EPA Launches Comment Period On Power Plant Climate And Air Toxics Rules

Highlights

• The U.S. Environmental Protection Agency (EPA) proposes to eliminate greenhouse gas regulations for power plants after concluding that power plants do not "contribute significantly" to dangerous air pollution or, alternatively, that certain methods of emission reduction do not satisfy Clean Air Act (CAA) criteria.
• EPA also seeks to repeal Biden-era Mercury and Air Toxics Standards amendments that tightened particulate matter limits, required continuous monitoring systems and strengthened mercury standards for lignite plants.
• These first major rules of the second Trump Administration must navigate a post-Chevron legal landscape, requiring EPA to demonstrate its interpretations represent the "single best reading" of the CAA.
• The proposals may foreshadow the deregulatory strategies EPA may employ beyond power plant emission regulations, potentially reshaping environmental regulation more broadly.

The U.S. Environmental Protection Agency (EPA) published a pair of proposed Clean Air Act (CAA) rules on June 17, 2025. First, EPA proposed to eliminate all greenhouse gas (GHG) emission rules for power plants or, alternatively, eliminate nearly all such rules (90 Fed. Reg. 25,752). Second, EPA proposed to repeal amendments to the Mercury and Air Toxics Standards (MATS) finalized in 2024 (90 Fed. Reg. 25,535).

These proposed rules on power plant emissions of GHGs and hazardous air pollutants (HAPs) are the most significant public step EPA has taken in its sweeping deregulatory agenda. The proposed rules offer valuable insight into the administration's broader strategy and approach as it begins to grapple with notice-and-comment rulemaking requirements.

Proposed Regulation of Carbon Dioxide (CO2) Emissions Under Section 111

The regulation of power plant GHG emissions under CAA Section 111 has been contentious and subject to dramatic swings since their introduction. EPA's 2015 Clean Power Plan (CPP) under the Obama Administration took a broad approach, seeking Chevron deference for an interpretation of the "best system of emission reduction" (BSER) that could include generation-shifting measures that took advantage of the uniquely interconnected nature of the electric grid and power sector. The U.S. Supreme Court later stayed the CPP, and the rule never went into effect.

EPA's 2019 Affordable Clean Energy (ACE) rule under the Trump Administration limited the BSER to measures that could be applied directly "at and to the source" and concluded that only heat-rate improvements sufficed as the BSER. The U.S. Court of Appeals for the District of Columbia Circuit vacated the ACE rule and repeal of the CPP as a "fundamental misconstruction" of CAA Section 111(d), but the Supreme Court reversed. In West Virginia v. EPA, 597 U.S. 697 (2022), the Court invoked the major questions doctrine to reject the CPP's generation-shifting approach as a "transformative" measure requiring clearer congressional authorization.

Following this decision, EPA under the Biden Administration issued new power plant GHG rules in 2024 with BSERs that varied depending on the type of plant. Most significantly, the Biden EPA rule relied on carbon capture and sequestration (CCS) technology for certain existing coal plants and new gas-fired power plants and on natural gas co-firing for other existing coal plants. Although the Supreme Court declined to stay the Biden rules, following the change in administration, the D.C. Circuit agreed to hold the case in abeyance while the Trump Administration evaluated a change of course. EPA now proposes a new approach.

EPA's Primary Proposal for CO2 Emissions

The Trump Administration's proposal would eliminate all GHG limits for coal- and gas-fired power plants based on the premise that these sources do not "contribute significantly" to the endangerment of public health. CAA Section 111(b)(1)(A), 42 U.S.C. 7411(b)(1)(A), states that the EPA administrator must list a source category for regulation under Section 111 "if in his judgment it causes, or contributes significantly to" dangerous air pollution. EPA concludes that this language confers discretion on the administrator to determine when emissions reach the threshold of significant contribution; specifically, the agency states that GHG emissions from fossil fuel-fired power plants do not contribute significantly because they represent only 3 percent of global emissions and no cost-effective control measures are reasonably available.

In the proposal, EPA further concludes that the term "contributes significantly to," in conjunction with an explicit reference to the administrator's "judgment," confers discretion to consider policy issues central to other parts of Section 111. Those policy issues include the effectiveness of emissions reduction controls, cost reasonableness of those controls, impacts on industry and impacts on public health and welfare. This approach would be a significant shift from previous approaches to Section 111 rules, which more clearly separated the threshold inquiry of which source categories are subject to regulation under Section 111 versus the actual emission reduction requirements.

