By Valerie Volcovici
WASHINGTON (Reuters) - Regardless of who takes the reins, the U.S. Environmental Protection Agency will likely face continued legal battles in President Barack Obama's second term as it tries to finalize pollution rules for power plants, analysts said.
EPA Administrator Lisa Jackson, who spearheaded the Obama administration's regulation of carbon emissions, said on Thursday she will step down after almost four years.
Her tenure was marked by opposition from industry groups and Republican lawmakers to the EPA's first-ever crackdown on carbon emissions, as well as other anti-pollution measures.
Analysts said whoever succeeds Jackson will probably face a spate of lawsuits to challenge rules that the EPA will finalize governing power plants, industrial sources and oil and gas production.
"This is shaping up to be four years of litigation," said Christopher Guith, vice president for policy at the U.S. Chamber of Commerce's Energy Institute.
Given the partisan divide, Guith said, legislators would struggle to draft laws that could serve as alternatives to the EPA's pending suite of carbon and air regulation.
"As we look to an even more divided Congress, the action will be in the federal courts," he said.
The U.S. Court of Appeals for the District of Columbia circuit, which hears most challenges to federal environmental rules, is likely to be busy as industry groups and states bring their cases against the EPA's rules after they are finalized.
The court sided with the agency in most of the recent challenges, most notably upholding its decision to use the Clean Air Act to regulate carbon dioxide emissions.
David Doniger, policy director of the Natural Resources Defense Council's Climate and Clean Air Program, said this could bolster the EPA as it tackles rules that may be more controversial than those rolled out under Jackson.
"The agency has a very good batting record on the clean air side. Carbon and climate (regulations) have come through completely unscathed," he said.
After the EPA was a political lightning rod during the first Obama administration, the president is likely to seek out a safe, possibly internal choice as Jackson's successor, or to avoid the confirmation process altogether.
"There are just so many arrows pointed at this agency," said Susan Tierney, managing principal and energy and environment specialist at Boston-based Analysis Group
Bob Perciasepe, deputy EPA administrator, will take over on an interim basis and could continue in that role indefinitely.
He previously worked at the EPA during the Clinton administration, specializing in water and air quality. Before rejoining the agency, Perciasepe was a top official at the National Audubon Society, a major conservation group.
Tierney said she expects the EPA to stay the course on its current agenda, especially as the agency faces some court-ordered deadlines to finalize rules, such as for coal ash, industrial waste from coal-fired plants and ozone standards.
PRIORITY ON CLIMATE CHANGE?
Some environmentalists have criticized Obama for being too timid on climate issues during his first term. But in his acceptance speech on election night in November the president gave a nod to climate change, raising hopes for more activism.
The White House may lean on the EPA to tackle one of the largest sources of U.S. greenhouse gas emissions, the current fleet of power plants, said Jeremy Symons, senior vice president at the National Wildlife Federation.
"The president has made clear that climate change is one of his top three priorities for the second term, so that means EPA needs to do its job," Symons said.
This, he said, means the agency needs to finalize the rules for new power plants and the standards for limiting carbon emissions from existing power plants.
The NRDC's Doniger said once the EPA meets an April 2013 legal deadline to finalize the greenhouse gas rules for new power plants, it will then have to address standards for existing plants.
The EPA has to start promptly in the beginning of the second term, said Doniger, because the rulemaking process is "a multistep process that will take time."
The controversial task will almost certainly trigger lawsuits because the rules will target a large number of domestic power plants and could jeopardize electric reliability.
"It's high stakes litigation when you are talking about bringing 40 percent of generation under regulations. That's disastrous," the Chamber's Guith said.
Guith said that while the EPA does have the authority to regulate carbon dioxide using the Clean Air Act, its rules are too difficult for industry - forcing the litigation.
"This EPA has been so aggressive in pushing the envelope by way of the compliance timeline that it has made itself more vulnerable to lawsuits," he said.
The EPA may also face legal challenges from environmental groups and certain states. The NRDC, the Environmental Defense Fund and the Sierra Club joined a group of nine states led by New York that threatened to sue the EPA last year to propose air pollution standards for oil and gas drilling.
They said that the drilling, transportation and distribution resulted in a significant release of methane, a potent greenhouse gas that is not regulated by federal rules.
Doniger said the group is trying to negotiate a timeline with the EPA to set a rule but could sue the agency if it doesn't agree a schedule by February.
(Additional reporting by Ayesha Rascoe; Editing by Gary Hill)
(This story was corrected to fix the name of environmental group to Natural Resources Defense Council from National Resources Defense Council in the tenth paragraph)