The EPA issued the guidance today in advance of a January start date for first-of-their-kind limits on greenhouse gas emissions from large facilities like power plants. Industry groups have railed against the rules, citing their potential cost and arguing that the EPA should not be regulating greenhouse gas emissions in the first place.

In a statement, API Director of Regulatory and Scientific Affairs Howard Feldman said:

The EPA is railroading job killing regulations onto states, localities and America’s businesses, during a time of uncertain economic recovery, without giving those affected adequate time to review, provide comments, or even implement the new regulations. EPA’s regulations take effect January 2, 2011, but it’s already November and EPA is just now releasing guidance documents for permitting.

The EPA guidance comes as the agency is preparing to require in January, for the first time, that new large facilities or facilities that need significant modifications implement Best Available Control Technologies, or BACT, to reduce their greenhouse gas emissions.

The new guidance does not require that states or local permitting authorities use a specific type of method for reducing emissions, but the EPA said in a statement today that it “anticipates that, in most cases, this process will show that the most cost effective way for industry to reduce GHG emissions will be through energy efficiency.”

Gina McCarthy, assistant administrator for EPA’s Office Air and Radiation, said in the statement:

To identify GHG reduction options, EPA and the states are now ready to apply the same time-tested process they have used for other pollutants. This shows that the Clean Air Act can be used to reduce these gases in a cost effective way.

Industry has been critical of the upcoming BACT requirements, arguing that they will impose prohibitive costs on building new facilities. On a conference call with reporters today, McCarthy said the requirements “will not significantly add to the burden or the timeline or the cost.”

The administration is expected to issue new greenhouse gas standards for power plants early next year, exercising its regulatory authority now that efforts in the Senate to pass a climate bill have failed. It also plans to tighten standards for ozone pollutants, which have been linked to asthma.

On a conference call with reporters today, API staffers said the new rules will impose huge costs on the business community and the oil and natural gas industry. For example, API argues that it will be costly to comply with the new ozone rules. According to a chart provided to TWI by the trade group, as many as 2,990 of the total 3,099 counties in the contiguous United States won’t meet the strictest ozone standards being considered by the administration. The numbers are based on ozone monitoring and “interpolated” estimates of ozone for those areas where ozone readings are not available.

Howard Feldman, API’s director of regulatory and scientific affairs, said the upcoming ozone rule is unrealistic and costly. Even Yellowstone National Park would be in violation of the new ozone rule, he said.

On EPA’s upcoming effort to put new limits on greenhouse gas emissions from power plants, Khary Cauthen, API’s director of federal relations, said that the Clean Air Act is not meant to regulate carbon emissions. API said the best way to reduce emissions is through legislation that incentivizes clean energy technology.

Lastly, on EPA’s decision to grant the E15 waiver, API’s Prentiss Searles said that the agency should wait for more research to determine the affect of increased ethanol blends on engines. “We think here that EPA is responding to politics right now,” Searles said.

EPA Administrator Lisa Jackson has said that she made her decision on the waiver after reviewing testing by the Department of Energy on the affect of higher ethanol blends on engines and on ethanol’s greenhouse gas emissions.

An EPA spokeswoman did not immediately return a call for comment.

The move ups the pressure on lawmakers who prefer congressional action to EPA regulation but have been wary of carbon-pricing legislation. With the threat of EPA restrictions growing ever stronger, it’s getting increasingly difficult for these lawmakers to ignore the issue.

Equally important is the utilities sector, some of whose leaders have backed the notion of comprehensive climate legislation. But utility CEOs have been more skeptical of a bill that would impose emissions limits only on power plants.

A Senate aide familiar with the energy and climate negotiations tells me that the utilities are unlikely to sign on to any legislation that does not feature some guarantee that other sectors will be capped down the line, even if only utilities are subject to the cap at first.

But the utilities’ bargaining power is likely to diminish with each new EPA assertion of authority. Faced with a choice between EPA regulation and a bill that will put a price on their carbon emissions — but one that they can help shape — they’re likely to choose the latter.

