EPA Moves Closer to Rescinding the Greenhouse Gas Endangerment Finding: What Businesses and Municipalities Should Know

In early February 2026, the Trump administration announced that the U.S. Environmental Protection Agency (EPA) is moving forward with a final rule rescinding the agency’s 2009 “endangerment finding” for greenhouse gases. This development represents a significant escalation beyond earlier indications that the EPA was considering such a step and marks one of the most consequential shifts in federal environmental regulatory policy in decades.

While the proposal will almost certainly be challenged in court and may not take effect for some time, the announcement has immediate implications for businesses, developers, and state and local governments that rely on federal climate regulatory frameworks.

This update explains what the recent announcement means, how it fits into the broader legal landscape, and what stakeholders should be preparing for.

What Has Changed Since EPA’s Draft Rule Submission

As described in our prior article, the EPA submitted a draft final rule to rescind the greenhouse gas endangerment finding for executive review. The administration has now publicly confirmed that it intends to finalize that rule, framing the action as a major deregulatory step that would fundamentally alter federal climate policy under the Clean Air Act.

The 2009 endangerment finding concluded that emissions of six greenhouse gases, including carbon dioxide and methane, “cause or contribute” to air pollution that endangers public health and welfare. That determination has served as the legal foundation for federal regulation of greenhouse gas emissions from vehicles and other sources for more than 15 years.

The new rule would withdraw that determination, which in turn would undermine the statutory trigger that authorizes or requires the EPA to regulate greenhouse gases under several Clean Air Act programs. Litigation challenging the rescission is widely expected and could ultimately reach the Supreme Court.

Key Legal Issues Raised by the Rescission

1. Interaction with Massachusetts v. EPA and Clean Air Act Obligations

The endangerment finding was the EPA’s response to the Supreme Court’s 2007 decision in Massachusetts v. EPA, which held that greenhouse gases are “air pollutants” under the Clean Air Act and that the EPA must determine whether they endanger public health or welfare.

The current proposal does not repeal that Supreme Court decision or amend the Clean Air Act. Instead, it represents a new agency interpretation of whether greenhouse gases meet the statutory “endangerment” threshold. That distinction will be central in litigation, as courts will assess whether the EPA’s new interpretation is consistent with the statute and administrative law principles governing agency reversals of prior scientific determinations.

2. Administrative Law and Scientific Record Challenges

A core legal question will be whether the EPA has provided a sufficient scientific and administrative record to justify reversing a long-standing scientific determination that has been reaffirmed multiple times by courts and prior administrations.

Under administrative law doctrines, agencies may change policy positions, but they must provide a reasoned explanation and address reliance interests. Opponents of the rescission are likely to argue that the EPA has failed to adequately justify departing from a substantial body of scientific evidence and precedent.

3. Federalism and State Authority

The rescission does not eliminate state authority to regulate greenhouse gas emissions. States such as New York regulate greenhouse gases under state statutes and regulations independent of the federal endangerment finding. However, a divergence between federal and state frameworks could raise complex federalism and preemption questions, particularly in sectors where federal standards historically served as a baseline.

Implications for Businesses and Developers

Regulatory Uncertainty and Compliance Planning

For regulated industries, such as energy, manufacturing, transportation, and large-scale development, the most immediate impact is regulatory uncertainty. Existing federal rules remain in effect unless revised or invalidated, but their legal footing may become less stable.

Companies that have invested in compliance strategies, emissions controls, or decarbonization initiatives may face shifting federal requirements while still navigating state and international climate obligations. Investors and lenders often view regulatory volatility as a risk factor, which can affect financing terms, project timelines, and corporate disclosures.

Potential for Increased Litigation Risk

Paradoxically, reducing federal regulation could increase litigation exposure. A unified federal regulatory framework can preempt certain tort and nuisance claims. If federal authority is curtailed, plaintiffs may test state law or common law theories, potentially increasing litigation risk for certain sectors.

Global and Market Pressures

Even if federal regulatory obligations are relaxed in the United States, multinational companies will still face climate-related regulatory and disclosure requirements in other jurisdictions, including the European Union and international financial markets. Market-driven climate risk management is therefore likely to persist irrespective of federal policy changes.

Implications for Municipalities and Local Governments

State and Local Regulatory Programs Continue

The rescission does not affect state environmental laws, such as New York’s Climate Leadership and Community Protection Act (CLCPA), state environmental review requirements, or local land use authority. Municipalities will continue to review energy, infrastructure, and development projects under state and local frameworks.

Land Use, Infrastructure, and Planning Considerations

Municipalities may see increased divergence between federal and state permitting frameworks, particularly for energy and industrial projects. Local governments should anticipate questions about how federal policy shifts affect:

• Environmental review under state law

• Comprehensive planning and zoning for energy facilities

• Infrastructure financing and risk allocation

• Long-term climate resilience planning

Intergovernmental Coordination Challenges

Differences between federal and state regulatory approaches may complicate coordination on infrastructure, transportation, and environmental permitting. Municipalities may need to reassess intergovernmental agreements and compliance strategies in light of evolving federal standards.

What to Expect Next

Rule Finalization and Immediate Litigation

Once the final rule is published in the Federal Register, legal challenges are expected from states, environmental organizations, and industry stakeholders. Courts will likely issue preliminary rulings on stays and injunctions, which could determine whether the rescission takes effect while litigation proceeds.

Potential Supreme Court Review

Given the significance of the endangerment finding to federal climate regulation, the dispute is likely to reach the Supreme Court. The outcome could reshape administrative law, environmental regulation, and the scope of agency authority under the Clean Air Act.

Ongoing Policy and Legislative Responses

Congress retains authority to amend the Clean Air Act to explicitly address greenhouse gas regulation, although legislative action is uncertain. States may also expand or modify their own climate regulatory frameworks in response to federal changes.

Conclusion

The EPA’s move to rescind the greenhouse gas endangerment finding represents a structural shift in federal environmental law rather than a routine regulatory adjustment. While the ultimate legal outcome is uncertain and likely years away, the announcement has immediate implications for regulatory planning, risk management, and intergovernmental coordination.

Businesses, developers, and municipalities should monitor the rulemaking process, litigation developments, and state regulatory responses. In the interim, compliance strategies should account for continued state and international climate obligations, evolving litigation risk, and the possibility of further changes in federal policy.

If you have questions, need assistance, or are seeking guidance with an Environmental, Land Use & Zoning, or Municipal Law matter, please contact Jacob H. Zoghlin at 585-258-2834 or jzoghlin@underbergkessler.com.