The federal agency issued a final version of the rule in August, triggering what could be years of court appeals by opponents who argue the EPA has no legal authority to dictate how much CO2 can be emitted by individual states.

Critics of the rule like Pence, a first-term governor who recently announced plans to seek a second, four-year term, and the governors of other states including Wisconsin, Texas and Oklahoma, have thrown down the gauntlet to President Barack Obama and the EPA. They have promised not to comply with the rule unless significant changes are made to lessen its impact on low-cost energy, particularly that supplied by coal.

In a July letter to Obama, Pence said the United States needs an “all of the above” energy strategy that does not discriminate against any predominant energy resources such as coal. “Energy policy should provide the safe, environmentally responsible stewardship of our natural resources with the goal of reliable, affordable energy,” Pence said. “Your approach to energy policy places environmental concerns above all others.” The CPP, he added, represents a “genuine threat to the affordability of electricity,” which, in turn, threatens the state’s economy. Indiana is a major Midwestern manufacturing state and for three decades has led the nation in steel production.

Pence called Indiana a “proud pro-coal state,” a reference to the fact the Hoosier state gets more than 80% of its electricity from coal. Indiana traditionally is a top 10 coal producer, usually mining more than 35 million tons of steam coal annually, primarily for sale to U.S. electric utilities.

Dan Schmidt, Pence’s policy director for energy and the environment, said the governor told the EPA that unless the final CPP is significantly improved from its earlier version, Indiana will not comply with the rule. “Gov. Pence believes the best improvement in the rule would be its complete withdrawal,” Schmidt said, “and he will pursue all legal means at his disposal to oppose the rule.”

American Energy Alliance President Thomas Pyle applauded Pence’s position. “This rule is an attempt by President Obama to impose a national cap-and-trade system that he failed to pass democratically when he controlled Congress in 2010,” Pyle said.

Bruce Stephens, president of the Indiana Coal Council, echoed Pyle’s remarks. Indiana Attorney General Greg Zoeller, he noted, has joined more than a dozen other state attorneys general in a lawsuit that claims the CPP is illegal.

Pence’s planned defiance of the rule “is really the only sensible approach he can take or any governor can take who has a state large on manufacturing or that produces a lot of fossil fuel,” Stephens said. “This is just not workable for Indiana. It doesn’t fit our economic scheme. It’s going to be bad for businesses, bad for ratepayers.”