But some justices questioned the agency's reach.
"Are greenhouse gases the only air pollutant for which EPA has the authority to change the statutory thresholds?" asked Justice Samuel Alito. "Could it do this for another pollutant, something other than any of the greenhouse gases?"
After Kennedy and Chief Justice John Roberts pressed the point, Verrilli suggested the EPA could broaden its discretionary authority, absent a specific congressional mandate.
This is the second major environmental regulation case that will be heard this term.
The justices in December heard arguments over the EPA's ability to measure emissions from an upwind state that is polluting a downwind state, requiring upwind states to pay for greenhouse gas reductions. A ruling in that case is still pending.
Many business groups hope the conservative majority will limit the reach of government in this and a range of regulatory areas, which the Chamber of Commerce and others say is hurting the economy and stifling innovation.
The cases argued Monday are Chamber of Commerce of the United States v. EPA (12-1272); Texas v. EPA (12-1269); Southeastern Legal Foundation v. EPA (12-1268); Energy-Intensive Manufacturers Working Group on Greenhouse Gas Regulation v. EPA (12-1254); American Chemistry Council v. EPA (12-1248); and Utility Air Regulatory Group v. EPA (12-1146).