Court rejects Bush's signature air pollution rule

The suit had been brought by North Carolina, Duke Energy and other utilities, which argued that the Environmental Protection Agency had exceeded its authority in establishing the Clean Air Interstate Rule.

That regulation required 28 mostly Eastern states to reduce smog-forming and soot-producing emissions that can travel long distances in the wind. By 2015, states would have to cut sulfur dioxide emissions by 70 percent and nitrogen oxide emissions by 60 percent from 2003 levels.

The EPA predicted it would prevent about 17,000 premature deaths a year, and the Bush administration found itself unusual allies supporting the regulation.

"This is the rare case where environmental groups went to court alongside the Bush administration," said Frank O'Donnell, president of Clean Air Watch, a group that has criticized other Bush administration policies.

The U.S. Court of Appeals for the District of Columbia Circuit agreed on Friday that the EPA had overstepped its authority. It said the Clean Air Act did not give the EPA the authority to change pollution standards the way it did. Citing "more than several fatal flaws," the court scrapped the entire regulation.

"This is without a doubt the worst news of the year when it comes to air pollution," O'Donnell said.

The ruling was somewhat of a surprise, even to North Carolina and industry groups, which challenged aspects of the law.

While North Carolina Attorney General Roy Cooper said he was glad the court agreed "we need tougher rules to clean up and protect the air we breathe," his spokeswoman, Noelle Talley, said the attorney general's office disagreed that the entire rule needed to be scrapped.

Duke Energy had opposed the Clean Air Interstate Rule for its distribution of a cap-and-trade system of pollution allowances among industries.

"It was not the intent of Duke Energy's participation in this litigation to overturn E.P.A.'s Clean Air Interstate Rule," Thomas Williams, a spokesman for Duke Energy, wrote in an email to The New York Times.

Williams pointed out that Duke Energy follows more stringent 2002 North Carolina law setting limits on sulfur dioxide and nitrogen oxide.

William M. Bumpers, an attorney representing Entergy Corp., said a few electric companies flatly opposed the regulation but most generally favored it because it included cap-and-trade provisions. Such provisions allow companies that exceed emissions caps to buy credits from companies that do not.

"The power-generating industry had already invested billions and billions of dollars in anticipation of the trading market," Bumpers said. "They're not happy with this development."

The EPA said it was reviewing the 60-page opinion. The Bush administration can appeal the decision, but environmental groups called for Congress and the EPA to quickly begin working on a new law or replacement regulation.