EPA's Fallback Proposal for CO2 Emissions

Alternatively, EPA's proposal offers a narrower approach focusing on the Biden EPA's use of CCS and natural gas co-firing as the BSER for certain coal-fired power plants. The core aspects include:

• for long-term coal-fired power plants and for plants undertaking major modifications, a repeal of the Biden EPA's 90 percent CCS as the BSER because the technology is not "adequately demonstrated" and is unreasonably costly
• for medium-term coal-fired power plants, a repeal of the Biden EPA's 40 percent natural gas co-firing as the BSER because co-firing is "an inefficient use of natural gas"
• a repeal of the requirements for existing natural gas and oil-fired power plants because – having proposed to repeal the requirements for coal-fired power plants – it would be "an inefficient use of State resources" to require state governments to develop and submit plans for natural gas and oil-fired plants given how few GHGs they emit in comparison

This alternative is more technical than the primary proposal and would likely take longer to finalize due to the distinct issues arising for each of the various standards and the need to build an adequate technical record to support any final rule.

Proposed Repeal of 2024 Revisions to MATS Rule

In a separate action, EPA proposed to repeal amendments to the MATS for coal- and oil-fired power plants promulgated by EPA under the Biden Administration in May 2024.

The MATS rule has also been the focus of intense scrutiny since its 2012 promulgation. EPA under the Obama Administration promulgated the original MATS rule for coal- and oil-fired power plants under CAA Section 112, including a key predicate determination that regulation under Section 112 was "appropriate and necessary." In Michigan v. EPA, 576 U.S. 743 (2015), the Supreme Court held that EPA had improperly ignored cost in its "appropriate and necessary" determination, but the regulation nevertheless remained in effect through the Obama Administration and first Trump Administration. EPA under the Biden Administration strengthened the standards in May 2024.

EPA now proposes to repeal three key provisions of the EPA amendments under the Biden Administration:

• Filterable particulate matter (fPM) emission standards tightened from 0.030 to 0.010 pounds per million British thermal units (lb/MMBtu) for coal-fired electric-generating units. EPA proposes that the costs to achieve the standard are too high – flagging that cost effectiveness was worse than similar standards rejected for other sectors – and also that the standard is not "necessary" under CAA Section 112(d)(6).
• Requirement to use particulate matter (PM) continuous emission monitoring systems (CEMS) for compliance demonstrations, because the transparency and pollution abatement advantages of CEMS do not sufficiently outweigh the costs to industry compared to other compliance options from the original 2012 MATS rule.
• Tightened mercury emission standards for lignite-fired power plants, which had been lowered from 4 to 1.2 pounds per trillion British thermal units (lb/TBtu). EPA now proposes that this tighter standard was "based on insufficient available data," including inappropriate extrapolations between units at different lignite-fired plants.

Administrative Law Backdrop

These proposals represent the first major EPA regulations of the second Trump Administration and first power plant GHG rules developed entirely after the Supreme Court eliminated Chevron deference in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).¹ Particularly for the power plant CO₂ rules, EPA spends many pages of the proposal elaborating on statutory interpretations that have not been tested in court. Without the benefit of Chevron deference, courts will assess whether these untested interpretations are the "single best" readings of the statute rather than merely one of several "reasonable" interpretations. If successful, this position would seemingly foreclose any stationary source GHG regulation under CAA Section 111, given that power plants are by far the greatest emitters; if power plants do not "contribute significantly" to climate change under CAA Section 111, it is not clear that any other source category would meet the test, either.

The "significant contribution" argument for GHGs could also potentially be applied to other source categories and pollutants, establishing a higher threshold for when EPA can regulate emissions under various CAA provisions.

Another major issue will be the economic analysis of the proposals. The MATS repeal is premised in large part on cost considerations. The current proposal puts a heightened emphasis on the cost-focused approach to the technology review provisions of Section 112(d)(6), potentially establishing precedent for how costs are evaluated in other CAA contexts.

The CO₂ proposal has a more complicated cost framework. EPA proposes that the cost of controls can be relevant to whether a source category's GHG emissions should be regulated at all under Section 111. However, the agency's proposed economic analysis shows costs (lost health benefits) that vastly outweigh the avoided compliance costs. Depending on the discount rate, the EPA estimates compliance cost savings between $9.6 billion and $19 billion, as compared to lost health benefits between $76 billion and $130 billion due to increased fine particulate matter and ozone emissions. The proposal did not monetize any benefits associated with CO₂ emissions, stating that was an explicit choice to ignore those emissions due to direction in Executive Order 14154: Unleashing American Energy.

Conclusion

These proposals are the first in EPA's deregulatory agenda and the first in a legal landscape that has fundamentally shifted post-Loper Bright. As these proposals move through the CAA's unique rulemaking process, EPA's decisions are likely to test not only the substantive boundaries of CAA authority, but also the procedural constraints on administrative agencies in the post-Chevron era.

Both proposals will undergo 45-day public comment periods following Federal Register publication. EPA has indicated that it intends to move quickly to finalize rules. Stakeholders should prepare detailed technical and legal comments if they are affected.

Holland & Knight is well positioned to provide assistance. For more information or questions, please contact the authors.

Footnote

1. Under the Chevron deference doctrine, reviewing courts were required to defer to a federal agency's reasonable interpretation of ambiguity in a statute administrated by the agency, a 40-year-old standard that led lower courts to frequently rule for the government in challenges to agency rules and regulations.