WASHINGTON - The Supreme Court indicated Tuesday it could breathe new life into a federal rule requiring states to reduce power plant pollution from the South and Midwest that fouls the air in the eastern United States.

Several justices suggested during a 90-minute argument that they believe the Environmental Protection Agency did not exceed its authority when it issued its cross-state air pollution rule in 2011. A divided federal appeals court panel invalidated the rule last year.

The EPA sought to reduce pollution from power plants in 28 states that drifts above states in the Northeast and Mid-Atlantic regions. Texas led 14 states and industry groups in challenging the rule. Most downwind states support it.

Justice Department lawyer Malcolm Stewart said the EPA is trying to be "an honest broker" between upwind and downwind states.

Sulfur dioxide and nitrogen oxide pollution from power plants can be carried long distances, and the pollutants react with other substances to form smog and soot, which have been linked to illnesses. The cross-border pollution has prevented many cities from complying with health-based standards set by law.

The cross-state pollution case was not the only Obama administration air pollution policy being challenged in a Washington courtroom Tuesday. At a federal appeals court, industry groups sought to invalidate the first regulations aimed at controlling mercury and other toxic air pollution from coal-fired plants.

The EPA has long tried to find a way to enforce the so-called good neighbor provision of the federal Clean Air Act that prohibits states from polluting their neighbors' air. The latest effort would cost energy utilities $800 million annually to install pollution controls on coal-fired and other plants, according to EPA estimates.

The EPA said the investments would be far outweighed by the hundreds of billions of dollars in health-care savings from cleaner air. The agency said the rule would prevent tens of thousands of premature deaths and hundreds of thousands of illnesses each year.