updated 12/23/2008 2:57:19 PM ET 2008-12-23T19:57:19

In a ruling hailed by environmentalists, a federal appeals court on Tuesday reinstated one of President George W. Bush's clean air regulations while the Environmental Protection Agency makes court-mandated changes.

In July, the U.S. Appeals Court for the District of Columbia Circuit threw out the Clean Air Interstate Rule, which required 28 mostly Eastern states to reduce smog-forming and soot-producing emissions that can travel long distances in the wind.

The court said the EPA overstepped its authority by instituting the rule, citing "more than several fatal flaws" in the regulation. However, a three-judge panel decided to reinstate the rule while the EPA develops a new clean air program.

Judge Judith W. Rogers said allowing the country to go without the protection of CAIR while the EPA fixes it "would sacrifice clear benefits to public health and the environment."

The judges did not give EPA a deadline to come up with new regulations, but warned the agency that this decision is not an "indefinite stay" of its July ruling.

The Environmental Protection Agency had predicted that the Clean Air Interstate Rule would prevent about 17,000 premature deaths a year by dramatically reducing sulfur dioxide and nitrogen oxide emissions. In addition, the EPA said the rule would save up to $100 billion in health benefits, eliminate millions of lost work and school days and prevent tens of thousands of nonfatal heart attacks.

Rep. Ed Markey, a Massachusetts Democrat who heads a House global warming panel, applauded the decision, saying that "common sense ruled the day."

"Knocking down the Clean Air Interstate Rule completely would have left our lungs in a lurch," the congressman said. "Today's decision is significant because it gives the new Obama Administration some breathing room — and gives the American people some clean air to breathe."

"Air pollution does not obey state boundaries and CAIR is essential to protect Americans living downwind of sources of dangerous emissions," he said.

Said Vickie Patton, deputy general counsel at the Environmental Defense Fund: "Today's court decision is a welcome gift for the millions of Americans that face serious health threats from power plant pollution. Power plants across the East will reduce millions of tons of smog and soot pollution today while America's new leadership fixes the mistakes made by the Bush administration."

Jeff Holmstead, one of the authors of the CAIR rule when he served as EPA's air administrator, said the court had changed "nothing substantive from its earlier opinion."

Holmstead, who now heads Bracewell & Giuliani's Environmental Strategies Group, said that while the opinion "is more consistent with past precedent in its approach to rulemaking, there is still some uncertainty regarding exactly what the EPA will do in response. Until the Agency responds, regulated sources will have to comply with CAIR."

"The regulated industry looks forward to working closely with the new administration in formulating a response to today's decision. The resulting rule must balance important environmental, economic, and energy objectives," he said.

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