The US Supreme Court is considering whether carbon dioxide (CO2) should be defined as a pollutant and therefore subject to a law regulating emissions.
CO2 is harmful and should be regulated, campaigners say
Twelve states and 13 campaign groups have brought the case against the US Environmental Protection Agency (EPA).
They say the US government has a legal duty, under the Clean Air Act, to restrict greenhouse gas emissions.
The EPA says the 1970 Act does not give it the powers to impose limits because CO2 is not deemed to be a pollutant.
The dispute, which dates back to 1999, is centred on whether greenhouse gases meet the Clean Air Act's definition of a pollutant.
The key clause, 202(a)(1), states: "The Administrator shall by regulation prescribe... standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines, which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare."
The plaintiffs say the evidence that climate change endangers the health and welfare of US citizens is clear.
Commenting on the Supreme Court hearing oral evidence on Wednesday, John Stanton, vice president of the National Environmental Trust (NET), said: "It finally appears that the curtain is about to drop on the Bush administration's stubborn refusal to acknowledge the existence of global warming pollution.
But the EPA, as well as 10 states, four motor trade associations and two coalitions of utility companies, says that it does not have the authority to control greenhouse gas emissions.
In 2002, responding to a petition asking for it to curb emissions, the agency said: "Congress has not granted EPA authority under the Clean Air Act to regulate CO2 and other greenhouse gases for climate change purposes."
Industry groups back this view, and argue that CO2 is a naturally occurring gas, thereby falling outside the law's definition of a pollutant.
The Supreme Court is expected to rule on the case, known as Massachusetts verses EPA, in June 2007.