"The administration will not ignore science or the law any longer, nor will we avoid the responsibility we owe to our children and our grandchildren," EPA Administrator Lisa Jackson said.
"The Clean Air Act sets out a simple premise, which is, once you know you have pollution and once you know it's endangering human health and welfare, then EPA must act," Jackson said.
The EPA now has unilateral authority to act, including setting new carbon emissions standards for power plants, factories and cars, even if Congress fails to pass a climate bill.
"What it says for the rest of the world is that although Congress has not succeeded in passing the big piece of climate legislation, nevertheless the United States is prepared to move forward in dealing with carbon dioxide," Sierra Club chief climate counsel David Bookbinder said.
But some Republicans accused the administration of doing an end-run around Congress, which is still debating a climate bill.
"Today the American public are getting a raw deal. All cost and no benefit. Yet the Obama administration is moving forward anyway," said Sen. James M. Inhofe, R-Okla.
Industry groups also strongly objected, saying the EPA's action could damage the economy and send jobs overseas.
"I've heard from every industry sector, I've heard from utilities, I've heard from large manufacturers, I've heard from small manufacturers. There is a significant concern from every single manufacturing sector out there," said Keith McCoy, vice president of energy and resources policy at the National Association of Manufacturers.
Among those with the most at stake are coal-fired power plants.
"I make the energy today for about four cents a kilowatt hour. This will take it up somewhere just south of eight cents kilowatt hour," said Michael Morris, CEO of American Electric Power, one of the nation's largest utilities with 5 million customers in 11 states.
AEP said that it would pass those higher costs on to consumers.
The action by the EPA has been a long time coming. In some ways, the Supreme Court forced the issue with a ruling two years ago ordering the EPA to make the call one way or another.
Today the agency pledged to work with Congress -- not move ahead on its own. But supporters of today's action said this won't necessarily hurt the economy: It could create jobs, as companies are forced to implement technologies that cut down on greenhouse gas emissions.