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Environmental groups scored a major legal victory Tuesday when the U.S. Court of Appeals for the D.C. Circuit struck down a Bush administration rule that stripped state governments of their power to implement strict pollutions standards.

The decision is the latest setback for the Bush administration which sought to formulate an emissions policy that largely favors the energy industry.

In a 2-1 decision, the court of appeals tossed out a Bush administration rule that permitted some refineries, power plants and factories to exceed pollution limits because the Environmental Protection Agency "failed to fix inadequate monitoring requirements ... and prohibited states and local authorities from doing so."

"We vacate this rule because it is contrary to the statutory directive that each permit must include adequate monitoring requirements," Appeals Court Judge Thomas B. Griffith wrote for the majority.

Since 1990, states were authorized to issue permits under the Clean Air Act limiting the amount of emissions refineries, utilities, and other industrial facilities released into the air. Congress required states to set strict monitoring requirements to ensure compliance with the rule.

In 2006, the EPA prohibited states from implementing new monitoring rules. Environmental groups sued claiming the EPA blocked public agencies from accessing data about air pollution.

"EPA's about-face means that some permit programs do not comply" with federal law, Griffith wrote.

The decision said the Clean Air Act "requires that '[e]very one' of the permits' issued to large factories and power plants must require adequate monitoring, and that EPA had failed to "read the statute" in taking a contrary view.

Earthjustice challenged the 2006 EPA rule on behalf of the Environmental Integrity Project, Environmental Defense Fund, Natural Resources Defense Council and Sierra Club. The rule specifically prohibited permitting authorities -- predominantly state agencies -- from including stronger air pollution monitoring requirements in permits for approximately 18,000 major stationary pollution sources, even where needed to guarantee compliance with emission limits.

"This is a huge victory for everyone who breathes," said Earthjustice attorney Keri Powell who argued the case in court. "We can't have strong enforcement of our clean air laws unless we know what polluters are putting into the air."

John Walke, Clean Air Director for the Natural Resources Defense Council, said "the Bush EPA went out of its way to overturn a system that required states to adequately monitor air pollution at power plants and factories."

"Instead, EPA actually outlawed states from requiring monitoring good enough to protect the health of their citizens," Walke said. "EPA's consistent polluter-biased practices have amounted to industry foxes having a house party in the henhouse," said.

Griffith, the appeals court judge, wrote that federal pollution standards does not go far enough to ensure pollution standards are met therefore state governments should be allowed to put their own rules into place.

"The question in this case is whether permitting authorities may supplement inadequate monitoring requirements when EPA has taken no action," Griffith wrote. The Clean Air Act provision "is a complex statute with a clear objective: it enlists EPA and state and local environmental authorities in a common effort to create a permit program for most stationary sources of air pollution. By its terms, this mandate means that a monitoring requirement insufficient 'to assure compliance' with emission limits has no place in the permit unless and until it is supplemented by more rigorous standards."

Appeals court judge Brett Kavanaugh, a former Bush administration attorney, wrote the panel's only dissenting opinion. He said the EPA has the legal authority "to determine whether state and local permitting authorities can impose additional monitoring requirements."

In February, Dow Jones reported Tuesday, the same appeals court struck down the EPA's decision to "de-list" mercury from a list of pollutants it is required to control at each power plant. Also, last year a divided Supreme Court ruled that carbon dioxide and other so-called greenhouse gases are air pollutants under the Clean Air Act, and that the Bush Administration broke the law in its refusal to limit emissions of those gases.

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