Republicans and industry groups are sharpening their opposition to proposed Environmental Protection Agency emissions rules for new power plants by saying the agency violated federal law by basing its standard partly on projects that received federal subsidies.

The argument is that the EPA is running afoul of the Energy Policy Act of 2005 by requiring new power plants to install carbon capture and sequestration technology, which traps carbon emissions and stores them underground, because the law forbids rules on projects that receive federal dollars.

House Republicans first pushed that tack, which has been embraced by lawmakers in the Senate, industry and the state of Nebraska, which sued the EPA this week over the rule on the grounds that the rule is unattainable because carbon capture and sequestration technology isn't yet used commercially.

The rule is a cornerstone of the climate plan President Obama announced in June. Supportive Democrats, public health groups and environmental organizations say the regulation, with an expected statute covering existing power plants, would reduce medical costs and curb climate change-driving emissions. But Republicans and industry have argued the rules would raise energy prices and harm U.S. competitiveness.

Opponents of the rule say the examples EPA cited in the proposed regulation show that the technology is not ready.

"It just seems to be a level of denial by the EPA as to what is actually viable," Sen. John Barrasso, R-Wyo., told EPA Administrator Gina McCarthy on Thursday at a Senate Environment and Public Works Committee hearing.

But the EPA and environmental groups say the rule requires the agency to look beyond the regulated industry — in this case, electric utilities.

"There's nothing in the law that precludes us from considering those [utility projects] in the context of a larger, more robust data set," McCarthy said.

That means the rule does not contradict the Energy Policy Act, McCarthy noted, as the EPA has maintained that carbon capture and sequestration technology is being used in other industries.

"We believe that having this specific consideration of [the Energy Policy Act] makes no change in terms of the standard we've proposed," McCarthy said, who added later in the hearing, "I am very confident that you will see that [carbon capture and sequestration] is proven to be technically feasible."

Those developing the technology aren't so sure. They argue the EPA rule creates a disincentive to invest, as they contend the technology won't be ready by the time utilities must comply with the regulations, despite the fact that few utilities are planning to build new coal-fired generators in light of competition from cheap natural gas.

Several of those companies were part of a National Association of Manufacturers-led meeting Wednesday with Janet McCabe, EPA's air and radiation director.

Ross Eisenberg, vice president of energy and resources policy with the National Association of Manufacturers, said he and others assembled pressed the Energy Policy Act issue in the meeting.

"Even within a three-year timeframe, these guys are saying it's not going to be ready. So you have a [standard] that's essentially forcing this technology out of market," Eisenberg told the Washington Examiner. "Everybody is going to just move on to something easier."