On March 12, the Environmental Protection Agency (EPA) announced their plan to reconsider and potentially roll back a long list of the agency’s own policies and regulations. This could amount to a sweeping change in how the EPA regulates electric power, oil and gas production, vehicles, water and air quality, and climate pollutants from all sources. The magnitude of these regulatory changes remains to be seen, but the types of changes the agency is considering suggest that it intends to end the regulation of climate pollutants to the maximum extent possible.
This announcement presents an opportunity for states to enact their own climate policies and regulations to make up for any withdrawal by the federal government. We convened a panel of exports to dive into which policies the EPA is targeting and what states can do to fill the gaps left by the agency’s changing direction. Our expert panel included Janet McCabe, former Deputy Administrator for the U.S. EPA, as well as Climate XChange’s own experts: Jordan Gerow, Policy & Research Director; Ruby Wincele, Policy & Research Manager; Jacqueline Adams, Senior Policy & Research Associate; and Greg Casto, Communications Manager.
In this recap article, we’ll provide highlights from our experts’ presentations, including a note on Tuesday’s Executive Order targeting state-level climate policies, first impressions on the EPA’s changing direction from former EPA Deputy Administrator Janet McCabe, how changes to EPA regulations and actions might actually play out, and a survey of the proposed rollbacks and correlated state-level policies that are not federally preempted.
A Note on the recent State Overreach Executive Order
We have a brief note that was not on our agenda, but is closely related to the federal-state issues we’re exploring today, and is too urgent not to mention.
On Tuesday, the President issued an Executive Order asking the Attorney General to target state and local laws related to climate and climate justice that they believe are in some sense an overreach, whether by federal preemption or otherwise. The Attorney General has 60 days to take action on things he has the power to affect — potentially through the form of lawsuits brought to states — and submit a report with recommendations for the executive and legislative branches where he might lack that power.
The Order lists several examples of laws and regulations that they’re targeting. Some of it is unsurprising and may not have a huge impact on state-level climate action. Climate superfund bills, for example, are already in court on arguments related to federal jurisdictional issues. Some examples are vague and threateningly expansive, like targeting climate pollutant fees, which might call for a radical broadening of our understanding of federal preemption. Other examples listed include laws related to delayed permitting, EJ, ESG, and penalties and taxes. We don’t know how expansive this Order will be in practice yet.
The vast majority of state climate policy is unambiguously in states’ rightful jurisdiction. Where there are legitimate doubts to that effect, a responsible attorney general from either party might intervene in litigation to voice federal questions.
But this Order, in its tone and breadth, suggests more far-reaching interventions into legitimate areas of state jurisdiction. Such an approach might forestall legal climate policy from coming into effect, or have a chilling effect on policymakers and advocates. It might foreshadow legislative efforts to curtail the rights of states to manage their carbon transitions. Or it might foreshadow attempts to take other executive actions against states that are outside of the power of the Attorney General, as the Order calls for.
At this time, Climate XChange is paying close attention to further actions from the Administration to assess the practical scope of this Order. To our network of state advocates and policymakers, we would note that, at the least, the Attorney General may vigorously litigate questions of federal preemption in the years ahead, and we ought to respect that risk in crafting state policies. But state powers are Constitutionally protected, and our portfolio of climate options are overwhelmingly beyond the reach of federal intervention. At this critical moment, let’s also remember that fact, and not allow this announcement to have a chilling effect.
Janet McCabe, former Deputy Administrator for the U.S. EPA
There’s no question that the announcements on March 12 represent a massive proposed rollback of environmental protections, and I put them into a couple overlapping categories.
Firstly, there are those actions related to climate specifically, like the endangerment finding, the social cost of carbon, and the power plant and oil and gas rules that directly regulate GHGs.
The second category includes those actions related to energy — and this administration has made it clear that energy development and production is going to be treated very differently than other industries. These include the climate-specific rules I just mentioned, the steam electric rule, and water quality rule, as well as non-rule actions like the clear directive to the enforcement office to back off of energy-related compliance activities.
A third category relates to other industrial deregulatory proposals that are not strictly climate-related, but affect air quality and other climate co-benefits, including the roughly two dozen air toxics rules under reconsideration.
