The US Environmental Protection Agency (EPA) has lost some of its power to reduce greenhouse gas emissions.
The landmark ruling by the US Supreme Court represents a major setback to President Joe Biden's climate plans.
Environmental campaigners have reacted with dismay, one calling the ruling "judicial overreach".
The case against the EPA was brought by West Virginia on behalf of 18 other mostly Republican-led states and some of the nation's largest coal companies.
They were challenging whether the agency has the power to regulate planet-warming emissions for state-wide power sectors or just individual power plants. My
These 19 states were worried their power sectors would be regulated and they would be forced to move away from using coal, at a severe economic cost.
In a 6-3 ruling, the court sided with the conservative states and fossil-fuel companies, agreeing that Congress had not "intended to delegate... decision[s] of such economic and political significance".
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Attorney General Eric Schmitt for Missouri - one of
the 19 states - called it a "big victory... that pushes back on the Biden EPA's job-killing regulations".
The court hasn't completely prevented the EPA from making these regulations in the future - but says that Congress would have to clearly say it authorises this power. And Congress has previously rejected the EPA's proposed carbon limiting programmes.
Environmental groups will be deeply concerned by the outcome as historically the 19 states have made little progress on reducing their emissions - which is necessary to limit climate change.
The states made up 44% of the US emissions in 2018, and since 2000 have only achieved a 7% reduction in their emissions on average.
"Today's Supreme Court ruling undermines EPA's authority to protect people from climate pollution at a time when all evidence shows we must take action with great urgency," said Vickie Patton, general counsel for Environmental Defense Fund (EDF).
It means President Biden is now relying on a change of policy from these states or a change from Congress - otherwise the US is unlikely to achieve its climate targets.
This is a significant loss for the president who entered office on a pledge to ramp up US efforts on the environment and climate.
On his first day in office he re-entered the country into the Paris Agreement, the first legally-binding universal agreement on climate change targets.
And he committed the country to reducing its greenhouse gas emissions by 52% by 2030 against 2005 levels.
The outcome of this case will be noted by governments around the world, as it will affect global efforts to tackle climate change. The US accounts for nearly 14% of the world's greenhouse gas emissions.
A United Nations spokesman called it "a setback in our fight against climate change" but added that no single nation could derail the global effort.