Crisis Law and Strategy Update - June 2025

Environmental Protection Agency’s (EPA) “Day of Deregulation”: Weighing Respite and Risk

Article Contributors: Hayden Little and Thomas Poston

On March 12, 2025, EPA announced its intent to take 31 deregulatory actions broadly aimed at “Unleashing American Energy,” “Lowering the Cost of Living,” and “Advancing Cooperative Federalism”—marking what EPA Administrator Lee Zeldin called “the greatest day of deregulation our nation has seen.”  That same day, a memo from the agency’s enforcement arm outlined “initial guidance” regarding the Trump administration’s enforcement priorities, emphasizing human health and energy production while jettisoning “environmental justice considerations.” 

This was likely welcome news to many companies operating in heavily regulated sectors, like oil and gas, that had faced tighter environmental regulations and heavier compliance oversight during the previous administration.  Some of these moves, especially proposed changes to agency rules, may well mitigate the threat of government enforcement in these spaces in the long term.  Still, caution is warranted. Changes in enforcement priorities (rather than legislation or regulations) can ease compliance pressures in the short term, but won’t change the underlying rules of the road, leaving violators exposed to enforcement later if priorities shift again.  In the meantime, some state regulators may continue—or even increase—enforcement activities under state law, even as their federal counterparts step back. 

Regulatory Rollbacks

When it comes to agency rules, the Trump administration has its sights set on reversing or paring back more than a dozen regulations promulgated by its predecessors. 

Several of the envisioned rollbacks would offer greater flexibility to the power generation sector.  Just as the first Trump administration replaced the Clean Power Plan with its own Affordable Clean Energy rule, Mr. Zeldin’s EPA now plans to reconsider the so-called “Clean Power Plan 2.0” promulgated by his predecessor in May 2024, which would otherwise require fossil fuel-fired power plants to achieve significant reductions in GHG emissions over the next decade and a half.  The EPA will also revisit mercury and air toxics standards (MATS), which were amended upward in May 2024.  Indeed, following the March announcement, President Trump issued a proclamation granting two-year MATS compliance exemptions to dozens of stationary sources pursuant to section 112(i)(4) of the Clean Air Act, effectively leaving the status quo in place until 2029 for exempted plants.  90 Fed. Reg. 16777 (Apr. 21, 2025).  The sector could further benefit from the administration’s proposals to “increase flexibility” in the implementation of the National Ambient Air Quality Standards and to curtail the Greenhouse Gas Reporting Program. 

The oil and gas industry could also enjoy some reprieve from stringent regulation.  In 2024, the Biden administration published a final rule revising new source performance standards for crude oil and natural gas facilities, seeking further cuts to these sources’ emissions, including of greenhouse gases—notably methane—and volatile organic compounds.  Those heightened standards—often referred to as “OOOOb/c regulations” in reference to the regulations in which they are codified—are also now set for reconsideration.  Meanwhile, the EPA will consider amending the effluent limitations guidelines applicable to oil and gas extraction in order to afford the industry greater flexibility in the discharge and reuse of treated wastewater.

Broader deregulatory impacts could also follow from the proposed revocation of the Obama-era greenhouse gas endangerment finding.  That 2009 finding undergirds subsequently adopted regulations designed to limit greenhouse gas emissions from power plants, oil and gas operations, and automobiles.  Though the endangerment finding evaded reversal during President Trump’s first term, the EPA will now reconsider it, along with all “prior regulations and actions that rely on” it.

If realized, these and other outright rollbacks may offer meaningful regulatory relief.  But the successful reversal of these rules is by no means guaranteed, and companies would be wise not keep in mind that these initiatives are not self-executing and face a lengthy approval process.  The Trump Administration is likely to face stiff opposition in court from pro-regulatory plaintiffs, including environmental advocates and certain states’ attorneys general.  Indeed, less than a week after Mr. Zeldin’s announcement, the Connecticut attorney general issued a statement promising “to fight these reckless rollbacks at every single step.”  Once in court, any novel statutory interpretations the EPA may advance in support of deregulation will likely enjoy scarce if any judicial deference, following the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).

That said, where the Trump Administration does succeed, industries may confidently align their conduct with revised regulatory requirements to their commercial advantage.  Some risk will remain that future administrations might once again reinstate more stringent rules.  But given the inertia of notice-and-comment rulemaking, such reversals will likely take years to take effect, allowing firms to readjust their operations accordingly in the interim.

Enforcement Discretion

While moving toward bona fide revisions to applicable regulations, the EPA also envisions nearer-term shifts in the exercise of its enforcement discretion.  The March 12 enforcement and compliance memorandum explains that environmental justice considerations will no longer play a role in the agency’s selection of enforcement targets, penalty assessments, or other enforcement and compliance assurance activities.  But the administration’s goal of “unleashing American energy” will play such a role:  When it comes to energy production or power generation facilities, the agency will narrow its focus to human health and safety threats and violations that risk disrupting such facilities’ core production and generation activities.  These and other regulated entities may enjoy a respite from enforcement actions as a result of this change in focus.  Minor, isolated breaches of standards applicable to, for example, methane emissions, coal ash disposal, and releases of hazardous air pollutants now appear less likely to engender near-term enforcement action. 

