The Supreme Court ruled on Monday against the Environmental Protection Agency's mandate to limit mercury and other toxic emissions from coal-fired power plants.

In a major setback against the Obama administration's efforts to reduce toxic emissions and carbon pollution, the 5-4 decision not to uphold EPA rules was based mainly on the organization's failure to consider the cost of complying to the rules, Reuters reported.

"The agency must consider cost - including, most importantly, cost of compliance - before deciding whether regulation is appropriate and necessary," Justice Antonin Scalia wrote, according to Reuters.

The justices ruled in favor of Michigan and 22 other states that brought the case to the Supreme Court, saying the EPA incorrectly interpreted the Clean Air Act's directive.

The Clean Air Act orders the EPA to regulate emissions of mercury and other toxic pollutants into the environment when "appropriate and necessary," but state lawyers argued that the EPA took the directive too far.

"EPA's decision that it is 'appropriate' to achieve $4 million to $6 million in health benefits at a cost of $9.6 billion is not reasonable, imposes great expenses on consumers, and threatens to put covered electric utilities out of business," the lawyers said, according to The Inquisitr.

The case revolved around this argument, and the justices agreed that the EPA should consider the economic implications of complying with its regulations before imposing them.

The agency issued a statement on Monday through spokeswoman Melissa Harrison.

"EPA is disappointed that the Court did not uphold the rule, but this rule was issued more than three years ago. Investments have been made and most plants are already well on their way to compliance," Harrison said, according to CNN.

Neil Gormley, senior associate of Earthjustice DC, said that the Supreme Court's decision does not change EPA's authority "to protect the public from toxic air pollution."

On the other hand, Michigan attorney general Bill Schuette considered the ruling a "victory for family budgets and job creation in Michigan," CNN reported.

"The court agreed that we can and must find a constructive balance in protecting the environment and continuing Michigan's economic comeback," Schuette said.