The decision will require the Clean Air Act to be substantially rewritten and the EPA's bounds of authority redrawn.
The ruling was a victory for the American Trucking Assns. and other industry groups that filed suit against the EPA for new pollution standards the agency set two years ago. The groups said complying with the standards would cost them $45 billion a year.
The ATA called the decision "a significant victory for the trucking industry and all Americans. Now we can go forward in working out sensible rules that protect both our air and our economy."
The decision did not completely set aside the new ozone standards, but said they could not be enforced under the section of the clean air law. The court set aside the coarse particulate matter standards and told the EPA to develop different ones.
"What EPA lacks is any determinate criterion for drawing lines," the court said. "It has failed to state intelligibly how much (pollution) is too much."
The panel reinforced the fact that EPA must follow the law as written by Congress and cannot just implement its own open-ended policy preferences, as Section 109 of the Act allows. "The maximum stringency would send industry not just to the brink of ruin but hurtling over it, while the minimum stringency may be close to doing nothing at all," the court said.
The EPA said it planned to recommend an appeal to the Justice Department. But if it loses in the courts, the EPA said it would then call on Congress to "preserve these protections."
One judge of the three-member panel dissented, saying the ruling ignores more than 50 years of Supreme Court precedents on the delegation of congressional authority.