For an energy and climate bill that’s still facing tough odds, the timing of the EPA’s announcement couldn’t have been better.

First, plans to open new coal power plants in Michigan and Nevada were put on hold, and Gov. Mark Sanford (R-S.C.) came out against a South Carolina plant, all due to environmental concerns and anticipated carbon emissions controls.

Now, the details of the compromise stimulus bill, expected to get a vote in Congress tomorrow, reveal that funding for so-called clean coal has been stripped from the package altogether.

The House bill did not provide for clean coal funding, but the Senate version contained two provisions to support the industry. The first provided $2 billion for “near zero emissions power plants,” likely clean coal plants such as Illinois’ FutureGen. The second made $1 billion “available for selections under the Department’s Clean Coal Power Initiative Round III Funding Opportunity Announcement.”

Neither of these provisions survived in the compromise reached yesterday.

The whole concept of clean coal has been dismissed as everything from an oxymoron to a nightmare. President Obama spoke out in favor of clean coal on the campaign trail, but today’s news indicates that the country’s energy future lies elsewhere, and it’s unlikely that Obama will resist.

“The current concerns over global climate change should not drive EPA into adopting an unworkable policy of requiring emissions controls,” Johnson said.

In a letter sent Monday to Attorney General Michael Mukasey, Boxer blasted Johnson’s argument as not only detrimental to anti-global warming efforts, but illegal. To heed Johnson’s words, Boxer wrote, would only “create further unconscionable delay in efforts to protect America — and the world — from the ravages of unchecked global warming.” From the letter:

The steps we must take to address global warming are a recipe for economic recovery, but Mr. Johnson’s illegal memo will only postpone the steps that will combat global warming, create millions of jobs, and ensure America’s energy security.

The courts are on Boxer’s side. In April 2007, the Supreme Court ruled that carbon emissions are indeed subject to the Clean Air Act. More recently, the EPA’s Environmental Appeals Board reached the same conclusion. “The Attorney General has an obligation to intervene when the actions of the Administration are so clearly outside the law,” Boxer said in a statement accompanying the letter.

The Natural Resources Defense Council issued a statement saying that the sheer absurdity of the ruling should lend hope to those interested in reining in air pollution.

The ultimate consolation, however, is that today’s EPA offense is so ham-handed, so divorced from the law, that it can and should be reversed by the Obama administration with the stroke of a pen.

Obama already has hopes to overturn many of the Bush administration’s “midnight regulations,” and this, no doubt, will be among those targeted. The question is: How long will that take?

But the Bush administration, especially under EPA head Stephen Johnson, has weakened ozone standards and ignored a U.S. Supreme Court order to use the law to regulate greenhouse gases that cause global warming.  Even though Johnson and the EPA have been pilloried for their actions, it appears the administration is using its last two months to further weaken air pollution controls.

The Wall Street Journal reports today that EPA will loosen pollution curbs on power plants:

Under current policy, power plants that make upgrades to operate longer and increase emissions must install pollution-control equipment.

The proposed rules, which seek to make it easier for older power plants to extend their life span and upgrade without installing costly new equipment, are tired to an hourly rate of emissions. As long as a power plant’s hourly emissions stay at or below the plant’s historical maximum, the plant would be treated as if it were running more cleanly, even if its total annual emissions increased as plant operators stepped up operations.

Some in Congress are incensed, especially Barbara Boxer, (D-Calif.), chair of the Senate environment committee, and Henry Waxman, (D-Calif.), chair of the House oversight committee.

Boxer and other Democrats on her committee have already called for Johnson to step down. She promises an investigation of any air-pollution rule changes made in the next two months.

Waxman fired off a caustic letter to Johnson last week that itemized the 18 air-pollution decisions the EPA has made that a federal court subsequently overturned.

The message from Waxman and Boxer is clear: Johnson has lost credibility, and his last-minute decisions won’t survive congressional scrutiny or the courts.

The administration apparently has some confidence that its decisions will be upheld. That — or it just wants to lock in its anti-regulatory legacy for posterity.