IMPEACH BUSH

WASHINGTON (Reuters) - The Supreme Court on Monday refused to hear a Bush administration appeal defending its rule that would allow older factories, refineries and coal-burning power plants to upgrade their facilities without installing the most modern pollution controls.

The justices declined to review a U.S. appeals court ruling in March 2006 that struck down the Environmental Protection Agency's rule for violating the federal Clean Air Act.

According to the rule that was adopted in 2003 but has never taken effect, modern antipollution controls would have to be installed only if plant upgrades cost more than 20 percent of the replacement cost of the plant.

At issue is the ability of U.S. electric companies to overhaul and expand their aging fleet of about 500 coal-fired power plants to keep them running.

Utilities want to modify their aging power plants, some decades old, without triggering Clean Air Act rules that require them to spend billions of dollars on emission-reduction equipment. Oil refineries and other industrial factories are also subject to those rules.

Environmental groups said the plan would allow plants to spew more nitrogen oxides and sulfur dioxide -- precursors of acid rain and smog linked to respiratory diseases like asthma.

The Electric Reliability Coordinating Council, a utility group that has lobbied hard in favor of the rule changes, said the Supreme Court decision was "not totally unanticipated," because the court recently ruled on a similar case involving power plants owned by Duke Energy Corp.

Environmental groups and 14 states sued in challenging the rule. They argued it would allow plants to expand production without cutting pollution emissions and would undermine the Clean Air Act's new source review enforcement provisions.

The appeals court agreed. It said the rule was "contrary to the plain language" of the Clean Air Act, and said the EPA's rules make sense "only in a Humpty Dumpty world," a reference to the children's nursery rhyme.

"Looks like all the king's horses and men at the EPA could not put Humpty Dumpty together again," quipped John Walke, an attorney at the Natural Resources Defense Council, an environmental group that has opposed the EPA's rule change.

The Bush administration appealed to the Supreme Court and said the appeals court had erred in invalidating the rule. A group representing auto manufacturers backed the appeal by the Bush administration, as well as a separate appeal by a group representing electric utilities.

The 14 states, led by New York, and the various environmental groups opposed the appeals. The Supreme Court rejected both appeals without any comment or recorded dissent.

(Additional reporting by Chris Baltimore in Washington)