Washington (Platts)--20Dec2012/401 pm EST/2101 GMT

A divided federal court Thursday rejected industry petitions to rehear a unanimous decision allowing the US Environmental Protection Agency to regulate greenhouse gases emitted from the energy sector and vehicles, but two distinct dissenting opinions may stir plaintiffs to seek review by the US Supreme Court.

The dozens of plaintiffs in the case, Coalition for Responsible Regulation v. EPA (No.09-1322), have 90 days to petition the Supreme Court to consider their case against EPA activities to regulate industry greenhouse gas emissions under the Clean Air Act.

National Association of Manufacturers President and CEO Jay Timmons said his organization is "carefully considering" seeking Supreme Court review.

"While it is unfortunate that the Court denied our rehearing petition of our challenge to these costly EPA regulations, we welcome the fact that two judges wrote careful and well-reasoned dissenting opinions that supported our arguments," Timmons said in a statement. "These rare dissents send a clear signal that significant legal issues remain to be addressed."

Eric Groten, an attorney with Vinson & Elkins who represented the coalition, said he expects petitions for Supreme Court review will be filed.

"The dissents from denial set up the issues beautifully," he said.

The order denying a rehearing of the case by the full US Court of Appeals for the District of Columbia Circuit was accompanied by a statement from three judges in the majority in which they concluded that their decision was grounded in the landmark 2007 US Supreme Court ruling that EPA had the authority to control carbon dioxide under the Clean Air Act.

"To be sure, the stakes here are high. The underlying policy questions and the outcome of this case are undoubtedly matters of exceptional importance," DC Circuit Court Chief Judge David Sentelle and judges Judith Rogers and David Tatel said in their opinion dismissing the petitions.

"The legal issues presented, however, are straightforward, requiring no more than the application of clear statutes and binding Supreme Court precedent. There is no cause for en banc review."

Lengthy dissenting statements were filed by judges Janice Rogers Brown and Brett Kavanaugh.

Brown argued that the Supreme Court's Massachusetts v EPA opinion "does not compel" GHG regulation beyond vehicle tailpipes to stationary sources, such as power plants and refineries, under the Clean Air Act's "prevention of significant deterioration" or PSD and Title V permitting programs.

"The cascading layers of absurdity that flow from that interpretive exercise make clear that the plain language of the CAA compels no such result," Brown wrote in a 23-page dissent.

Further, despite the agency's "endangerment finding" against GHGs, the Clean Air Act was drafted to regulate pollutants that cause ill effects when inhaled and not to address flooding or heat waves as a result of GHG emissions, she said.

"Congress was of course free to circumvent this close cause-health effect nexus by devising a separate provision for GHG regulation, much as it did for stratospheric ozone, but it did no such thing," Brown said.

Kavanaugh zeroed in on EPA's "tailoring" of the law's PSD provisions so as to apply carbon dioxide regulations to only the largest industry sources of GHGs.

"As a court, it is not our job to make the policy choices and set the statutory boundaries, but it is emphatically our job to carefully but firmly enforce the statutory boundaries. That bedrock separation of powers principle accounts for my concern about this case," Kavanaugh said in his 20-page dissent. "Here, as I see it, EPA went well beyond what Congress authorized for the Prevention of Significant Deterioration statute."

Sentelle, who was appointed to the court by President Ronald Reagan, and Rogers and Tatel made up the three-judge panel that heard the original case earlier this year and on June 26 handed down a 3-0 opinion in favor of EPA.

The three judges ruled that EPA acted within its authority under the Clean Air Act when it issued its 2009 scientific "endangerment" finding that six greenhouse gases, such as carbon dioxide, threatened public health and welfare.

The panel also agreed that EPA's subsequent GHG emission standards for new vehicles and light trucks were correct and that these regulations then allowed the agency to go after stationary sources, such as power plants and refineries, in accordance with the law.

The court further upheld EPA's "tailoring" rule to regulate only the largest stationary sources for GHGs under the law's PSD program.

"EPA's interpretation of the governing CAA provisions is unambiguously correct," the three-judge panel said in its opinion for the agency.

--Cathy Cash, cathy_cash@platts.com --Edited by Jason Lindquist, jason_lindquist@platts.com