(FORTUNE Magazine) – SMOKESTACKS thrusting to 1,200 feet--about as high as the Empire State Building--have become a familiar sight at U.S. power plants and factories. Mostly built since the early Seventies, these brick or cement stacks were put up to help plants meet local air-quality standards by dispersing sulfur dioxide and other pollutants into the upper atmosphere. Now the Environmental Protection Agency is writing new regulations that will in effect ignore the height of many of the 450 or so stacks in operation. Prodded by the courts, the EPA intends to develop air-quality models based not on the actual pollution levels around a plant, but on what the air quality would be if a tall stack were shorter. Utilities will be forced to reduce emissions they now disperse. Environmentalists have long charged that the utility industry is simply spreading its air pollution problem around instead of solving it. Says Howard Fox, an attorney with the Sierra Club Legal Defense Fund: ''What goes up must come down. It's like throwing garbage over the fence. It winds up in your neighbor's backyard.'' In 1977 Congress amended the Clean Air Act to crack . down on dispersion, and the EPA has been trying to write new stack rules ever since. Due in April, the regulations will bear a price tag that's as high as the tall stacks. Electric utilities could be forced to burn lower-sulfur--and higher-cost--coal than they have been using. An alternative would be to install expensive scrubbers of the sort the tall stacks were supposed to make unnecessary. The EPA estimates that the new rules might impose up to $4.6 billion in new capital costs on electric companies, while annual operating expenses might increase by as much as $1.4 billion. Energy-intensive industries like steel and paper will see costs soar. Environmentalists, who believe acid rain is largely caused by pollution from coal-burning power plants, say that the new rules will reduce damage to streams, lakes, and forests. The utility industry hotly disputes this, and even the EPA has doubts. Joseph A. Cannon, assistant administrator for air and radiation, says that if it turns out that tall stacks don't contribute to acid rain after all, the regulations will have perversely produced enormous costs and no benefits. The utility industry is steaming. Says Henry Nickel, a Washington attorney for electric companies: ''This program assumes a theoretical public health problem when in reality no unsafe condition exists.'' Renewed litigation seems certain. The utility companies want less regulation. Environmentalists want even stricter rules. But the EPA is confident that this time its regulation will withstand challenge.