Green groups give EPA more time on CO2 rule

WASHINGTON (Reuters) - Green groups said on Saturday they would give the Environmental Protection Agency more time to forge the first-ever plan to regulate carbon dioxide from power plants, the country's single biggest source of greenhouse gases.

The Environmental Defense Fund and other green groups that are negotiating with the EPA on the deadline for the plan said they would withhold legal action against the agency until November 30. They, along with New York, California and several other states, had sued the agency to issue the carbon rules.

In a letter to the Department of Justice sent late Friday night, the petitioners said they had agreed to give the agency more time, "In light of the progress made to date."

The EPA delayed the proposed rule on power plants in June, saying it needed more time after talking with businesses, states and green groups on how the plan would work. It issued another delay in September.

The agency is preparing its most ambitious clean air rules in decades, but is under pressure from Republicans in the House of Representatives and polluters who say the rules would kill jobs and add billions of dollars in costs to businesses.

Some Democratic lawmakers from energy-intensive states also want the agency to slow down its air rules, and opponents have already had some success.

President Barack Obama directed the EPA in early September to delay a major rule on smog pollutants, forcing EPA Administrator Lisa Jackson to embrace a George W. Bush-era smog rule that she previously described as legally indefensible.

On Saturday the EPA said it plans to announce its next steps shortly on cost-effective and protective power plant standards.

Limits on greenhouse gases at power plants could add costs to power generators, including American Electric Power and Southern Co.. If less coal is burned as a result of the rule, it could also hurt miners such as Peabody Energy Corp and Consol Energy.

The EPA is also crafting rules to limit greenhouse gas emissions from oil refineries.

"EDF is hopeful that a resolution can be reached without litigation," an Environmental Defense Fund lawyer said in an email. "It is urgent we move forward to modernize our aging energy infrastructure ... and strengthen our clean energy economy."

(Reporting by Timothy Gardner; Editing by Paul Simao)