WASHINGTON -- New federal greenhouse gas emission regulation could expose a raft of smaller emitters to litigation, a nominee for a key post in the Environmental Protection Agency told lawmakers Thursday.

The potential for smaller emitters to be regulated under the Clean Air Act is one reason why business groups warn that EPA regulation of greenhouse gases could create a cascade of legal and regulatory challenges across a much broader array of sectors. The Obama administration has said that isn't their intent.

Regina McCarthy, nominated to be EPA's Director of Air and Radiation, told lawmakers that even while the government has flexibility in setting the threshold of emitting facilities to be regulated, she acknowledges the risk of lawsuits to challenge those levels for smaller emitters. Ms. McCarthy's office is responsible for drafting federal emission rules.

Sen. John Barrasso (R., Wyo.) has put a hold on Ms. McCarthy's nomination in part because of her responses on the greenhouse gas issue.

Under the Obama administration, the EPA is moving forward to declare greenhouse gas emissions a danger to public health and welfare, which will trigger new rules once finalized. The EPA says that only around 13,000 of the largest emitters, such as refiners, smelters and cement plants would likely be regulated.

Many legal experts say that based on clear Clean Air Act statutes, however, regulations could be applied to any facility that emits more than 100-250 tons a year, including hospitals, schools and farms. Taken in aggregate, farm animals are major greenhouse gas sources because of methane and nitrous oxide emissions from flatulence, belching and manure. Buildings often emit greenhouse gases from internal heating or cooling units.

"It is a myth &hellip; EPA will regulate cows, Dunkin Donuts, Pizza Huts, your lawnmower and baby bottles," EPA Administrator Lisa Jackson said earlier this year, dismissing concerns raised by groups such as the Chamber and the National Association of Manufacturers.

But in responses to a senator's questioning, Ms. McCarthy acknowledged that legal suits could be brought against small emitters.

Asked how she would protect smaller sources against suits, Ms. McCarthy said she would talk with the litigants: "I will request that I be informed if any such notice is filed with regards to a small source, and I will follow-up with the potential litigants."

Bill Kovacs, the head of environment and regulatory affairs at the U.S. Chamber of Commerce said, "There's no way she can talk to the litigants and control them." By the Chamber's estimate, there are 1.5 million facilities -- such as large office buildings that have their own boilers -- that produce over the 250-ton limit.

Kassie Siegel, director of the Center for Biological Diversity's Climate Law Institute, says her group is prepared to sue for regulation of smaller emitters if the EPA stops at simply large emitters.

Write to Ian Talley at ian.talley@dowjones.com