EPA's decision, which was expected, found that carbon dioxide and other greenhouse gases that produce global warming pose a threat to human health and welfare.

The agency had no immediate comment on its proposed ``endangerment finding,’’ which was made public by the White House Office of Management and Budget.

White House officials were quick to downplay talk of unilateral action by EPA to regulate greenhouse gases, saying President Barack Obama prefers Congress do this with new legislation.

The Supreme Court in 2007 directed EPA to decide whether greenhouse gases from burning fossil fuels, particularly CO2, are injurious to public health and welfare because they are warming the earth. The Bush administration did not act on the ruling.

The court said if such a finding is made, CO2, sulphur dioxide and other contaminants must be regulated under the Clean Air Act.

``I think this is just the step in that process,’’ White House Press Secretary Robert Gibbs said, referring to the Court's ruling.

Joe Pouliot, director of climate and policy communications at World Wildlife Fund, tells Recharge that Congress must take the lead role on the matter.

``This issue requires a legislative solution,’’ he says. ``Congress needs to take action.’’

Adds Christopher Flavin, president of Worldwatch Institute, an environmental group: ``EPA’s regulatory framework is a backup for eventual legislation.’’

During her confirmation hearings, several prominent senators warned Lisa Jackson, now EPA administrator, not to bypass Congress on climate change regulatory issues.

The EPA action ``signals that the days of ignoring this pressing issue are over,’’ say Senator Barbara Boxer, a California Democrat, whose Senate committee is working on a climate bill.

In an editorial today, the Washington Post called for a market-based solution for carbon emissions, suggesting that EPA could not efficiently manage the workload of having to issue hundreds of thousands of new clean-air permits and manage enforcement under the Clean Air Act.

The US Chamber of Commerce, a powerful business lobby group, claimed if CO2 is regulated as EPA wants under the Clean Air Act, the ``regulated community’’ would increase from 15,000 entities to 1.5m.

Obama is on record as favoring a carbon cap-and-trade system, although his administration wants Congress to provide details on how it would work.

Some lawmakers prefer either a flat carbon tax or cap-and-dividend, which would distribute revenue raised from carbon permits on upstream industries such as coal mines directly to the American people.

Given the wide disparity of opinion, some observers such as Flavin wonder if Congress this year will pass a law regulating CO2.

``I think it could go either way,’’ he tells Recharge, adding that ``fundamental differences’’ are a long way from being worked out..