The Environmental Protection Agency this week starts regulating greenhouse gases from power plants and other big polluters for the first time.
The rules only apply to new construction and major expansions, but they've become hugely controversial. Critics say they will drag down the economic recovery.
Old Dominion Electric Cooperative was trying to get permits for a massive new coal-fired power plant in Virginia. But last fall, it delayed the project.
David Smith, the utility's director of environment, says there were two main factors: the recession, which was cutting demand for electricity, and uncertainty about EPA's greenhouse gas rules.
Smith says he still hasn't figured out how the new rules will change his project. But one thing is certain: They give a potent new weapon to the plant's opponents.
"The environmental organizations, I mean, their goal is to challenge any coal plant," Smith says. "Another regulation just gives them another avenue to make another challenge."
Attorney Cale Jaffe from the Southern Environmental Law Center has been fighting the plant.
"Finally we've got the rules that are beginning to require power companies to account for their global warming pollution," Jaffe says. "That's a historic turn of events."
Jaffe says he hopes the utility will reconsider and opt for a cleaner energy source — like offshore wind power.
For EPA's supporters, examples like this are proof that the rules will work to constrain global warming pollution. But in the eyes of critics, they show how the rules will deflate the economic recovery.
Jeffrey Holmstead, who headed EPA's air pollution office under President Bush, predicts that the new requirements will increase energy costs and halt industrial construction. That's because there's no clear rule book. Officials will evaluate each project to see what technologies could cut its pollution.
"It slows everybody down because nobody knows what the rules are going to be," he says.
Holmstead, who now represents energy companies as a lawyer, says companies that do try to get permits will be stymied by red tape and challenges from environmental groups.
"That is a huge part of the problem. There are multiple opportunities for it to be challenged and held up," Holmstead says.
"We will be able to issue these permits," says Gina McCarthy, who heads the EPA's pollution office. "We will not slow down the economy."
She says agency and state officials will only require companies to use existing technologies, but in ways that make plants as energy-efficient as possible, "so that the pollution they emit is as minimal as possible to get the job done."
A number of power companies and refiners say the new rules won't stop them from expanding over the next few years. Some already have permits for upcoming projects. Others are replacing coal-fired plants with cleaner natural gas plants so they won't face global warming regulations — yet.
But even more significant restrictions are on the way. Just before Christmas, the EPA announced it will set standards for how much carbon dioxide pollution power plants and refineries can release.
Incoming head of the House energy committee Fred Upton (R-MI) exploded when he heard the news. He and other Republicans, and some Democrats from coal-mining states, are vowing to stop the EPA when the new Congress begins work.