The last category of actions relates to how the EPA will implement its programs, including changing the way it uses its enforcement discretion and it they expects states to implement certain Clean Air Act (CAA) programs including the Regional Haze Program and implementation of the National Ambient Air Quality Standards (NAAQS), specifically targeting particulate matter among other pollutants.
Many of the rules and programs that aren’t specifically focused on GHGs or climate certainly have climate co-benefits. For example, the Regional Haze Program affects power plants, especially in the western U.S., and if states are given more flexibility and relax requirements for power plants, there could definitely be clear climate disbenefits.
Some of the actions listed in this Order can immediately be implemented by the EPA without any rulemaking or public comment processes. Of particular note in this category is EPA’s enforcement discretion — the Agency has already invited regulated facilities to send an email asking for an exemption from compliance with emissions standards under the CAA’s Section 112 (the air toxics program). If granted, these entities would have a two-year delay to meet certain air toxics rules, during which time the EPA could potentially change the rules to eliminate compliance requirements altogether. However, many of the announced actions will require a formal rulemaking process to move forward, which includes developing a proposal for public comment and allowing for the rule to be challenged once finalized. It’s essential that all stakeholders participate in any public process that the EPA puts forward.
The EPA can also revise its guidance on existing rules and regulations, which doesn’t require a formal rulemaking process. For example, the EPA recently released revised guidance on the demonstrations states must make to attribute bad air quality within the state to international air pollution. Since this revised guidance will not necessarily be preceded by public proposals, we need to be watching for those revisions and recissions — especially for areas that the EPA is clearly targeting, such as permitting under the National Ambient Air Quality Standards (NAAQS) program.
For a number of these actions, states do have the ability to fill some gaps. If the EPA relaxes federal enforcement activity, states can step in (states already carry out most of the enforcement activity). States may also choose not to backslide on the provisions in their existing State Implementation Plans and toxics rules, even if the EPA reconsiders their regulations. EPA Administrator Zeldin has signaled that he will give states increased discretion on these actions, and while some states may back off, others might be more aggressive where not explicitly preempted. In these non-preempted areas, states do have the ability to protect their residents and businesses from environmental pollution, even if not feasible in every state.
Jordan Gerow, Ruby Wincele, Jacqueline Adams, and Greg Casto, Climate XChange
EPA’s Regulatory Process: What to Expect
Of the EPA’s announced 31 actions that are under reconsideration, many will require a full, formal rulemaking process, which could take years:
- Proposing Rulemaking: The EPA will publish a notice of proposed rule changes in the Federal Register, detailing their rationale and anticipated impacts.
- Public Comment Periods: States, industry stakeholders, environmental groups, and the public will have an opportunity to submit comments on the proposal.
- Final Rulemaking: After considering public input, the EPA will publish the final rule in the Federal Register, with a preamble explaining its provisions and addressing significant comments submitted by stakeholders.
- Interagency Review: The White House Office of Management and Budget (OMB) will assess regulations deemed to have significant economic or regulatory impacts.
- Potential Legal Challenges: Once finalized, these actions may face legal challenges from states, advocacy groups, or affected industries.
This can be a long and involved process. Under the first Trump administration, Obama’s Clean Power Plan (CPP) was under attack for years in an attempt to replace it with the Affordable Clean Energy (ACE) Rule. It began when Trump signed an Executive Order to revisit the CPP, only a month into his term in March of 2017, followed by the EPA’s proposed repeal in October and notice of proposed rulemaking to replace the CPP in December. In August 2018, the EPA published the proposed ACE rule, and a year later, in June 2019, the EPA finalized the CPP repeal and ACE’s replacement, followed quickly by the filing of the lawsuit American Lung Association v. EPA in July. On Trump’s last full day in office (January 19, 2021) the D.C. Circuit Court officially vacated (or invalidated) the ACE Rule.
Proposed Climate Rollbacks
In this section of the webinar, our staff reviewed some of the proposed rollbacks that most-directly impact climate change, synthesized from our recently published article How States Can Fill the Gaps Left by the EPA’s Climate Deregulation.