Nevertheless, in contrast to the slow-moving pendulum of legislative rulemaking, agency enforcement priorities can be more mercurial.  If the underlying rules haven’t formally changed, violators can be pursued later if enforcement priorities shift with a new administration, or even if the current administration shifts priorities.  Actions by the federal government for civil penalties are generally subject to a five-year statute of limitations, 28 U.S.C. § 2462, so violating regulations in reliance on promises of enforcement forbearance and (as yet aspirational) deregulation could expose firms to liability during any subsequent crackdown by the next administration.

Businesses should also remain mindful that many environmental statutes can be enforced by states or even private citizens.  Historically, when agencies have deprioritized enforcement, environmental NGOs have filled the void.  Numerous environmental statutes contain “citizen suit” provisions, including the Clean Water Act, the Clean Air Act, the Safe Drinking Water Act, RCRA, CERCLA, and the Endangered Species Act.  Both the Clean Water Act and the Clean Air Act—the statutory bases for many of the regulatory requirements the Trump administration is now deemphasizing—allow for attorneys’ fees awards when the citizen prevails, as well as injunctive relief and hefty civil penalties or fines.  Even with a shift toward more lax government enforcement, businesses seeking to minimize litigation risk should still comply with applicable regulations until they have been formally revised and implemented.

“Cooperative Federalism”: Local and State Regulatory Activity

Another consideration is the EPA’s promise to “give power back to states to make their own decisions.”  If realized, this emphasis on “cooperative federalism” could undercut the predictability that preemptive federal standards provide, forcing companies to navigate various states’ competing regulatory regimes—some of which may favor the more stringent level of environmental regulation, including climate-related measures, that the Trump administration aims to unravel federally.  On the other hand, in an April executive order, President Trump instructed Attorney General Bondi to scrutinize—and potentially bring constitutional challenge to—state laws that “threaten American energy dominance,” including those premised on climate change, environmental justice, or ESG considerations.  90 Fed. Reg. 15513 (Apr. 14, 2025).  Governors and attorneys general of states like California and New York responded with vows to continue vigorous enforcement of their own environmental laws.

Wherever this mixed approach to federalism leads, the journey is likely to entail higher compliance costs and increased litigation risk for businesses operating amid the stir.  As a practical matter, commercial considerations may counsel compliance with the most stringent state regulations applicable—especially if those regulations govern a large and valuable statewide market.  That said, in the past this phenomenon—under which powerful states, especially California, exercise expansive influence over nationwide standards—has led to significant legal challenges by trade groups and other states. 

For example, during the Biden administration, a group of states, fuel producers, and trade groups challenged the EPA’s authority to grant California a waiver to enact its own, more protective vehicle emissions standards.  Ohio v. EPA, 98 F.4th 288 (D.C. Cir. 2024).  Although the Clean Air Act contains a broad preemption clause, the statute also requires the EPA to grant a waiver to California allowing the state to enact more stringent standards, which other states may thereafter adopt, so long as they are necessary “to meet compelling and extraordinary conditions.”  42 U.S.C. § 7543(a)–(b).  In 2012, California applied for a waiver to promulgate a set of regulations it calls the Advanced Clean Car Program, which set new-vehicle emissions limits for both criteria pollutants and greenhouse gases.  EPA granted the waiver in 2013.  During the first Trump administration, after car manufacturers had already adjusted their fleets to comply with the Program, EPA revoked the waiver, but in 2021, the Biden administration reinstated it.  The D.C. Circuit ultimately held that the fuel producers and trade groups lacked standing to challenge whether California had made its showing of “compelling and extraordinary circumstances” while also rejecting the states’ argument that granting California a waiver violated their constitutional right to “equal sovereignty.”  98 F.4th at 293.

This saga offers at least two lessons to keep in mind throughout this period of regulatory uncertainty.  First, even agency actions subject to direct review in the courts of appeals can take entire presidential terms to resolve when challenged. The Biden Administration began the process of reinstating California’s waiver on April 28, 2021, and the D.C. Circuit did not uphold the final agency action until April 9, 2024.  Second, regulations can often compel investment in the meantime, regardless of whether they are ultimately rescinded. By the time the first Trump administration revoked California’s waiver, automobile manufacturers had already made investments to comply with California’s standards. They entered into independent agreements with California to meet its standards and did not join in the 2022 challenge to the waiver’s reinstatement.

All told, especially in contexts of intense regulatory flux, the costs of across-the-board compliance with the highest state standards may be preferable to the instability and inefficiencies of differentiated production tailored to each applicable state regulatory regime.  Of course, that calculus will be highly industry- and business-specific.  Industry participants should continue to monitor the shifting regulatory landscape and avoid overreliance on short-term relief from shifting enforcement priorities.