I had a source present in Richmond at oral arguments this morning. Here are the high points of the arguments, in which Judge Luttig was very active.
The Government's main contention was that the Supreme Court's Hamdi opinion controls; that the case of our dirty bomber/ American citizen is no different than Hamdi. Padilla took up arms in Afghanistan, eventually escaped from the region, and traveled to the U.S. where he contemplated terrorist attacks. He is an enemy combatant.
Judge Luttig pressed the government to argue that because the entire United States is a "battlefield," Padilla's situation is the same as Hamdi's. Padilla was simply captured on a battlefield in the U.S., whereas Hamdi was captured on a foreign battlefield. The government was very reluctant to follow this line of reasoning. One would expect that the President does not want the official position to be that the entire United States is a battlefield no different than Afghanistan.
Padilla's lawyer rejected that a battlefield could exist in a place where civil courts were operational. Hence, he argued that the United States could not be a battlefield at this time. In response to this assertion, Luttig stated unequivocally that the Supreme Court's Hamdi opinion was not limited to "battlefield" captures of enemy combatants and that Padilla's lawyer should stay away from a "battlefield" argument.
Judge Blane Michael's questions indicated that he rejected Luttig's suggestion to the Government that the U.S. is a battlefield. Judge Michael indicated the detention of Padilla depended on the law of war, not the location of a "battlefield."
Judge Luttig then offered the following hypo to Padilla's lawyers: The President learns that a terrorist has arrived at an American airport with plans to kill Americans, can the president order that the terrorist be detained? Padilla's lawyer said that only law enforcement officials could detain the terrorist, not the military. This earned a scoff from Judge Luttig, but Judge Michael attempted to bail out the lawyer by stating that of course the president could detain the terrorist: the question is what must be done with the terrorist after the detention.
From the tenor of the arguments, it is likely that the Fourth Circuit will apply Hamdi to the facts of Padilla. The result will be that the government is not required to charge Padilla in United States District Court. At most, he will be entitled to challenge his enemy combatant status in front of a military tribunal.