The Environmental Protection Agency violated the Clean Air Act when it rejected the state of Texas' flexible permitting program, federal appellate judges ruled Monday.

A three-judge panel of the U.S. Fifth Circuit Court of Appeals in New Orleans ruled 2-1 that the EPA overstepped its bounds when it rejected the Texas program. The flexible permitting program was established in 1994, and allows refineries, power plants and other industrial companies to modify their facilities without additional regulations as long as emissions continued to fall below the established limit.

But the EPA rejected the program in 2010, claiming, among other reasons, that it did not provide for adequate monitoring and gave too much discretion to the Texas environmental quality commission.

Texas Attorney Greg Abbott, who has been battling the EPA on the issue, praised the panel's decision.

"This ruling is a victory for Texas jobs and confirms what we've said from the start – that the EPA's actions were baseless and nothing more than a federal power grab by an administration that is desperate to extend its control over businesses, with no regard to the consequences of their actions," Abbott said in a statement.

In it's 23-page opinion, the judges wrote that the EPA improperly rejected the Texas Flex Permits Program more than 16 years after the agency's statutory deadline.

The court notes that the EPA did not disapprove of the program when it was first proposed in 1994 or when it was amended by the state in1998, 2000, 2001, 2002 and 2003.

The court also criticized the EPA for ignoring the role of states in implementing and running air permitting programs as established by the federal Clean Air Act. The Act gives the EPA responsibility for identifying pollutants and setting national standards, while the states are empowered to create their own unique air permitting programs that ensure compliance with these federal standards.

As long as federal standards are met, states "enjoy a measure of discretion," wrote Judge E. Grady Jolly for the majority.

"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. The EPA's final rule disapproving Texas's Flexible Permit Program transgresses the CAA's delineated boundaries of this cooperative relationship."

The state, the Texas Oil and Gas Association, the Texas Association of Manufacturers, the Texas Association of Business and others filed suit against the EPA over the rejection of the program, arguing that more regulations would hinder facility expansion and job creation.

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