The U.S. Environmental Protection Agency does not have to require water transfers—like the system that supplies fresh water to New York City—to meet a federal anti-pollution permitting program, the U.S. Court of Appeals for the Second Circuit ruled Wednesday.

The 2-1 ruling dealt a blow to environmentalists, sporting conservation groups, and some state and tribal governments who claimed that water transfers can move harmful pollutants from one body of water to another.

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