EPA Blocks Colorado Haze Plan, Citing Grid Reliability and Property Rights

In a move that could reshape how states draft air quality plans under the Clean Air Act (CAA), EPA is proposing to partially disapprove Colorado’s regional haze plan—not because it fails to reduce pollution, but because it could threaten grid reliability and, in EPA’s view, potentially violate the Constitution.

On July 16, EPA unveiled a novel interpretation of the CAA in the Federal Register, arguing that Colorado’s state implementation plan (SIP) improperly relies on enforceable coal plant closures without sufficiently considering energy impacts or legal safeguards. Specifically, the agency raises concerns under both the Takings Clause and grid reliability provisions—two arguments that could form the basis for broader challenges to state air plans across the country.

What's at Stake

The Clean Air Act requires states to periodically update SIPs to reduce regional haze and improve visibility in protected national parks and wilderness areas. Colorado’s latest plan called for the retirement of several coal-fired power plants by 2029, including Nixon Unit 1. The utility behind Nixon opposed its inclusion in the haze plan, citing grid reliability risks.

EPA now says Colorado failed to adequately demonstrate how these closures would impact electrical demand or reliability—especially in light of surging energy needs tied to manufacturing growth and AI data centers. According to EPA, the state also did not show it had legal authority to enforce these closures without risking a taking of private property without compensation.

A Broader Legal Shift

EPA’s disapproval rests on a reinterpretation of CAA section 110(a)(2)(E), which requires states to certify they can lawfully implement their SIPs. EPA now suggests this includes a duty to show the SIP won’t result in unconstitutional takings. The agency argues that forced closures without consent from utilities could qualify as either per se or regulatory takings—despite the lack of precedent applying takings law to CAA enforcement.

EPA also proposes that the term “emission limitations” in the CAA does not include mandates that require complete plant shutdowns over a utility’s objections. Similarly, “other control measures” should not be read to authorize forced closures. This reading—if finalized—could have implications far beyond haze programs, potentially limiting how states structure emissions reductions in any SIP that impacts coal-fired generation.

A New Tool in EPA’s Toolbox?

EPA’s approach blends legal and policy arguments: it appeals to national security and energy stability under a recent executive order prioritizing coal generation, while advancing constitutional concerns rarely invoked in CAA decisions. By rejecting the use of “unconsented” closures, EPA is signaling support for coal plant operators and opening the door to challenge other state efforts that might constrain fossil fuel use.

Despite disapproving part of Colorado’s plan, EPA says no additional regulatory action—such as a federal implementation plan—will be required. This reflects a targeted approach: block the closures, but leave the rest intact.

Looking Ahead

Environmental advocates are likely to challenge this shift. Many view EPA’s reliance on grid reliability and takings arguments as a distraction from the statutory purpose of the haze program: to reduce pollution and restore visibility in protected areas. They also argue that the Uniform Rate of Progress (URP) metric now favored by EPA lacks legal grounding.

Still, this proposal suggests a broader trend. Under the Trump administration, EPA is not just rolling back rules—it’s rewriting the legal boundaries of what states are allowed to do when it comes to shutting down polluting facilities. If finalized, this reinterpretation of the Clean Air Act could limit the tools states can use to phase out coal, not just for haze, but across the regulatory board.