The Obama administration suffered a major legal defeat today when a federal court threw out the Environmental Protection Agency’s strict new power plant emission regulations.

In a 2-to-1 decision posted Tuesday, the U.S. Court of Appeals for the District of Columbia held that the EPA’s new Cross-State Air Pollution Rule, targeting the 28 states that generate the majority of the electricity in the United States, exceeded the agency’s legal authority. The EPA had previously estimated that the regulations would inflict $2.7 billion in economic costs on the private sector.

Under the Clean Air Act’s “good neighbor” provision, the EPA is authorized to regulate sulfur dioxide and nitrogen oxide emissions that cross state lines. But the Obama EPA ignored legal precedent and the plain text of the statute by enacting limits that far exceeded the scope of the law. The court’s ruling reads:

EPA seems reluctant to acknowledge any textual limits on its authority under the good neighbor provision. At oral argument, EPA suggested that “reasonableness” is the only limit on its authority to use cost-effectiveness to force down States’ emissions. EPA would not rule out the possibility that under the good neighbor provision, it could require a State to reduce more than the State’s total emissions that go out of State. But such a claim of authority does not square with the statutory text – “amounts” of pollution obviously cannot “contribute” to a downwind State’s pollution problem if they don’t even reach the downwind State.

Obama’s Cross State EPA rule is just one of many costly regulations currently in the pipeline. The DC Court of Appeals is also hearing an appeal to the EPA’s major stationary source maximum achievable control technology (Utility MACT) rule. That regulation, which limits mercury emissions from power plants, is expected to inflict more than $10 billion of harm on the U.S. economy.

“The D.C. Circuit Court has vacated EPA’s Cross-State Air Pollution Rule (CSAPR) but that doesn’t tell the whole story of this Administration’s record in the courts,” Sam Batkins, American Action Forum’s Director of Regulatory Policy, said. “Based on our calculations, judges across the ideological spectrum, including the President’s appointees, have struck down 15 major regulations, with a total cost of $4.6 billion.”