EPA issues rules on big carbon polluters

WASHINGTON (Reuters) - The U.S. Environmental Protection Agency ruled on Thursday that factories and power plants would be subject to greenhouse gas regulations, a major step that could push polluters and lawmakers to support the climate bill unveiled this week in the Senate.

The Obama administration has long said it would prefer that Congress pass a bill to cut U.S. greenhouse gas emissions but has used the threat of EPA regulation to push lawmakers in states heavily dependent on fossil fuels to support the climate bill.

Many power utilities and other companies have also wanted Congress to act, believing they would have a better bargaining position in the legislative process than in top down regulation by the EPA.

The climate bill unveiled by Senators John Kerry, a Democrat, and Joseph Lieberman, an independent, on Wednesday would stop automatic EPA regulations under existing clean air laws.

But the bill faces an uncertain future in the Senate because of a lack of a Republican sponsor. The legislation also worries coastal state Democrats eyeing the massive and unchecked oil spill in the Gulf of Mexico because it includes incentives for offshore drilling.

The EPA action could spark concern from industry and unions worried about jobs as the big companies would have to prove they are using the best green technology when undergoing major plant work.

"It's long past time we unleashed our American ingenuity and started building the efficient prosperous clean energy economy of the future," EPA Administrator Lisa Jackson said in a statement on Thursday.

Under this ruling, the EPA is effectively trimming the Clean Air Act, or "tailoring" it, so it only applies to the biggest emitters of gases blamed for warming the planet. Without the tailoring, small emitters like hospitals and schools would be regulated, which would load down the agency with paperwork.

The rules would subject power plants, factories and oil refineries that emit 75,000 tonnes of carbon dioxide equivalent to regulations beginning in January 2011. Regulated polluters would include big coal-fired power plants and heavy energy users such as cement, glass and steel makers.

Waste landfills and factories that are not already covered by the Clean Air Act that emit at least 100,000 tonnes of greenhouse gases a year would get a six month extension and would not be regulated until July 2011.

Under the rules polluters would at the least have to get permits showing they are using the best available technology to cut emissions when building new plants or modifying existing ones. They could also face a host of other emissions rules in coming years if the climate bill fails to pass.

The rules could hit big operators of coal-fired power plants. Companies such as Calpine Corp, Southern, and Dynegy Inc may benefit because because they have "peaker" plants that only run in times of high demand. (Additional reporting by Tom Doggett; Editing by Doina Chiacu)