To avoid duplication in this recap, we refer you to that article for the basics of what these rollbacks are, their potential impacts to climate and co-pollutants, and what levers states have to fill the gaps left by potential federal deregulation, including as they relate to:
- The 2009 Greenhouse Gas (GHG) Endangerment Finding, which is the basis for all of the EPA’s GHG regulations
- The social cost of carbon, which acts as a measure of the damages from climate pollution to inform regulatory cost-benefit analyses
- The Clean Power Plan, which sets emissions guidelines for coal and natural gas plants
- Vehicle emissions rules, which provide technology-neutral, performance-based emissions standards for cars, SUVs, and certain trucks
- Note: The waivers that the EPA has granted for California to set its own more stringent emissions targets for cars and trucks were not included in this announcement. Those waivers are being challenged separately, via directives in the “Unleashing American Energy” Executive Order, as well as under the Congressional Review Act.
- Oil and gas methane regulations, which aim to reduce methane emissions at oil and natural gas extraction sites from routine flaring (openly burning) and other sources like pipeline leaks and inefficient equipment
- The Technology Transition Rule for Hydrofluorocarbons (HFCs), which establishes limits on the use of HFCs (with global warming potentials that can be hundreds to thousands of times more potent than carbon dioxide) in specific technology sectors
How States Can Fill the Gaps on Potential EPA Deregulation
In this webinar, we dove into the state policies that are not currently federally preempted and work to achieve decarbonization in the sectors impacted by EPA’s proposed rollbacks. We also presented enacted examples of these policies, as tracked in our State Climate Policy Dashboard.
Social Cost of Carbon
States can adopt their own social cost of carbon (SCC), whether for specific sectors, utility resource planning, or more holistically. Many states use the SCC value that’s currently being reconsidered — which is still possible in the event of federal suspension of the SCC — but they are also able to set their own values. Currently, nine states have adopted their own SCC policies, including:
- States that have adopted the federal SCC, such as
- New York and Illinois, which use the SCC for the value of “zero-emission credits”
- Colorado, Minnesota, and Washington, which require electric utilities to use the SCC in resource planning
- California, which requires regulators to incorporate the SCC into policy analysis
- States that have adjusted the SCC and adopted their own value, such as
- New York, which adopted its own SCC in 2020 and was subsequently adopted by Vermont as well. New York tailored its SCC by adjusting the discount rates, which represent the current value of future climate damages.
Power Sector Emissions and Fuel Regulations
States can reduce emissions and require cleaner fuels for the power sector in various ways, including regulating power plant emissions directly. State Implementation Plans, which is how states typically implement their CAA regulations, can propose more stringent requirements than the EPA’s. Additionally, states can adopt standalone regulations under state law, such as:
- Massachusetts, which has enforced state-level mercury regulations on power plant emissions since 2004.
States can also set goals to reduce power sector emissions by establishing electricity sector-specific emissions targets, typically as a percent reduction relative to a s baseline year. Currently, seven states have enacted electricity sector GHG reduction targets, including:
- California, which requires 38 million metric tons (MMT) reduction by 2030 and 35 MMT by 2032
- Colorado, which requires a 46 percent reduction by 2027 and 80 percent by 2030, relative to 2005 levels
- Connecticut, which requires a 100 percent reduction by 2040
- Oregon, which requires an 80 percent reduction by 2030, 90 percent by 2035, and 100 percent by 2040, relative to 2010-2012 average annual levels
To achieve meaningful emissions reductions in the power sector, states can pull various policy levers, such as:
- Coal phaseouts, which set a date for when a state must cease using coal for energy generation. Currently, nine states have enacted coal phaseout policies, including Washington (SB 5116, 2019), which uses a ‘stick’ method, requiring coal phaseout by 2026 and imposing escalating financial penalties for utilities that fail to meet those phaseout targets.
- Coal plant securitization, which allows coal plants to be refinanced with the backing of ratepayers, and then reinvests those savings on programming relevant to their state’s energy priorities such as energy efficiency measures or bill assistance. Currently, eight states have enacted coal plant securitization policies, including Colorado, New Mexico, and North Carolina.
- Peaker plant regulations, such as Massachussett’s Clean Peak Standard (HB 4857, 2018), which is an incentive-based program that directs retail electricity suppliers and distributors to meet a minimum percentage of sales with qualified clean peak resources.
