The US Environmental Protection Agency (EPA) repealed its Clean Power Plan in June this year to replace it with the "Affordable Clean Energy" rule, which Ferguson on Tuesday claimed would increase air pollution.
Under the new rule, states are given more freedom to decide on the upgrade of coal-burning power plants, which generate more carbon emissions than other non-fossil fuel sources.
"This rule is yet another example of the Trump administration pandering to fossil fuel industry interests at the expense of human health and the environment," Ferguson said.
He slammed the new Affordable Clean Energy rule as "neither affordable nor clean", calling it "a thinly veiled attempt to loosen restrictions on coal power plants".
The new rule would allow those plants to operate much longer than they should, resulting in more air pollution and carbon emissions, Ferguson said, according to Xinhua news agency.
Washington Governor Jay Inslee expressed his support for Ferguson's challenge, saying the EPA's new policy "puts the health and security of all Americans at risk".
"This rule is a sham that shows powerfully how this administration refuses to limit carbon pollution and to protect Americans from the harmful effects of climate change," Inslee said.
Washington is among a coalition of 22 Democratic-led US states and seven local governments that sued the Trump administration over its decision to relax restrictions on coal-fired power plants.
The lawsuit was filed in the US Court of Appeals for the District of Columbia Circuit, accusing the Trump administration of violating the Clean Air Act.
The legal action was joined by other state attorneys general from California, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Wisconsin and the District of Columbia.
Ferguson' office said Washington has already seen adverse impacts of climate change, including rising sea levels, increased flooding, wildfires and ocean acidification.
( With inputs from IANS )