UPDATE 2-U.S. EPA may not replace Obama-era climate regulation after repeal -draft

-draft@ (Adds policy details, reaction from industry group and environmental group)

WASHINGTON, Oct 6 (Reuters) - The U.S. Environmental Protection Agency has not decided whether it will replace the Clean Power Plan - the centerpiece Obama-era climate change regulation - after it moves to repeal it, according to a draft of the proposal seen by Reuters on Friday.

In the 43-page document, the EPA said the rule, introduced by former President Barack Obama in 2015 to curtail greenhouse gas emissions from power plants, was illegal. It aimed to cut emissions by 32 percent below 2005 levels by 2030.

"Under the interpretation proposed in this notice, the CPP exceeds the EPAs statutory authority and would be repealed," the proposal says.

The EPA said it has not determined whether or when it will propose a new rule to regulate greenhouse gas emissions from existing power plants using the same section of the Clean Air Act used by the Obama administration.

But the agency said it soon intends to release what it calls an Advanced Notice of Proposed Rulemaking to solicit information on "systems of emission reduction that are in accord with the legal interpretation proposed in this notice."

"We cant comment on the authenticity of the document, but what we can say is that the Obama Administration pushed the bounds of their authority so far that the Supreme Court issued a stay the first in history to prevent the so-called Clean Power Plan from taking effect," said EPA spokeswoman Liz Bowman.

In justifying the repeal, the EPA under the administration of President Donald Trump found fault in the Obama administration's use of section 111 of the federal Clean Air Act to regulate carbon emissions from power plants. That part of the Clean Air Act enables the EPA to set emission guidelines for existing sources that reflect the "best system of emission reduction (BSER).

The Trump administration argues that the section can only be used to regulate a single source and that the Clean Power Plan "encompassed measures that would generally require power generators to change their energy portfolios through generation shifting" - rather regulating individual sources.

Industry groups welcomed news of an imminent repeal of the Clean Power Plan while environmental groups warned of the detrimental impacts of killing the rule with no replacement.

"The Clean Power Plan represented an unlawful attempt to transform the nations power grid," said Hal Quinn, director of the National Mining Association lobby group.

David Doniger, climate program director of the Natural Resources Defense Council, said the repeal would "leave millions of Americans in grave danger from extreme weather and other climate impacts." (Reporting By Valerie Volcovici; editing by Grant McCool)