EPA's new rule makes it easier to upgrade utilities, refineries and other industrial facilities without installing additional pollution controls.
The rule, which was proposed last December and signed by EPA's administrator in August, was made final on Monday. It will take effect in two months, and states have up to three years to comply.
EPA said in a statement it does not believe this rule will result in significant changes in emissions and that it "preserves the public health protections" under law.
However, attorney generals for the 12 states — New York, Connecticut, Maine, Maryland, Massachusetts, New Hampshire, New Mexico, New Jersey, Pennsylvania, Rhode Island, Vermont and Wisconsin — and legal officers for New York City, Washington, D.C., New Haven and several other cities in Connecticut said the new regulations will weaken protections for the environment and public health.
They argued only Congress can make sweeping changes to such a bedrock law.
"We are not going to sit by quietly and allow the energy interests in this country to receive special treatment while so many of our children and elderly are needlessly suffering from respiratory problems that are, in essence, brought on by bad environmental policy," Massachusetts Attorney General Tom Reilly said.
The lawsuit was filed in the U.S. Court of Appeals for the District of Columbia. A similar group of states also filed suit in that court to challenge a previous batch of the administration's related changes to the Clean Air Act.