US energy sector faces uncertainty after EPA upends landmark climate rule

The Trump administration's decision to withdraw the US government's ability under the Clean Air Act to regulate greenhouse gas emissions from vehicles will also affect power companies and the oil and gas industry, but legal experts disagree on how.

The 2009 greenhouse gas endangerment finding issued for mobile sources also provides the legally required finding that the US Environmental Protection Agency has relied on to regulate GHG emissions from other industrial sources, including the power sector and, for methane emissions, the oil and natural gas sector, according to David Hayes, professor at Stanford University's School of Sustainability. Hayes served as a special climate policy assistant to former President Joe Biden.

The EPA on Feb. 12 issued a final rule repealing that 2009 finding.

Among immediate concerns for the oil and gas sector in particular are state climate lawsuits.

Given the EPA's repeal, the so-called preemption under the Clean Air Act can no longer be invoked to halt state and local climate lawsuits, David Amerikaner, a partner with Duane Morris, said.

"With EPA withdrawing from its role as the regulator of greenhouse gas emissions, there's no preemption anymore that shielded energy and industry players from climate tort lawsuits," Amerikaner said in an interview. "It's now ceding that ground and I think we should expect a wave of litigation in many states."

The EPA's move will bring additional risks to industry, according to Anna Mosby and Matt Williams, global and regional climate policy analysts with S&P Global Energy.

The US Supreme Court had previously ruled in American Electric Power v. Connecticut in 2011 that "federal statute -- namely the EPA's authority to regulate GHG emissions under the [Clean Air Act] -- displaced federal common law, shielding regulated industries from litigation," Mosby and Williams wrote in a Feb. 13 brief.

"The EPA argues in the final rule that federal preemption of state emissions standards and federal common-law claims stands, but this position is very likely to face its own legal challenges," the analysts said.

The EPA's decision to revoke the 2009 endangerment finding for vehicles could bolster the Trump administration's argument for undercutting a Biden-era power plant rule, but experts differed over the impacts for methane regulation.

Continued uncertainty for power sector

The Trump administration used some of the same arguments in its proposal to repeal Biden-era standards for power plants as it did to eliminate GHG reductions for cars and trucks. The power plant rule is still in the proposal stage and has yet to be forwarded to the White House for final review.

But the power plant rule did not outright repeal the endangerment finding for that sector, and the administration would have to update its proposal with a supplemental filing were it to do so, Hana Vizcarra, senior attorney with Earthjustice focused on national climate cases, said.

"They're in sort of a bind here trying to figure out where they're going," Vizcarra said in an interview. "Are they going to take this very extreme ideological stance that is contrary to existing law and precedent and try to push that through across the board? We don't yet know how they're going to transfer [the Feb. 12 rule] into the stationary source world."

Much will depend on how the litigation goes, Vizcarra and other attorneys said.

The EPA's final rule revoking the 2009 endangerment finding for motor vehicles was published in the Federal Register on Feb. 18. The same day, 17 health and environmental groups, as well as 18 youth climate activists, filed petitions challenging the repeal in the US Court of Appeals for the District of Columbia. Organizations and states have 60 days from the rule's publication to challenge the repeal.

The Trump administration's decision could take many months to litigate in the appeals court and then the US Supreme Court.

"This throws everything into tremendous uncertainty while it plays out in courts and state capitals," Amerikaner said.

Future of methane rule debated

Experts differed on whether rescinding the endangerment finding would imperil the EPA's methane emissions rules for the oil and gas sector -- an area where federal regulation can bolster the gas industry's marketing efforts.

"While EPA has not yet moved to repeal the methane leak detection and repair requirements ... repeal of the endangerment finding means, as a practical matter, that the methane rule is no longer enforceable as long as the repeal of the endangerment finding stands," Stanford's Hayes said in an email. "While the methane oil and gas rule might remain on the books, the EPA has pulled the rug out from under it, making it a rule that the Trump administration could not defend or enforce."

Others saw room for methane regulation to continue.

The EPA's 2024 final rule to curb methane from oil and gas operators made a separate endangerment finding that is not directly affected by the Feb. 12 rule, according to Jeff Holmstead, a partner with law firm Bracewell's energy practice focusing on regulatory matters.

"My understanding is that EPA does not plan to revoke that finding or the methane rules," Holmstead said in an email.

As a legal matter, it would be complicated for the EPA to revoke the methane rules altogether, Holmstead said. When the EPA issued a rule to eliminate the Obama-era methane regulations near the end of the first Trump administration, Congress passed a resolution of disapproval under the Congressional Review Act to revoke the Trump administration rule, which means the agency could run into legal trouble if it tried to revoke or substantially weaken the methane rule, Holmstead said.

Under the Congressional Review Act, a federal agency is prohibited from issuing another rule that is "substantially similar" to the rule that was disapproved, tying the hands of a future administration.

Oil and gas sector weighed in

The oil and gas industry has also lobbied the EPA, both publicly and privately, not to revoke the methane rules, although it has pushed for revisions, Holmstead said.

Attorneys with the law firm Baker Botts noted that the EPA has regulated methane emissions from the oil and gas sector based on non-climate impacts as well.

"[Even] in the absence of the 2009 finding, EPA might continue to assert authority to regulate methane emissions from the refining sector separate and apart from the 2009 endangerment finding," the lawyers said in a blog post.

The EPA's news release said the Feb. 12 action "does not affect regulations that combat criteria pollutants and air toxics."

The endangerment finding announcement did not pertain to stationary sources, an EPA spokesperson said.

In 2025, EPA Administrator Lee Zeldin said the agency will be reconsidering the oil and gas sector methane rules and has delayed compliance deadlines of the Biden-era regulation.

Ending the rule outright could add to headwinds for gas exporters, because demonstrating that methane emissions are under control remains important for US companies' efforts to market LNG overseas.

In Europe, there has already been some increased discussion about the need to diversify LNG sources, in light of cooler US-EU relations following President Donald Trump's recent push to acquire Greenland.

"A widening trans-Atlantic rift and growing climate policy divergence between Washington and Brussels could create headwinds for US operators hoping to sell oil and gas to Europe — eventually, if not immediately," Kevin Book, ClearView Energy Partners co-founder and director of research, said in an email. "The White House may be wagering Europe will buy US energy anyway in the absence of alternatives — and, in the short run, that might well be true."