The Hill reports that:

In a 2-1 ruling, the Cincinnati-based Court of Appeals for the Sixth Circuit delivered a stinging defeat to Obama’s most ambitious effort to keep streams and wetlands clean, saying it looks likely that the rule, dubbed Waters of the United States, is illegal.

“We conclude that petitioners have demonstrated a substantial possibility of success on the merits of their claims,” the judges wrote in their decision, explaining that the Environmental Protection Agency’s (EPA) new guidelines for determining whether water is subject to federal control — based mostly on the water’s distance and connection to larger water bodies — is “at odds” with a key Supreme Court ruling….

The decision expands a stay that a North Dakota judge imposed in August, the day before the rule took effect, and that only applied to 13 states.

The EPA said it will respect the court’s decision, but it believes the rule is legal and necessary….

Waters of the United States has become one of the most controversial environmental regulations under Obama.

Republicans, nearly 30 states and a wide range of business interests say that it is a major overreach of federal power, putting the EPA in charge of nearly every square inch of private and state land.

The EPA and the Army Corps, which enforce the rule together, said it was necessary to clarify the federal government’s authority and ensure protection of small waterways that are connected to bigger ones, as called for under the Clean Water Act.

The Friday decision means those small waterways will, for the time being, go without Clean Water Act authority.

The stay is not the final word on the regulation, since the court still needs to go through the process of making a full ruling on it. After that, it can be appealed up to the Supreme Court.