The three-judge panel, acting on a lawsuit by a number of industry groups, said the section of the 1990 Clean Air Act on which the EPA relied in issuing the air pollution rules amounted to "an unconstitutional delegation of legislative power."
The EPA is almost certain to appeal the case, although the agency had no immediate comment.
The decision was a major victory for a broad range of industry groups from trucking companies to electric utilities, which had fought the tougher air quality rules as too expensive and ill-conceived.
The regulations, issued in July 1997, imposed much tougher health standards for smog-causing ozone and opened the way for the first time for regulation of microscopic soot. The tighter standards overnight put hundreds of counties in violation of federal air quality standards.
At the time, Vice President Al Gore called the tougher requirements "the most significant steps in a generation to protect the American people, especially our children, from air pollution."
The opinion was handed down by the U.S. Court of Appeals for the District of Columbia on a lawsuit filed by the American Trucking Associations and a number of other industry groups.
Judges David S. Tatel, Stephen F. Williams and Douglas H. Ginsburg wrote separate parts of the opinion, although Tatel filed a dissent on a portion of the findings.
The rule was one of the most contentious environmental issues facing the EPA.
The regulation dramatically tightened federal air quality requirements for ozone, commonly known as smog, with an aim to provide better protection of children, the elderly and populations with respiratory problems.
"It's a big victory. One of the biggest," said Robin Conrad, senior vice president for litigation at the U.S. Chamber of Commerce. She said the ruling put into question the EPA's methods of selecting the new standards and asserted the agency was "picking numbers out of thin air." She said the EPA now will have to "start the process all over again ... and justify its numbers."
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