and "represents the full spread of the court" in ideological terms.

Another option is to seek Supreme Court review, but based on the fact that the Obama rules were prompted in large part by the Massachusetts v. EPA case, "that's a fool's errand," Doniger suggested.

It is not yet clear what industry groups and the states that challenged the rule -- led by Texas -- will do next.

Jeff Ostermayer, a spokesman for the National Association of Manufacturers, said lawyers "are still reviewing the opinion, but we will take a look at all options."

Speaking for the Obama administration, Ignacia Moreno, who heads the Justice Department's environment and natural resources division, said in a statement that officials are "pleased that the D.C. Circuit unanimously sustained EPA's interpretation of the Clean Air Act and its actions to protect the health and welfare of the American people, which the Justice Department has been proud to vigorously defend."

As those involved in the litigation await to see what the challengers seek to do next, environmental lawyers will continue to revel in the outcome.

Sean Donahue, of the Donahue and Goldberg law firm, argued on behalf of environmental groups that intervened in support of the regulations.

The ruling is a "hugely significant moment in the history of U.S. climate policy," he said.

Click here to read the ruling.

Reporters Jean Chemnick and Jeremy P. Jacobs contributed.