A federal appeals court has struck down the Bush Administration's "cap and trade" rule for power plants.
The policy, which was set to go into effect in 2010, would have allowed power plants that fail to meet mercury emission targets to buy credits from plants that do, and thus avoid having to install their own emission controls.
The Environmental Protection Agency claimed that it would reduce mercury emissions by 70 percent. But New Jersey and several other states challenged the policy, arguing that mercury from the exempted plants could endanger children living nearby.
On Friday, a three-judge panel ruled that the EPA does not have the authority to exempt the plants.