What An EPA Climate Rollback Means For Michigan And The U.S. Economy

WASHINGTON DC – For more than 15 years, U.S. companies, utilities, insurers, and state governments have planned investments around a stable set of federal climate rules anchored by a single regulatory foundation: the Environmental Protection Agency’s 2009 Endangerment Finding, which determined that greenhouse gas emissions pose risks to public health and economic welfare.

That framework may now change.

The Trump administration has signaled its intent to repeal the Endangerment Finding — a move that would not simply reduce regulation, but fundamentally alter the assumptions under which large parts of the U.S. economy have operated for more than a decade.

The central economic question is not whether regulation is good or bad.
It is what it costs to change the rules after long-term decisions have already been made.

Why Rule Stability Has Economic Value

Issued by the Environmental Protection Agency, the Endangerment Finding itself did not impose emission limits. Instead, it established EPA authority under the Clean Air Act, allowing future administrations to set vehicle standards, power-plant rules, and industrial emissions guidelines.

Over time, those rules became embedded in:

Once embedded, they became planning assumptions, not policy debates. Changing those assumptions midstream introduces friction — and friction has a price.

Cost Bucket #1: Industry Transition Costs (Michigan’s Auto Core)

Michigan feels rule changes faster than most states because of its industrial structure.

Vehicle platforms are designed five to ten years in advance, with emissions and efficiency assumptions built into:

• Engine and drivetrain architecture

• Software and control systems

• Supplier contracts

• Tooling and manufacturing lines

When regulatory assumptions change mid-cycle, costs follow — even if regulation is loosened.

Auto programs move through fixed stages — design, engineering, supplier commitments, tooling, and production. A rule change after those steps begin triggers redesigns, delays, write-downs, and supplier disruption.

For Michigan manufacturers and suppliers, this is not theoretical. Global markets — including Europe and large U.S. states — still require emissions compliance, meaning companies must often design to the strictest applicable standard regardless of federal rollbacks.

From a cost perspective, uncertainty is often more expensive than regulation itself.

Cost Bucket #2: Energy and Infrastructure Planning

Utilities operate on 20- to 40-year planning horizons, financing grid upgrades and generation capacity based on long-term assumptions approved by regulators and investors.

Changing EPA rules does not reverse existing investments. Instead, it increases:

Michigan utilities are already investing billions to modernize the grid and improve reliability. Rule changes complicate those efforts rather than simplifying them.

Cost Bucket #3: Insurance and Risk Pricing (Where Households Feel It First)

Insurance markets price risk independently of EPA policy — and they react quickly.

As extreme rainfall, flooding, wind damage, and infrastructure stress increase claims, insurers respond by raising premiums, increasing deductibles, or limiting coverage.

When federal climate coordination weakens, costs don’t disappear. They shift downward.

Reduced federal coordination shifts financial exposure to states, cities, businesses, and households — through higher insurance costs, infrastructure repairs, and local budgets.

For homeowners and small businesses, insurance premiums are often the first tangible signal of climate-related cost pressures.

Cost Bucket #4: Legal and Administrative Friction

Major regulatory changes rarely end regulation. They move it into the courts.

Repealing the Endangerment Finding would likely trigger years of:

During that period, businesses must hedge against multiple outcomes, increasing compliance and planning costs. From a management standpoint, this is complexity without clarity — one of the most expensive operating environments.

Cost Bucket #5: Competitiveness and Market Access

U.S. policy shifts do not alter global market requirements.

Automakers, manufacturers, and exporters must still comply with:

• International emissions standards

• Customer and investor expectations

• Supply-chain requirements set outside the U.S.

States with stable, predictable policy environments tend to attract capital more easily than those navigating regulatory transitions. For Michigan, which competes aggressively for advanced manufacturing investment, uncertainty becomes a competitive disadvantage.

Science vs. Policy: Why the Cost Story Is Different

Scientific bodies such as the Intergovernmental Panel on Climate Change continue to strengthen the evidence linking human activity to climate change, and U.S. courts have repeatedly upheld the EPA’s scientific findings.

But from an economic standpoint, the science debate is not the primary cost driver.

Markets, insurers, and global regulators have already moved.
The costs now stem from policy transitions, not ideology.

Changing EPA climate rules does not eliminate costs.
It reallocates them — from federal standards to:

• Industry redesigns

• Ratepayer exposure

• Insurance premiums

• Legal complexity

• Competitive uncertainty

For Michigan — a state built on long-cycle manufacturing and infrastructure — the cost of changing the rules may exceed the cost of keeping them.

In economic terms, stability itself has value.

Editor’s Note 

This analysis examines the economic and planning costs associated with regulatory change, independent of political motivations or the merits of climate policy.