The Obama administration suffered a stinging legal loss at the federal appellate level today.  The DC circuit vacated a novel EPA rule that would have forced power plants in 28 states to cut electricity production, ruling 2-1 that the EPA had exceeded its statutory authority under the Clean Air Act:

A federal court has struck down an Environmental Protection Agency rule that forces cuts in soot- and smog-forming power plant emissions that cross state lines, dealing a major blow to the White House’s air quality agenda.

The U.S. Court of Appeals for the District of Columbia Circuit vacated the Cross-State Air Pollution Rule that forces cuts from plants in 28 states in the eastern half of the country, finding that it exceeds EPA’s powers under the Clean Air Act. …

The judges said the Obama administration rule allows EPA to “impose massive emissions reduction requirements on upwind states without regard to the limits imposed by the statutory text.”

Several states, including Texas, Alabama and Georgia, challenged the rule alongside the National Mining Association, power companies and other parties. But other states such as New York and Delaware, as well as environmental groups, joined the case in defense of EPA.

The EPA imposed the rule last year, announcing that the benefits of the new rule would outweigh its costs. The justices didn’t base the decision on the relative merits of the argument, though, but on the basis of statutory authority.  The correct venue for making that determination would be Congress, which would then need to grant the EPA the jurisdiction for that kind of rule making and/or enforcement.  Congress had not granted the EPA that kind of authority, so the cost-benefit analyses were moot.

So what comes next?  The court ordered the EPA to return to the Clean Air Interstate Rule until Congress decides otherwise:

A three-judge panel of the U.S. Court of Appeals in Washington today sided with more than three dozen challengers to the EPA’s Cross-State Air Pollution Rule, which imposes caps on emissions for 27 states. The rule was put on hold by the court while it considered the legality of the regulation.

The court ordered the agency to enforce a 2005 rule known as the Clear Air Interstate Rule, until a viable replacement to the cross-state pollution rule is made.

NPR calls this “another notch in [the] belt” for Texas AG Greg Abbott, who won another fight against the EPA last week, too:

Just a week after a court victory against the Environmental Protection Agency(EPA), Texas Attorney General Greg Abbott has another notch in his belt. Today, an appeals court in Washington has ruled that the EPA violated the Clean Air Actwith its Cross State Air Pollution Rule (CSAPR), and now must revise the ruling.

It’s welcome news for Abbott, who just last week bragged that he likes to “sue the Obama administration” for fun. The state of Texas was joined by dozens of others, including some Texas power companies, in challenging the rule. …

Why did the court vacate the EPA’s rule?

It said that agency had “exceeded its statutory authority” in enacting the rule. “Congress did not authorize EPA to simply adopt limits on emissions as EPA deemed reasonable,” the ruling, which you can read below, states:

“Rather, Congress set up a federalism-based system of air pollution control. Under this cooperative federalism approach, both the Federal Government and the States play significant roles. The Federal Government sets air quality standards for pollutants. The States have the primary responsibility for determining how to meet those standards and regulating sources within their borders.”

Consider this a victory for Governor Rick Perry as well.  He has made it a personal mission to fight federal interference in state matters, and he’s racking up impressive victories in that battle with Washington.