If Democrats take a drubbing in November, the Obama Administration is likely to turn to regulation to achieve its “transformational” agenda. Which is all the more reason to cheer on Texas as it pushes back against the EPA’s illegal attempt to rewrite the nation’s clean air laws.

To wit, the Lone Star State is resisting the Environmental Protection Agency’s decision to regulate carbon under the clean air laws of the 1970s. These regulations will be damaging enough on their own. But the EPA and chief Lisa Jackson are also threatening to punish Texas and other green dissenters with a de facto moratorium on any major energy or construction projects. Just what the economy needs.

Under the Clear Air Act, the EPA’s national office chooses priorities, but state regulators run the relevant programs and issue the necessary permits. When orders from HQ change, as with carbon over the last year, states get three years to revise their “implementation plans.” But in August, Ms. Jackson decided that the law posed too long a climate wait and decreed that if these plans aren’t updated by an arbitrary January 2011 deadline, her office will override the states and run the carbon permitting process itself.

Put bluntly, this coercion is illegal. As badly as Ms. Jackson has abused clean air laws to go after CO2, she can’t by regulatory fiat usurp the law’s statutory language about the federalist balance of power between Washington and the states. Texas filed an unusual lawsuit last week with the D.C. appeals circuit calling it an “ultra vires” act—literally, “beyond the powers”—and requesting an emergency stay of the EPA’s regulations because of the imminence of irreparable harm.

No major construction project in America can go forward without EPA air quality and pollution permits, and that reality has special bearing for Texas, a world center of energy production. The EPA is good at issuing broad edicts but doesn’t have any special competence or staff to run a day-to-day permitting operation, and its national permitting program is still being written. It certainly won’t lift off by January. So the EPA decision to strip permitting authority from the states is tantamount to a ban on major construction or building expansion—not merely Texan refineries but any kind of carbon-heavy utility, industrial production, manufacturing plant or even large office buildings.

The Texas Commission on Environmental Quality, the state EPA branch, estimates that 167 current state projects would have to be junked in 2011, more after the first year. This regulatory uncertainty is already icing over business planning statewide and making capital hard to obtain. Even the EPA admits in its regulatory filings that its takeover of permitting “may have adverse consequences” for state economies.

Ms. Jackson’s real goal here is to threaten states like Texas that haven’t fallen into line: Either accede to her unlawful and politically driven rules, or else watch EPA drive businesses out of the state. In the case of Texas, that means Mexico, where—ahem—companies will take their carbon emissions with them.

Believe it or not, West Virginia Democrat Jay Rockefeller has emerged as one of Ms. Jackson’s most trenchant critics, and at a Capitol Hill coal rally in mid-September he said she “doesn’t understand the sensitivities economically of what unemployment means.” That’s for sure, and he’s sponsoring legislation to put a two-year freeze on Ms. Jackson’s planning. Meantime, the EPA can’t blatantly rewrite the laws it doesn’t like, which means it is past time for the courts to intervene.