(Reuters) - The Trump administration on Tuesday proposed replacing a signature Obama-era policy to combat climate change with a weaker plan that would let states write their own rules on coal-fired power plants, prompting critics to warn of dire environmental and health consequences.

The Environmental Protection Agency (EPA) proposal would require states to submit plans for improving efficiency of coal-fired power plants. The federal government will set carbon emission guidelines, but states will have the leeway to set less-stringent standards, taking into account a facility’s age and the cost of upgrades.

The rule also could allow power plant owners to sidestep costly permits for those improvements.

“The era of top down, one-size-fits-all federal mandates is over,” EPA Acting Administrator Andrew Wheeler said on a conference call.

The attorneys general of Virginia and New York quickly criticized the EPA announcement and said they would sue to block the rule if it becomes law.

EPA projected the new plan would result in $400 million a year in economic benefits and reduce retail power prices by up to 0.5 percent by 2025. Yet documents released on Tuesday showed the EPA estimated carbon dioxide emissions would be higher than under the Obama policy, while pollution-related premature deaths, hospital admissions, asthma cases and school absence days could be higher by 2030.

The agency’s assistant administrator for the Office of Air and Radiation, Bill Wehrum, said that under the new rule, power sector emissions would be similar to the goals set under the Obama administration’s Clean Power Plan (CPP) because of how much the industry has already shifted toward cleaner fuels.

“Things have changed a lot since the CPP was put in place,” Wehrum said to reporters on the EPA conference call. “The industry continues to transform before our very eyes.”

The administration’s Affordable Clean Energy Rule is limited in its scope to coal-fired plants. The Obama-era plan, which has been put on hold by the U.S. Supreme Court, set overall carbon-reduction goals for each state using a series of different measures.

FILE PHOTO: An empty podium awaits the arrival of U.S. Environmental Protection Agency (EPA) Acting Administrator Andrew Wheeler to address staff at EPA headquarters in Washington, U.S., July 11, 2018. REUTERS/Ting Shen/File Photo

EPA forecast that under the new rule, coal production would rise by up to 5.8 percent by 2025.

California Attorney General Xavier Becerra, asked in an interview whether his state would sue to block the plan, said “we’re moving in that direction” but would see the administrative process through.

“We think that there is a strong case to be made that they are violating the very laws they are supposed to enforce,” Becerra said.

EPA’s 236-page proposal is open for a public comment period, with a final rule expected later this year.

The effort to re-write the plan is the latest move by Trump administration to roll back environmental rules put in place by Obama.

Trump, who has scheduled a rally on Tuesday in coal-producing state West Virginia, has vowed to end what he termed “the war on coal” and boost domestic fossil fuels production.

Environmental groups warned the focus on improving efficiency of coal-fired generators could raise overall carbon emissions.

“A coal plant that operates more efficiently may be called upon to run more hours, increasing the total amount of CO2 emitted overall,” Lissa Lynch, an attorney for the Natural Resources Defense Council, said in a statement.

The CPP, which Obama’s EPA finalized in 2015, sought to reduce emissions from power plants to 32 percent below 2005 levels by 2030. The Supreme Court put the brakes on it in 2016 after energy-producing states sued the EPA, saying it had exceeded its legal reach.

In many states, the CPP’s limits on emissions have already been met because the cost of generating power from natural gas and renewable energy like wind and solar is cheaper than coal.

An EPA study forecast that compliance costs relative to the CPP would be slightly lower or higher depending on the assumed cost of making efficiency improvements to the coal-fired plants. That is because the electricity sector has already become far less carbon intensive in recent years.