Washington (Platts)--10Dec2010/740 pm EST/040 GMT

The US Court of Appeals for the District of Columbia on Friday rejected an industry request that it issue a stay that would have blocked the Environmental Protection Agency from imposing limits on greenhouse gas emissions from large stationary sources beginning January 2.

Oil and natural gas producer, refinery and utility groups had asked the court to block the rules from taking effect while it considers a legal challenge to the regulations.

But the court said the groups failed to show "the harms they allege are 'certain,' rather than speculative."

"The doors of state and local permitting agencies will be open for business come January 2, 2011," said Bill Becker, executive director of the National Association of Clean Air Agencies, a Washington-based group which represents state clean air agencies.

While the appeals court granted a temporary victory to the Obama administration and environmentalists, the legal challenges to the sweeping new rule continue.

"The denial of a stay is hardly an endorsement of the underlying EPA position," said Scott Segal, a partner at Bracewell & Giuliani and head of the Electric Reliability Coordinating Council, which represents coal-fired generators. "Indeed, we expect vigorous challenges to continue regarding EPA's unprecedented foray into greenhouse gas regulation."

The motion decided on Friday is part of a challenge to the so-called "Tailoring Rule" which EPA is using to phase in the regulation of GHGs from new or modified sources.

EPA's GHG tailoring rule, which takes effect January 2, will require power plants, refineries and other large industrial sources already subject to Clean Air Act "prevention of significant deterioration" permits to include GHG controls for new construction or modifications that have the potential to emit 75,000 tons per year of carbon dioxide equivalent.

Title V or operating permits for existing sources would also have to include GHG considerations when renewing their permits or if they make major modifications that increase their carbon emissions above 75,000 tons per year.

Starting in July 2011, these PSD-permitted facilities and new sources that emit GHGs in excess of 100,000 tons per year or that make modifications that boost their carbon emissions by 75,000 tons per year will also come under the rule.

"Today's action means that EPA's invasive and misguided regulations will be imposed on our nation's businesses and manufacturers at the beginning of 2011," said Charles Drevna, president of the National Petrochemical and Refiners Association, one of the parties in the lawsuit.

Environmentalists cheered the decision Friday.

"This is a victory for every American who wants better gas mileage and cleaner cars and factories. It means cleaner air, a stronger economy and a healthier future for us all," said David Doniger, policy director for the Climate Center at the Natural Resources Defense Council.

--Tom LoBianco, tom_lobianco@platts.com --Cathy Cash, cathy_cash@platts.com

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