Another lever for electricity sector-wide decarbonization is renewable portfolio and clean energy standards (RPS/CES), which require a specific percentage or megawatt hour (MWh) of electricity sold by utilities to be generated by renewable or clean sources. Currently, 36 states have enacted a CES or RPS, with varying degrees of stringency, including Minnesota, Rhode Island, Vermont, and Washington.
Carbon pollution pricing is another policy to reduce emissions by establishing a pollution fee, or a cap-and-trade program for GHG emissions. A well-known example is the Regional Greenhouse Gas Initiative (RGGI), a multi-state collaborative of 11 northeastern states to reduce carbon dioxide emissions from power plants. Since 2005, RGGI states have reduced annual power sector emissions by 50 percent — faster than the national average — and raised over $8.6 billion to invest in local communities, which states can use for their own needs and priorities. RGGI investments in New Hampshire, for example, have largely been spent on targeted rebates on bill assistance for all customers, whereas Maryland has used theirs across direct bill assistance for low-income customers, energy efficiency programs, and more.
Transportation Emissions and EV Incentives
Although the fate of California’s waivers to set more stringent emissions targets than the federal government is unclear, while the waivers stand, states are able to adopt a few of their regulations to limit tailpipe emissions and increase EV sales over time, such as:
- Advanced Clean Cars II (ACC II), which sets exhaust limits and requires an increasing percentage of new light-duty vehicle (LDV) sales to be zero-emission, reaching 100 percent of new sales by 2035. Currently, 17 states have adopted ACC rules to varying extents, including 11 states that have adopted ACC II in its entirety, such as Massachusetts, Vermont, and Washington.
- Advanced Clean Trucks (ACT), which sets a zero-emission sales standard for medium- and heavy-duty vehicles (MHDV), reaching 40-75 percent of sales depending on vehicle class. Currently, 11 states have adopted ACT, including Maryland, Rhode Island, and Vermont.
- Low-NOx Omnibus Rules, which limits NOx emissions from heavy-duty vehicles, aiming for a 90 percent reduction in NOx emissions by 2031. Currently, eight states have adopted Low-NOx rules, including Massachusetts, New York, and Washington.
States can also adopt low carbon fuel standards (LCFS), which reduce the carbon intensity of transportation fuels, accounting for the entire life cycle emissions of the fuel, through a set of targets that decline over time. The policy also creates a marketplace to buy, sell, and trade credits based on whether fuels are above or below a cap. While designed to incentivize the use of cleaner fuels, there have been criticisms of implementation, including in California, where LCFS accounting has led to the increased use of biofuels over electricity and zero-emission fuels. Currently, four states have enacted LCFS: California, Oregon, Washington, and New Mexico.
Encouraging EV adoption and building out EV charging networks is another way to incentivize transportation emissions reductions, with a variety of policy levers, such as:
- Tax incentives and rebates for EVs and EV chargers. Currently, 12 states offer LDV EV rebates and four states offer MHD EV rebates, while seven states offer EV charging infrastructure rebates.
- Governmental EV procurement targets, also known as Lead by Example, which aim to electrify state-owned vehicle fleets. Currently, 18 states have LDV/MHDV EV procurement targets and/or electric bus targets.
- Streamlined permitting for EV charging stations, such as California’s AB 1236 (2015) and AB 970 (2021), which require cities and counties to adopt streamlined permitting procedures for EV charging stations, and establish a checklist that municipal permitting schemes should abide by.
- EV-related building and zoning codes, which take many approaches, including requiring new buildings to be EV-ready and mandating the installation of EV charging equipment in buildings or public parking lots. Currently, ten states have EV charging infrastructure requirements.
- EV-related administrative and planning reforms, which include looking into EV charging rate design, such as limiting costs for customers charging EVs during peak demand hours (e.g. New Hampshire), as well as requiring PUC proceedings to build out charging infrastructure, and participating in statewide or multi-state EV planning exercises.
HFC Regulation and Incentivizing Alternatives
As the federal government reconsiders its regulations on hydrofluorocarbon (HFC) use, states can phase down their own HFC emissions by adopting the existing federal rules under the EPA’s Significant New Alternatives Policy (SNAP) Program. SNAP Rules 20 and 21, were enacted federally to restrict applications of HFCs in specific contexts while proposing alternatives. States can also incentivize alternatives to HFCs, such as providing rebates for equipment that uses substances with low global warming potential (GWP) and providing funding for pilot projects and programs. Another lever is adopting governmental procurement preferences for HFC-free products, which restrict state agencies from purchasing HFC products unless alternatives are not cost effective or available.
