* EPA chief clashed often with Republicans, industry groups
* Deputy to be interim chief, among candidates to take over
* Decision on fracking rules looms large on EPA's agenda
* First of Obama's energy, environment team to depart
By Ayesha Rascoe
WASHINGTON, Dec 27 (Reuters) - U.S. Environmental Protection Agency chief Lisa Jackson, who spearheaded the Obama administration's crackdown on carbon emissions, said on Thursday she will step down after almost four years of battles with Republican lawmakers and industry over proposed regulations.
Under her leadership, the agency declared for the first time that carbon dioxide was a danger to human health and could be regulated under the Clean Air Act, leading the EPA to develop a new regulatory regime to limit carbon emissions.
Industry groups and Republican lawmakers opposed Jackson's efforts to fight climate change, hauling her in for numerous hearings in Congress, and she faced some pushback from within the administration too.
She won praise from many environmental groups, while others complained her EPA was too timid. It was unclear what direction the administration will take on climate change during President Barack Obama's second term.
Obama thanked Jackson for her service, praising her work on mercury pollution limits, fighting climate change and helping set new fuel economy standards for vehicles.
"Under her leadership, the EPA has taken sensible and important steps to protect the air we breathe and the water we drink," Obama said in a statement.
Jackson, the first black administrator of the 17,000-strong EPA, said in a statement she was "confident the (EPA) ship is sailing in the right direction."
Jackson, 50, is expected to leave her cabinet position after Obama's State of the Union address in early 2013. Leading the list of potential replacements are Bob Perciasepe, deputy EPA administrator, who will take over the agency on an interim basis; and Kathleen McGinty, a former head of Pennsylvania's Department of Environmental Protection and a protege of former U.S. Vice President Al Gore.
Also said to be in the mix are Gina McCarthy, the EPA's assistant administrator for the Office of Air and Radiation; and Mary Nichols, chair of the California Air Resources Board.
Jackson's departure was not a surprise. Analysts had not expected her to stay for Obama's second term.
The administration is expected to face a tough fight to get any potential nominee confirmed by the Senate -- especially any candidate seen as being in the mold of Jackson.
"Secretary Jackson played the environmental 'bad cop' to President Obama's more moderate 'good cop,' but the result of their tag-team effort has been a huge expansion of the EPA's power. That's the exact opposite of what is needed," said S. T. Karnick, research director at the Heartland Institute, a Chicago group that is skeptical of man-made climate change.
Jackson is the first major energy policy official to step aside since Obama's re-election last month. Some have speculated that Energy Secretary Steven Chu, a Nobel prize-winning physicist who has also clashed with industry, will also depart, as may Interior Secretary Ken Salazar.
Republican lawmakers accused Jackson's EPA of massive government overreach that choked economic growth, and passed numerous bills aimed at undoing the regulations. Obama did not sign their bills into law, but the White House did begin to pull back or delay rules in the face of the relentless onslaught.
Some speculated Jackson would step down in 2011, when Obama decided to delay rules to restrict emissions of smog-forming chemicals from power plants.
"From an energy and consumer perspective, it has to be said that the Jackson EPA presided over some of the most expensive and controversial rules in agency history," said Scott Segal, director of the Electric Reliability Coordinating Council, which lobbied against many of the EPA's proposed regulations.
States and governors fought Jackson's rules in the courts, scoring a win in August when a U.S. appeals court overturned the EPA's Cross-State Air Pollution Rule, aimed at reducing harmful emissions from coal-burning power plants.
On Thursday, many environmentalists and public health advocates hailed Jackson, saying she leaves a legacy of cleaner air.
"Administrator Jackson has been one of the most effective leaders in the history of the Environmental Protection Agency," Larry Schweiger, president of the National Wildlife Federation.
Jackson is a chemical engineer by training, and reports in recent weeks suggested she might be under consideration for the post of president of Princeton University. She is also a one-time chief of staff of New Jersey Governor John Corzine, and other media reports say she may be mulling a run for governor of that state.
Despite contentious dealings with Congress, Jackson maintained a cordial relationship with one of her biggest critics, Senator Jim Inhofe. She even kept a photo of the Oklahoma Republican and his grandchildren in her office.
"Lisa Jackson and I disagreed on many issues and regulations while she headed the EPA, however, I have always appreciated her receptivity to my concerns, her accessibility and her honesty," said Inhofe, who has called climate change a hoax, chided the Obama administration for a "far left green agenda" and vigorously opposed carbon regulations.
Inhofe said Jackson's departure offers the White House the chance to appoint someone "who appreciates the needs of our economy."
UNFINISHED AGENDA INCLUDES FRACKING
A self-described pragmatist, Jackson passionately fought to limit air pollution. She often described her two sons' struggles with asthma when discussing the importance of clean air.
Jackson also rejected her critics' complaints that stronger environmental rules were incompatible with a robust economy.
When broad climate change legislation sputtered in Congress in 2010, the EPA became the White House's main vehicle for addressing carbon emissions.
Since then, the agency has finalized rules outlining restrictions on carbon emissions for new power plants, effectively prohibiting the construction of new coal-fired plants without carbon-capture and storage technology.
Natural Resources Defense Council President Frances Beinecke said Jackson's successor "will inherit an unfinished agenda that begins with the issuance of new health protections against carbon pollution from existing power plants - the largest remaining driver of climate change that needs to be controlled."
The EPA also will help decide whether the federal government will regulate hydraulic fracturing, or fracking. The drilling technique has sparked a boom in U.S. energy production but opponents have linked it to water pollution and other problems.
Most regulation of fracking has fallen to the states, but the EPA has said it plans to propose standards on wastewater from gas wells by 2014 and is considering rules that would require more disclosure about the chemicals used in fracking.
U.S. oil and gas production has reached record levels in recent years. Even so, drillers have complained that EPA has taken too heavy a hand in regulating energy production and warn that onerous rules could crimp oil and gas output.
"In the past four years, EPA has hindered development of our nation's oil and natural gas resources by making it difficult for America's independent producers to overcome the enormous regulatory obstacles to operate," said Julia Bell, spokeswoman for the Independent Petroleum Association of America.