EPA Proposes Rollback of Climate and Power Plant Regulations

The Environmental Protection Agency (EPA) has launched a regulatory rollback campaign implementing President Trump’s energy and deregulatory agenda. These proposed actions represent a fundamental shift toward policies prioritizing American energy production, economic competitiveness, and regulatory restraint.

The EPA’s proposals align with Trump administration executive orders, including “Unleashing American Energy” and the declaration of a national energy emergency. Additional rule repeals and revisions are expected over the coming weeks and months as EPA continues to develop and propose new rules.

These rules will significantly impact new power projects, including data center developers who are planning for behind-the-meter and “private grid” arrangements powered by gas-fired EGUs.

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Proposed Repeal of Carbon Pollution Standards

The EPA has proposed repealing the Biden-era Carbon Pollution Standards for fossil fuel-fired electric generating units (EGUs), which required 90% carbon capture and storage (CCS) for existing coal-fired EGUs or 40% co-firing of natural gas, starting on Jan. 1, 2032. For new gas plants, the rule imposes two phases of standards. Phase 1, which is effective now, imposes greenhouse gas (GHG) efficiency standards, depending on the type of unit. The Phase 2 standards require 90% CCS for new gas-fired EGUs that operate as baseload units (greater than 40% annual capacity), starting in 2032.

EPA’s proposed rule includes two alternatives:

Primary Proposal: Non-Significant Contribution Finding – EPA’s primary proposal involves issuing a non-significant contribution finding under Section 111(b)(1)(A) of the Clean Air Act, determining that greenhouse gas emissions from power plants do not “contribute significantly” to air pollution endangering public health or welfare. The agency found that U.S. power sector emissions accounted for approximately 3% of total global greenhouse gas emissions in 2022, declining from 5.5% in 2005. EPA concluded this relatively minor share means reductions from U.S. power plants would not meaningfully impact global atmospheric concentrations.

Alternative Proposal: Repeal of 90% CCS and Gas-Firing Standards – EPA alternatively proposes that CCS for coal- and gas-fired EGUs and natural gas co-firing for coal-fired EGUs do not meet statutory requirements for the best system of emission reduction. The agency argues these technologies are not adequately demonstrated, are unreasonably costly, and cannot be achieved within required timeframes. Under the alternative proposal, the Phase 1 standards would remain in place.

Proposed Repeal of Mercury and Air Toxics Standards

EPA has also proposed repealing the 2024 Mercury and Air Toxics Standards for coal-fired EGUs, reverting to the original 2012 MATS requirements. The 2024 amendments had lowered filterable particulate matter limits from 0.030 lb/MMBtu to 0.010 lb/MMBtu and mercury limits for lignite units from 4.0 lb/TBtu to 1.2 lb/TBtu.

EPA has proposed to find that the cost-effectiveness of the 2024 standard—$10.5 million per ton of non-mercury hazardous air pollutant metals—exceeds reasonable thresholds. The agency also found insufficient data demonstrating all lignite-fired units can reliably achieve stricter mercury limits given diverse boiler types and variable fuel compositions. The proposed repeal would restore monitoring compliance flexibility for coal-fired EGUs.

Proposed Rescission of the 2009 Endangerment Finding

EPA has proposed rescinding its 2009 Endangerment Finding for greenhouse gases from vehicle emissions under Section 202(a) of the Clean Air Act. The 2009 rule found that elevated concentrations of six well-mixed GHG in the atmosphere are a driver of global climate change, that climate change indirectly endangers public health and welfare, and that vehicle GHG emissions contribute to elevated concentrations of GHG in the atmosphere. This finding led to regulations on GHGs from vehicles.

In the proposed recission of the 2009 finding, EPA articulates several independent rationales for its decision. EPA cites recent U.S. Supreme Court decisions that limit its regulatory authority, including the major questions doctrine as articulated in West Virginia v. EPA and the Court’s recent decision limiting the deference courts grant agency actions in Loper Bright Enterprises v. Raimondo. EPA also argues that the original finding incorrectly considered global climate change concerns rather than local or regional exposure to regulated pollutants causing direct health impacts. EPA also cites newer scientific evaluations, including a Department of Energy report finding projections in the original finding were overly pessimistic.

What’s Next: Legal Challenges and Industry Implications

The comment periods for the proposed repeal of the Carbon Pollution Standards and the 2024 MATS Rule are now closed. The comment period for the proposed rescission of the 2009 Endangerment Finding is open, and comments must be filed by September 15, 2025.

The Agency has indicated its intention to finalize all three rules by early 2026. Once finalized, these regulatory rollbacks will certainly face legal challenges before the D.C. Circuit Court of Appeals. One or more of these rules may ultimately be reviewed by the Supreme Court.

For data center and power developers, these changes represent significant shifts in the compliance landscape. The Carbon Pollution Standard repeal would eliminate costly CCS requirements for baseload gas-fired EGUs, reducing capital expenditure requirements and providing more predictable project economics for conventional generation.

Our team is available to help you navigate these changes and position your business in the rapidly evolving energy regulatory landscape.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice. For questions, please contact a member of the Environment & Natural Resources practice.