Lastly, while the aforementioned strategies tend to target HFC use in new equipment, one of the most impactful ways that states can reduce HFC emissions is through regulating the management, recycling, and disposal of HFC equipment, which targets the large amount of HFC emissions that come from leaks in existing equipment and improper end-of-life equipment disposal. States can create training programs for leak detection and repair, establish maximum leak rates for HFC equipment, require automatic HFC leak detection systems, and prioritize recycling of unused leftover HFC gas to be used in new equipment.
Currently, 12 states have adopted their own HFC regulations, including:
- California, which set a target to reduce HFC emissions by 40 percent by 2040, prohibits certain HFCs in specific end-uses, and offers rebates for low-GWP equipment as well as funding for pilot programs
- Massachusetts and Virginia, which prohibit certain HFCs for specific end-uses
- Washington, which prohibits certain HFCs in specific end-uses and requires state agencies give preference to vendors with HFC-free products
Oil and Gas Methane Emissions
States can regulate methane emissions from oil and gas operations in many of the same ways that the federal government can, by using levers such as frequent leak detection and repair, prohibition of routine methane flaring during maintenance, installation of emission-limiting technologies, and adherence to greenhouse gas reporting requirements. Currently, nine states have their own methane regulations for oil and gas production and operation, including:
- Colorado (HB 21-1266), which requires that oil and gas (O&G) methane emissions are reduced 60 percent below 2005 levels by 2030, and that these emissions are reported. O&G companies must also find and fix methane leaks, installing emissions-limiting technologies where necessary, and they are required to use frequent leak detection and repair (LDAR). Routine methane flaring during maintenance is prohibited. These are some of the most comprehensive methane regulations in the country.
- Louisiana (through sections in the state’s Administrative Code), which prohibits routine venting and flaring of natural gas except in instances of economic hardship on the operator, with guardrails on the determination of ‘economic hardship’.
- New Mexico, which requires O&G operators to capture 98 percent of their waste natural gas by the end of 2026. O&G operators are also required to calculate emission rates, perform monthly checks for leaks and fix them within 15 days, and achieve state-determined emission reduction requirements for certain equipment and processes.
Q&A
Q: What is the status of the Lead Service Line Replacement funding and the Lead and Copper Rule Improvement standards, and is there any potential for these efforts or requirements to be scaled back?
Janet McCabe: [This answer is based on information from a person following these issues closely] With regard to Lead Service Line Replacement, the Bipartisan Infrastructure Law (BIL) provides $15 billion in funding over a 5 year period (2022 to 2026) to remove lead service lines. The funding goes to states in the Drinking Water State Revolving Fund (DWSRF). The BIL provides another $11.7 billion in DWSRF over that same period to fund any eligible drinking water project, including lead service line replacement. The law requires that 49 percent of both pots of money be issued as grants or forgivable loans to disadvantaged communities and that the funds be used to replace lead service lines on both public and private property in order to discourage partial lead service line replacements only on public property. States are responsible for allocating these funds to communities, except in Wyoming and Washington D.C., where the EPA is responsible.
Water utilities have sued the EPA on the Lead and Copper Rule Improvements. That litigation has been on hold since the inauguration, and we should soon hear from the EPA about whether the agency will defend the rule or take a voluntary remand and redo the rule. If Administrator Zeldin decides to redo the rule, utilities will no longer have to meet the 10 year deadline to replace all their lead pipes. It is possible EPA will redo the rule to reinstate the previous Trump rule, which allowed utilities 30 years or longer to replace their lead pipes, only if they could not control corrosion using chemical treatment.
Q: How can I find the current status of Inflation Reduction Act (IRA) funding and other federal grant programs, specifically the Clean School Bus Program? Have any of these programs been rescinded or had their funding withdrawn?
