The Environmental Protection Agency’s habit of stretching its legal authority faces another reckoning on Tuesday when the Supreme Court considers whether the agency can rewrite the Clean Air Act to usurp state responsibilities. This one ought to be in Justice Anthony Kennedy‘s federalist sweet spot.

The case focuses on the Clean Air Act’s “good neighbor” provision that gives EPA the power to oversee remedies when pollution in one state blows into a neighboring state. An upwind state that EPA judges to “significantly contribute” to a downwind state’s failure to meet federal standards can be required to limit emissions by a commensurate amount.

Some 27 states are considered upwind, and for decades EPA adhered to an interpretation of the law that let states come up with ways to minimize their contributions to downwind states. Only if a state plan was inadequate did the feds swoop in with tailored orders for how an individual state must limit emissions. This fit with the Congressional intent in the text of the Clean Air Act that regulating air pollution was “the primary responsibility of States and local governments.”

Enter the Obama Administration, whose 2011 cross-state air pollution rule violated the federalist structure of the Clean Air Act in two ways. First EPA no longer gave states a chance to develop their own plans to meet their required “good neighbor” emissions targets. Instead the agency began to issue its own federal implementation plans immediately.

Second, EPA issued a cookie-cutter standard that all states must adhere to regardless of their contribution to downstate pollution. The move was an obvious attempt to expand EPA’s writ, letting the agency set new emissions standards that exceed what an individual state might need to ease its own downwind pollution.

The rule was almost certainly targeted at Texas and other states with large coal-fired electric plants. This is part of the Obama Administration’s larger anti-carbon fuels agenda, which it is trying to impose by fiat because it can’t get Congress to go along, not even a Democratic Senate.

Texas and more than a dozen other states as well as private companies challenged EPA in Environmental Protection Agency v. EME Homer City Generation, and in August 2012 the D.C. Circuit Court of Appeals struck down the rule. Judge Brett Kavanaugh wrote for a 2-1 majority that “Congress did not authorize EPA to simply adopt limits on emissions as EPA deemed reasonable.” Democrats cried foul and blamed Judge Kavanaugh for being a Bush appointee, but it’s telling that the full D.C. Circuit denied en banc review.

The EPA says in its defense that business should love the rule because it is the most cost-effective, but that isn’t necessarily true for certain states. The Administration is also arguing that the states didn’t raise their objections loudly enough during the rule-making process, but the states also didn’t know how far this EPA would go until the rule was final.

The D.C. Circuit only rarely overturns EPA rules, which shows how out of bounds the cross-state regulation is. The Supreme Court should overturn it for violating the federalist intentions of Congress, but there is also the added judicial incentive to show this increasingly rogue agency that it can’t rewrite the law as it pleases.