Power Move: EPA Proposes GHG Rules Repeal

The question of how — and even whether — to regulate GHG emissions from power plants has been volleyed back and forth across the regulatory net since at least 2009. The Obama administration served up the first major federal attempt to limit power sector GHGs with its Clean Power Plan (“CPP”). The first Trump administration then attempted to serve up an ACE with its Affordable Clean Energy Rule repealing the CPP, but the serve was returned by the Biden administration’s Carbon Pollution Standards (“CPS”). Now, Administrator Lee Zeldin is attempting an overhead smash to end this long-running match. What makes this move potentially decisive is its timing: the proposal comes early enough in the current administration’s term to allow for both adoption and litigation to conclude before another change in administration, raising the possibility that this move could finally break the cycle of regulatory ping-pong that has defined U.S. climate policy for over a decade.

Beyond its climate and regulatory implications, EPA’s proposal is explicitly framed as a response to broader economic and infrastructure needs. The agency links the repeal to supporting the resurgence of domestic manufacturing and the rapid construction of artificial intelligence (“AI”) data processing centers, both of which are driving unprecedented increases in electricity demand. EPA asserts that maintaining robust fossil-fueled generation is essential for grid stability as the nation faces rising power needs from new industrial and technological sectors. As a result, the proposed rule is positioned not only as a climate and regulatory pivot, but as a cornerstone of national economic and infrastructure policy in an era of accelerating demand for reliable electricity.

The Proposed Rule: A Full Repeal of GHG Standards for Power Plants

The agency is proposing to repeal all GHG emissions standards for fossil fuel-fired electric generating units (“EGUs”), including:

• The 2015 New Source Performance Standards (“NSPS”) for GHGs (40 CFR part 60, subpart TTTT);
• The 2024 Carbon Pollution Standards for new, modified, and reconstructed sources (40 CFR part 60, subpart TTTTa); and
• The emission guidelines for existing fossil fuel-fired steam generating units (40 CFR part 60, subpart UUUUb).

The Alternate Proposal: Targeted Repeal

Recognizing the potential for legal and political headwinds, EPA has also floated an alternate proposal. This “Plan B” would repeal all GHG standards for existing sources but repeal only the most stringent requirements for new sources — specifically, those based on carbon capture and sequestration (“CCS”) and natural gas co-firing. Under this approach, EPA would:

• Repeal the emission guidelines for existing fossil fuel-fired steam generating units (40 CFR part 60, subpart UUUUb).
• Repeal the CCS-based requirements for coal-fired steam generating units undertaking a major modification.
• Repeal the phase 2 CCS-based requirements for new base load stationary combustion turbines.

Importantly, the proposed regulatory text for the alternate proposal would eliminate CCS requirements but otherwise leave in place GHG emission standards for simple cycle combustion turbines subject to NSPS subparts TTTT and TTTTa. Under these standards, simple cycle combustion turbines are typically constrained to operating as peakers with a capacity factor no more than 30 to 40 percent.²

EPA’s Legal Basis: Redefining “Significant Contribution”

EPA’s legal justification for the proposed repeals is a departure from past practice. Under the Obama and Biden administrations, EPA interpreted the CAA as requiring only a single “significant contribution” finding per source category, not per pollutant. The new proposal, however, insists that a pollutant-specific finding is required before GHGs can be regulated under Section 111. The agency further proposes that “significance” is not a purely quantitative threshold, but must be evaluated in light of policy considerations, including the cost-effectiveness of controls, the impact on energy reliability, and the limited effect of U.S. regulations on global climate change.

EPA’s proposed finding is that GHG emissions from U.S. power plants do not “contribute significantly” to dangerous air pollution within the meaning of the statute. The agency points to the declining share of U.S. power sector emissions (now about 3 percent of global emissions), the global nature of GHGs, and the administration’s policy priorities.

Moreover, EPA believes that even the most stringent controls allowed by law would result in only very small emission reductions because the agency is legally constrained to measures that are source specific, adequately demonstrated, cost reasonable, and achievable within a reasonable timeframe, as clarified by Supreme Court in West Virginia v. EPA. These constraints prohibit broad, system-wide approaches like generation shifting (i.e., mandating transition from higher-emitting fuel types like coal to lower-emitting fuel types like natural gas and renewables). As a result, the emission reductions that can be achieved are limited to incremental improvements at individual power plants. And because U.S. fossil fuel-fired power plants currently contribute only about 3 percent of global GHG emissions, a share that is steadily declining due to both domestic reductions and rising emissions from other countries, EPA concludes that any additional reductions from U.S. power plants — no matter how stringent — would have a negligible effect on global GHG concentrations, such that the U.S. power sector cannot be considered a “significant” source for purposes of regulation under the CAA.

Carbon Capture: Not Adequately Demonstrated, Not Reasonable in Cost

A central pillar of both the primary and alternate proposals is EPA’s determination that CCS is not a viable “best system of emission reduction” (“BSER”) for power plants.

• Technical Feasibility: EPA finds that no commercial-scale power plant in the U.S. or abroad has demonstrated consistent, year-round 90% CO₂ The much-cited Boundary Dam project in Canada has achieved only about 63% capture over a calendar year, and the Petra Nova project in Texas, while briefly operational, faced significant technical and economic challenges and did not capture emissions from the entire plant.
• Cost: EPA’s updated cost analysis, which accounts for lower capacity factors and now excludes consideration of the federal 45Q tax credit, finds that the cost of CCS is “substantially higher” than previously estimated — up to $53.7/MWh, more than double the threshold the agency has previously deemed reasonable. EPA’s rationale for excluding consideration of the 45Q tax credit is that tax credits do not eliminate the real resource costs of a control technology; they merely shift the burden from regulated entities to taxpayers. EPA further notes that the 45Q credit has been targeted for repeal and thus the availability of tax credits is subject to legislative change and cannot be ensured for the life of the control requirement.
• Infrastructure: The agency concludes that the necessary pipeline and sequestration infrastructure cannot be deployed by the compliance deadlines, making the required emission reductions unachievable.