Janet McCabe: [This answer is based on information from a person following these issues closely] For grants overall, the EPA deployed $70 billion in BIL and IRA funding during the Biden Administration. Administrator Zeldin and his DOGE team are working to terminate at least $23 billion, including $20 billion in funds for the Greenhouse Gas Reduction Fund and every grant awarded by the Office of Environmental Justice. The Environmental Protection Network, Lawyers for Good Government, and others are helping grantees push back against funding freezes and terminations that are contrary to law and rules. Other programs may be at risk as well, so communities are encouraged to be proactive in telling their elected officials why these projects are important.
For the Clean School Bus program, the EPA awarded $3 billion in Clean School Bus grants and rebates. While the grant program is moving forward, rebate payments remain frozen. Those grantees have a legal right to be reimbursed, so hopefully payment will be made. It is unclear what will happen with the remaining $2 billion in funding. By statute, 50 percent must go to zero emission buses (i.e., electric) and 50 percent must go to low-emission buses. Potential worst case scenarios include funds getting retrieved by Congress and/or the EPA significantly loosening the definition of “low emission.”
Q: Given the EPA’s roll back signals, what are some of the most effective legal, diplomatic and financial tools that states can use to not only fill regulatory gaps, but also expand sub national and international partnerships, particularly in sectors like maritime shipping, where federal withdrawal leaves a complex vacuum?
Jordan Gerow: I am not going to speak to the diplomatic angle, but maritime shipping is an interesting one, where we think that there’s not so much state authority, but there might be a little bit more than we realize. So states, of course, are free to set fuel taxes. That hasn’t been politically popular in the past, but it’s been done. States are also free to set what are called in-use requirements. In-use requirements were basically proposed by California, challenged under the Clean Air Act, and then found by the Ninth Circuit Court to be viable. So California has a low sulfur emission standard for ships coming into their port that was permitted under this exemption within the Clean Air Act. And then ports themselves often have a lot of different things that they can do. You have to kind of go port by port, because there is a mix of government and private regulation of them. But ports themselves can set restrictions and fees to encourage certain types of travel coming into port and the different fuels used. So when we look at what authority states have over shipping, it’s not so much out in international waters or even in waters of the United States, but they do have substantial amounts of jurisdiction they can exercise.
Q: How might state climate policy gaps affect low income or environmental justice communities most severely, and what can be done to proactively address that?
Ruby Wincele: I’m not quite sure what state policy gaps mean, but if that’s referring to how states can fill federal gaps, we do track nine or ten environmental justice and just transition policies on our State Climate Policy Dashboard. First and foremost, identifying and defining environmental justice communities lays a lot of groundwork for other policies. Jacqueline mentioned the Colorado methane law that has explicit language to prioritize emission reductions in disadvantaged communities. We’ve seen several states do that in other ways to incorporate EJ benefits into climate policy. States can set investment requirements for specific programs for funds, kind of filling the gap that the federal Justice40 program is no longer doing; around five states have their own state level investment requirements. There are environmental justice advisory bodies, building out staff and interagency coordination around environmental justice. And then, of course, looking at the just transition angle of how to support communities and workers as states transition away from coal, transition away from fossil fuel production, all those types of things. The Dashboard also looks at cumulative impacts policies, dealing with how those new and existing polluting facilities exacerbate inequalities, air quality, and public health. So also kind of a trend we’re seeing, that states have to require those assessments when planning projects.
Q: What do the administration’s actions mean for polluters pay legislation, especially those that have already passed at the state level?
Jordan Gerow: I think that in these superfund lawsuits, there was always, kind of transparently, an interstate, jurisdictional issue going on that was going to have to be tested in court. And it is in court — 22 states, I think, sued New York on this. Basically, it is a federalism question: whether or not attributing harms that companies might have done out of state to in-state harms that are more measurable, and if they have jurisdiction over there. It’s just a little thorny. So if, under Tuesday’s Executive Order, the Attorney General is being told, ‘Hey, go out and intervene in all these cases and make sure that they’re hearing this,’ this federal argument won’t necessarily change the course of that litigation. I mean, it’s already being heard. So that would be an example of a less extreme outcome from this Executive Order, just that they’re going to continue pressing forward federal preemption issues that we already know are out there. So we’ll see how that resolves in the courts. I don’t think the Attorney General weighing into it is going to make a huge difference, one way or the other, personally, but you know, to be seen.
* The views and opinions expressed by our guest speakers during the webinar and summarized in this article are their own and do not necessarily reflect the views or positions of Climate XChange.
