Bill Cobb says regulatory lawyers told him he’d have a tough time challenging the U.S. Environmental Protection Agency when it disapproved of Texas’ plan to regulate air quality under the Clean Air Act (CAA).

Yet Cobb, who represented Texas, and Samara Kline, who represented 10 private industry clients, fought the EPA and won a ruling from the 5th U.S. Circuit Court of Appeals that vacates the EPA’s decision disapproving of Texas’ State Implementation Plan (SIP).

According to the 5th Circuit’s 2-1 decision in Texas, et al. v. U.S. Environmental Protection Agency, the background in the case is as follows: In 1994, then-Texas Gov. Ann Richards submitted a Flexible Permit Program to the EPA as an amendment to Texas’ SIP. Under the program, a facility could obtain a permit that would allow it to modify its facility without regulatory review as long as the emissions increase did not exceed an aggregate limit specified in the permit.

Despite the CAA’s mandate that the EPA approve or disapprove an SIP amendment within 18 months of its submission, the EPA delayed formal consideration of Texas’ Flexible Permit Program for more than a decade, according to the 5th Circuit. In 2010, the EPA issued its final decision disapproving of the program. As a result, every facility with a flexible permit could face fines or other enforcement action irrespective of emissions levels, the 5th Circuit wrote. Texas and private industry groups challenged the EPA’s decision at the 5th Circuit. Cobb says EPA administrative orders are appealed directly to U.S. circuit courts.

On Aug. 13, the 5th Circuit majority found that the EPA exceeded its authority when it disapproved of Texas’ plan. “It is clear that Congress had a specific vision when enacting the Clean Air Act: The Federal and State governments were to work together, with assigned statutory duties and responsibilities, to achieve better air quality,” wrote Judge E. Grady Jolly, joined by Judge Leslie Southwick. “The EPA’s final rule disapproving of Texas’s Flexible Permit Program transgresses the CAA’s delineated boundaries of this cooperative relationship.”

Senior Judge Patrick Higginbotham dissented, writing that “the rejection of SIP revisions is well within the statutory powers of the EPA.”

Cobb, then a Texas assistant attorney general, argued the case at the 5th Circuit. “From the start everyone thought that we would lose. EPA gets so much discretion that most veterans thought it would be difficult if not impossible to win the case,” says Cobb, a partner in the Austin office of Jackson Walker. It was a battle “that needed to be fought,” he says. Because of the EPA’s decision, facilities were operating under state-approved rules that exposed them to “citizen suits and potential liability,” he says.

Kline, a partner in the Dallas office of Baker Botts, says the opinion is important for her clients, which include the Texas Association of Business and the Texas Chemical Council, among others. “The permits were issued by the state under a state-enacted program and the EPA’s disapproval of the program added uncertainty. And the court said that EPA’s disapproval was invalid,” she says.

David Carson, senior counsel at the U.S. Department of Justice who represents the EPA, declines comment.

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