A U.S. Appeals Court reinstated on Monday a 2004 lawsuit by eight states and the city of New York against five of the largest U.S. utilities over their carbon dioxide emissions.

The lawsuit was dismissed in October 2005 by U.S. District Court Judge Loretta Preska, who said the issue was a political question for Congress or the President, not the judiciary.

Monday's ruling by the U.S. Court of Appeals for the 2nd Circuit in New York said the judge "erred in dismissing two complaints on the ground that they presented non-justiciable political questions."

The lawsuit against American Electric Power Co Inc, Southern Co, Xcel Energy Inc, Cinergy Corp and the Tennessee Valley Authority public power system, argued that greenhouse gas emissions from their plants were a public nuisance and would cause irreparable harm to property.

The utilities are five of the largest carbon dioxide emitters in the United States. Around 40 percent of U.S. carbon dioxide emissions come from fossil-fueled power plants.