A D.C. Circuit panel on Monday appeared inclined to strike down a 2020 EPA rule that lets industrial polluters of mercury, arsenic and dioxins escape MACT emission controls once emissions fall below an annual ceiling of 10 tons of a single hazardous air pollutant (HAP) or 25 tons of multiple HAPs.

What does the reclassification rule do?

The Reclassification Rule, finalized in January 2020, treats a polluter that lowers emissions below 10 tons of one HAP or 25 tons of several HAPs per year as an "area source." Area sources fall outside the strictest Maximum Achievable Control Technology (MACT) regime under Section 112 of the Clean Air Act.

The Sierra Club estimates thousands of facilities have used the rule to stop applying MACT controls after initial compliance pulled them under the threshold. Substances covered include mercury, dioxins, arsenic and cyanide compounds.

What did the challengers tell the court?

Sanjay Narayan, attorney for the Sierra Club and a coalition of environmental groups, told the panel the rule defeats the Clean Air Act's goal of eliminating listed air toxics from major sources.

"These are substances like mercury, dioxins, arsenic, cyanide substances that are extremely dangerous, even in very, very small quantities, sometimes a pound, sometimes a gram, sometimes less," Narayan said.

Narayan argued that a facility emitting 9.9 tons of mercury per year complies with the rule while abandoning MACT obligations. He called the EPA's reasoning inadequate and urged the judges to overturn the rule.

How did EPA defend the reclassification?

Laura Glickman, representing the agency, told the panel the rule tracks the statutory text. Section 112 defines a major source as one that "emits or has the potential to emit" 10 tons of a single HAP or 25 tons of multiple HAPs per year.

"A major source emits or has the potential to emit 10 tons per year of a single hazardous air pollutant, or 25 tons per year or more of multiple hazardous air pollutants," Glickman said. "By contrast, an area source is anything that is not a major source."

Glickman argued Congress used the present tense to capture a facility's current emissions rather than historical performance. The agency's reading, she said, reflects the statute's plain language.

How does the post-Chevron era affect the case?

Judge Gregory Katsas, a Trump appointee, told the panel it does not have to defer to the agency's interpretation of Section 112 after the Supreme Court's 2024 decision in Loper Bright Enterprises v. Raimondo, which ended Chevron deference to agency statutory readings.

Wilkins, an Obama appointee, pressed Glickman on how that reading squares with Congress's broader intent to prevent "significant deterioration of air quality." Chief Circuit Judge Sri Srinivasan completed the panel.

The D.C. Circuit's recent rulings on environmental statutes have trimmed agency flexibility, signaling the panel may apply a narrower scope of EPA discretion.

What related actions did the Sierra Club flag?

The Sierra Club told the court the Trump administration has escalated the regulatory rollback beyond the 2020 rule. In May 2025, the administration exempted 68 power plants from emission standards after soliciting exemption requests.

In February 2026, the administration moved to let coal-burning plants emit 50% more mercury than the existing cap. The court has not yet ruled on either action, both of which rely on the same Section 112 framework challenged Monday.

What happens next?

The panel took the case under advisement. A decision will determine whether the 25-ton ceiling remains the line between major and area sources, or whether MACT controls bind continuously at listed facilities.

The ruling will set the framework for challenges to the May 2025 plant exemptions and the February 2026 mercury rule. Industrial operators in cement, steel, waste incineration and metal recycling track these cases closely because MACT compliance costs and air permit timelines flow directly to operating margins.