The U.S. Court of Appeals for the District of Columbia ruled that the EPA violated the Clean Air Act in 2005 when it exempted coal plants from the strictest emission controls for mercury and other toxic substances like arsenic, lead and nickel.

The EPA's "Clean Air Mercury Rule" would have created a "cap-and-trade" program to allow utilities to swap rights to emit mercury to comply with overall limits that would reduce nationwide emissions by 70 percent by 2018.

Some 14 states, including New York and California, sued the EPA over the rules, along with environmental and public health groups.

The court ruling means that big coal-burning utilities like Atlanta-based Southern Co and American Electric Power of Columbus, Ohio, will have to install expensive mercury-reduction equipment at more of their power plants rather than rely on a fleet-wide trading program.

The ruling adds to the U.S. backlash against building coal-fired power plants, which are also a major source of heat-trapping carbon dioxide emissions.

Wall Street banks including Citigroup Inc, JP Morgan Chase & Co and Morgan Stanley this week issued standards that weigh carbon dioxide and mercury emissions when determining whether to lend money for new power plants.

"This adds to the momentum against building new coal-fired power plants," said John Walke, attorney with the Natural Resources Defense Council, which participated in the lawsuit. "This immediately changes the landscape and adds to the argument against new pulverized coal plants."

In a 36-page opinion, US District Judge Florence Marie Cooper said the Navy must now abide by a previous order which outlawed the use of submarine-hunting sonar in areas off the coast of California known to be populated by whales.

Environmental groups say the equipment is potentially harmful to marine mammals, citing cases in the Bahamas and Canary Islands where sonar has been linked to mass deaths of whales.

Last month Bush granted an exemption to the Navy over use of sonar, arguing it was vital for military preparedness exercises which were in the "paramount interest of the United States."

The decision allowed the Navy to ignore a January 3 injunction requiring it to "monitor for and avoid marine mammals while operating high-intensity, mid-frequency sonar during ... naval exercises."

In her ruling, Cooper suggested Bush's attempt to skirt the earlier court order was "constitutionally suspect."

She also dismissed the argument put forward by the Navy that the lives of its sailors depended on being properly skilled in hunting submarines from hostile nations.

"The Navy's current 'emergency' is simply a creature of its own making, i.e., its failure to prepare adequate environmental documentation in a timely fashion," Cooper wrote.

The contentious, two-week U.N. climate conference on the resort island of Bali ended with the United States, facing angry criticism from other delegations, relenting in its opposition to a request from developing nations for more technological help fighting climate change.

The new deal does not commit countries to specific actions against global warming. It simply sets an agenda and schedule for negotiators to find ways to reduce pollution and help poor countries adapt to environmental changes by speeding up the transfer of technology and financial assistance.

Despite an aggressive campaign led by the European Union to include specific emissions reduction targets for industrial nations — by 25 to 40% below 1990 levels by 2020 — the final road map has none.

The guidelines were eliminated after the United States, joined by Japan and others, argued that targets should come at the end of the two-year negotiations, not the beginning.

California can set its own standards on greenhouse-gas emissions from vehicles, a federal judge in Fresno has ruled, The San Jose Mercury News reports. The state still needs permission from the U.S. Environmental Protection Agency to implement the rules.

This is the second time this year that courts have ruled against the auto industry’s bid to stop regulation of tailpipe emissions by states. In September, a court decision in Vermont confirmed that states do have the ability to adopt California’s motor vehicle greenhouse gas emissions standards. Sixteen states comprising about 45 percent of all U.S. auto sales have adopted, or are in the process of adopting, California’s standards. The Vermont decision came on the heels of a U.S. Supreme Court ruling last April saying the U.S. EPA has the authority to regulate greenhouse gases.

California has filed a lawsuit against the EPA for failing to act on California’s tailpipe emissions waiver request.

California is the only state that can set its own vehicle pollution standards because it began regulating air pollution before the EPA’s creation. Under the Clean Air Act, however, other states can select either California’s rules or federal ones.