As a result, EPA proposes to repeal all requirements based on CCS as BSER.

Outlook: Regulatory Certainty or More Ping Pong?

EPA says it will issue a final rule by year-end, and we do not expect any wholesale retreat from the intentions expressed in the proposal. Legal challenges to any final EPA rule on this subject are a foregone conclusion. Environmental groups, states, and other stakeholders have already announced their intent to sue, arguing that the agency’s new interpretation of the CAA is both legally and factually flawed. Under the CAA, challengers have 60 days from the date the final rule is published in the Federal Register to file a petition for review in the U.S. Court of Appeals for the D.C. Circuit.

The litigation landscape has shifted in the wake of the Supreme Court’s Loper Bright decision, which eliminated “Chevron deference” to an agency-pronounced interpretation of its governing statutes. The D.C. Circuit will now review EPA’s legal interpretations de novo, without deferring to the agency’s reasonable interpretations of ambiguous statutory provisions. This makes the outcome less predictable.

However, in its recent Seven County decision, the Supreme Court reaffirmed that agency evaluations of scientific and technical matters — including determination of whether environmental impacts are “significant” and mitigation measures are “feasible” — are still entitled to an extreme degree of deference.³ This means that while courts will independently assess EPA’s legal interpretations, they should defer heavily to the agency’s technical judgments — potentially including its analysis of CCS feasibility and whether U.S. power sector GHG emissions “significantly” contribute to dangerous air pollution.

Conclusion: What Should Regulated Entities Do Now?

EPA’s proposed repeal of power plant GHG standards is a watershed moment for the energy sector — but potentially also the broader U.S. economy, including domestic manufacturing and AI development. The regulated community should closely monitor the rulemaking process and consider engaging in the public comment process.

Comments on the proposed rule are due August 7. EPA will also hold a virtual public hearing on July 8.

Supporters of EPA’s proposal should consider submitting comments addressing the following topics so as to ensure EPA’s rulemaking record is as robust as possible, which will help EPA finalize the best rule possible and improve the rule’s likelihood of surviving legal challenge:

1. Emphasize that the CAA requires a finding that is specific to both the source category and the pollutant in question. Were it otherwise, the statute would be (inappropriately) interpreted to authorize or even compel meaningless regulation.
2. Highlight that the rules being repealed have not been shown to produce measurable impact on climate indicators. The absence of demonstrable environmental benefits undermines the justification for maintaining these regulatory requirements.
3. Underscore that EPA cannot rely solely on a generic endangerment finding. The CAA requires, in multiple provisions, a finding that is tailored to the particular source-pollutant combination subject to regulation. This statutory structure reflects Congress’s intent that regulatory action be predicated on a clear and direct connection between the source, the pollutant, and the alleged danger.
4. Stress the need for EPA to clearly define what constitutes “dangerous air pollution” before regulating to address it. The agency has not articulated what specific climatic conditions it considers dangerous, nor has it identified the atmospheric concentration of CO₂ necessary to achieve a purportedly ideal climate. Absent such definitions, it is difficult to assess whether the regulatory approach is appropriately calibrated to the statutory objective.
5. Explain why the alternate proposal, which would leave in place significant constraints on companies’ ability to operate simple cycle combustion turbines to their full potential, still threatens the country’s ability to meet the accelerating demand for electricity. This could especially hinder the nation’s ability to win the AI race. Further, the retention of any standards for or limits on simple cycle plants would be inconsistent with the absence of a GHG-specific engagement finding for that source category. 

It is important for the regulated community to provide EPA not only with viewpoints and legal arguments, but also with concrete facts and real-world experiences. Submissions that include data, operational insights, and practical implications of regulatory requirements can be especially influential in shaping the agency’s final decision. By presenting factual information and evidence of how the proposed or existing rules affect operations, compliance costs, and environmental outcomes, stakeholders can help ensure that EPA’s determinations are informed by the realities of implementation and the actual impacts on industry and the public.

¹ See, e.g., Eric Groten, “Unwinding the Finding,” Texas Lawyer (Dec. 5, 2017), https://www.law.com/texaslawyer/2017/12/05/unwinding-the-finding/ (explaining that reversing EPA’s 2009 Endangerment Finding for vehicle and engine emissions is not a prerequisite for repealing EPA’s GHG regulations for other sources). 

² In the Regulatory Impact Analysis for the proposal, EPA assumes simple cycle turbines generally operate at capacity factor of less than 10 percent and that requirements in subparts TTTT and TTTTa, as they would remain under the alternative proposal, are not expected to impose meaningful costs. EPA would benefit from receiving comment from the regulated community regarding the accuracy of these assumptions.   

³ See Seven Cnty. Infrastructure Coal. v. Eagle Cnty., Colorado, No. 23-975, 2025 WL 1520964, at *7 (U.S. May 29, 2025) (“An agency must make predictive and scientific judgments in assessing the relevant impacts (what are the likely impacts; do they rise to the level of ‘significant’?) and alternatives (what are the potential alternatives; are they really ‘feasible’?). As this Court has said, the term ‘alternatives’ is not self-defining, and common sense should be brought to bear. Black-letter administrative law instructs that when an agency makes those kinds of speculative assessments or predictive or scientific judgments, and decides what qualifies as significant or feasible or the like, a reviewing court must be at its most deferential.”) (cleaned up).