UPDATE 2-US EPA issues rules on biggest carbon polluters

* EPA action could push lawmakers to support climate bill

* Climate bill would likely preempt EPA from regulating

(Releads, adds quotes from environmentalists)

By Timothy Gardner and Ayesha Rascoe

WASHINGTON, May 13 (Reuters) - The Obama Administration
finalized greenhouse gas rules for big factories and power
plants on Thursday, giving momentum to the troubled climate
bill in the Senate.

Starting next year, the Environmental Protection Agency
rules would require large power utilities, manufacturers and
oil refiners to get permits to operate or prove they are using
the latest green technology to cut emissions when building new
capacity.

President Barack Obama has pushed the EPA to roll out
emissions rules and polluters could face more stringent future
climate regulations if the climate bill fails. [ID:nN13187982]

"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.

The EPA said the new rules will cover nearly 70 percent of
U.S. emissions from stationary sources.

Environmentalists praised the effort.

"By focusing its requirements on only the largest sources
of emissions, EPA picked exactly the right place to start,"
said Eileen Claussen, president of the Pew Center on Global
Climate Change.

Big industry said the permitting requirements would be
onerous.

"The Portland Cement Association is concerned that the rule
could act as a disincentive for expanding U.S. cement
production, generally, thereby potentially impacting the
ability of cement producers to meet market demand," said Andy
O'Hare, a regulatory official at the PCA.

Capitals from Beijing to Brussels are closely watching how
the United States addresses climate change, an effort seen as
critical for building global agreement on a successor to the
Kyoto Protocol, which Washington sat out.

BETTER DEAL

Although mounting industry lawsuits question the EPA's
authority on climate, Obama hopes the rules will push lawmakers
in states heavily dependent on fossil fuels to support the
climate bill.

As written, the bill unveiled by Senators John Kerry and
Joseph Lieberman on Wednesday, would preempt automatic EPA
regulations. Preemption would come as a relief to emitters, who
feel they have more influence with Congress to form new air
laws than with the EPA, which is issuing rules from the top
down adjusting existing laws.

The climate bill currently lacks the Republican support it
needs to pass. [ID:nN12199780]

The bill faces additional obstacles, including the narrow
span of time for negotiation before mid-term elections and the
fact some Democratic senators are anxious about offshore
drilling provisions as a massive oil leak in the Gulf of Mexico
continues to gush unchecked.

But Kerry said polluters would get a better deal under the
legislation.

"If Congress won't legislate a solution, the EPA will
regulate one, and it will come without the help to America's
business and consumers contained in the" bill, Kerry said in a
release on Thursday.

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 such as hospitals and schools would be regulated
and overwhelm the agency with paperwork.

The rules would subject power plants, factories and oil
refineries that emit 75,000 tonnes of carbon dioxide equivalent
and already under clean air regulations to get operating
permits 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 not already covered by clean
air laws 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.

Sources that pollute less than 50,000 tonnes per year would
not be regulated until 2016, if ever, said EPA air official
Gina McCarthy.

Under the rules, polluters would have to get permits
showing they are using the best available technology to cut
emissions when building new plants or modifying existing ones.

The rules could hit big operators of coal-fired power
plants. Companies such as Calpine Corp (CPN.N), Southern Co
(SO.N) and Dynegy Inc (DYN.N) may benefit because they have
"peaker" plants that only run in times of high demand.
(Additional reporting by Tom Doggett and Richard Cowan;
editing by Russell Blinch, Lisa Shumaker and Andre Grenon)