WASHINGTON (Reuters) - A federal court on Wednesday halted a Bush administration plan to allow power plants, oil refineries and other industrial facilities to make upgrades to aging plants without installing costly new air pollution control equipment.

A coalition of environmental groups and states sued to stop the new rules issued by the Environmental Protection Agency, saying the policy changes violated the federal Clean Air Act and would result in more emissions being spewed into the air.

Emissions from coal-fired power plants and refineries can aggravate asthma, chronic bronchitis and pneumonia.

The U.S. appeals court in Washington, agreed to temporarily set aside the changes to the EPA's "new source review" rules and said they could not take effect until the lawsuit challenging their legality was finished.

EPA officials could not immediately be reached for comment on the ruling.

The Bush administration has been criticized by Democrats and green groups for relaxing several environmental protection rules at the behest of energy companies. The industry contends the changes simply reflect the administration's analysis of scientific evidence and costs.

Under the EPA's planned rules, a facility, such as a power plant, could have replaced equipment without installing pollution controls as long as the cost of the replacement did not exceed 20 percent of the cost of the plant.

When Congress wrote the new source review provision of the Clean Air Act in 1977, it assumed most of the aging coal-fired plants would be gradually replaced with new ones. Congress exempted plants operating at the time from stricter pollution controls, unless they launched a major renovation or expansion.

Green groups welcomed the court's ruling.

Ann Weeks, an attorney with the Clean Air Task Force, said the ruling means "no harm can be done until the court has decided whether the rule (change) is legal, which we strongly believe it is not."

If the EPA had adopted its policy change and the court later ruled against the agency, Weeks said the damage would have already been done to the environment.

"The (polluting) emissions are already in the air," she said.

Weeks said companies could have been hurt financially as well, if the court had ruled against the EPA after the policy change took effect, and firms would then have to pay for unexpected pollution controls or remove the newly installed equipment.

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