Washington (Platts)--20Jun2012/251 pm EDT/1851 GMT

The US Senate on Thursday rejected a resolution that would nullify federal regulations to require fossil fuel-fired power plants to strap on pollution controls to reduce mercury and other hazardous air pollutants, a move proponents argued will crush the economy while opponents countered that many utilities already cleaned up units without financial harm.

In the vote on Senate Joint Resolution 37, offered by Senator Jim Inhofe, Republican-Oklahoma, 46 senators voted to proceed with the resolution but 53 voted against it.

Inhofe's resolution had the support of at least three Democrats -- senators Mary Landrieu of Louisiana, Joe Manchin of West Virginia and Ben Nelson of Nebraska -- yet was expected to fall short of the 51 votes needed to pass, an energy industry source said.

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Had the resolution cleared the Senate and the GOP-controlled House of Representatives, President Barack Obama would have likely vetoed the measure as he has named reduction of mercury emissions a priority of his administration.

Under the Environmental Protection Agency's new rule, the Mercury and Air Toxics Standards, coal- and oil-fired generating units must install and operate "maximum achievable control technology," or MACT, by 2015 to prevent 90% of the sector's mercury emissions. The rule also reduces several other air toxins. The rule stems from provisions under the 1990 Clean Air Act.

Half the country's energy companies already have strapped on the necessary pollution equipment without economic hardship, said Senate Environment and Public Works Committee Chairwoman Barbara Boxer, Democrat-California.

"Instead of rewarding those coal-fired utilities who are doing the right thing, we are rewarding those who haven't done the right thing and continue to spew these toxins" if the resolution were to pass, she said.

But Inhofe, the committee's senior Republican, told his colleagues "by voting against the resolution, you are effectively killing coal."

Yet at least two other coal-state senators who opposed Inhofe's resolutions -- Democrat Mark Pryor of Arkansas and Republican Lamar Alexander of Tennessee -- plan to seek an alternative bill to provide the power sector a total of six years, or until 2018, to meet the MATS rule.

"We need clean coal," said Pryor. "We have 400 years' worth of coal in this country. We have technology to take 90% of the mercury out. This is a rule that has been 20 years in the making, that Congress has mandated that we do this. We should not have to make ourselves a false choice here."

--Cathy Cash cathy_cash@platts.com --Edited by Valarie Jackson, valarie_jackson@platts.com

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