Reversing a 2008 decision by the Bush Administration, the new Obama Environmental Protection Agency (“EPA”), lead by EPA Administrator Lisa Jackson, has now approved California’s request for the authority to regulate greenhouse gas emissions from new automobiles. The decision allows California to implement standards it adopted in 2005 that are more stringent than current federal requirements.

Generally, the Clean Air Act (“CAA”) preempts states from adopting automobile emission regulations that differ from federal standards. The purpose of the preemption is to avoid subjecting automakers to a “patchwork” of state regulations. However, the CAA gives California the unique authority to ask EPA for a “waiver” from preemption to address the “compelling and extraordinary” air pollution concerns that have often plagued the state. Once California adopts more stringent standards, and EPA approves them, other states are free either to adopt California standards as well or continue implementing the federal standards.

According to EPA, California has requested a waiver over 50 times in the past and has been denied only once – the 2008 denial of California’s most recent request. That request sought approval to require automobile manufacturers to meet a specific fleet-wide average emission rate for four greenhouse gases expressed in grams per mile (gpm) of “CO2 equivalent” – a measure of the heat-trapping potential of the combined emissions. Thirteen states have already adopted California’s standards even though, until EPA’s approval on June 30, 2009, even California didn’t have the authority to enforce them. EPA’s approval of California’s waiver request allows California and those thirteen other states to begin implementing the new emission restrictions for model year 2009 cars and trucks, but does not allow state regulators to impose civil penalties until 2010, to avoid concerns over any reliance on the initial 2008 denial of the waiver request.

Granting the waiver clears the way for implementation of an agreement President Obama announced in May between his Administration, California, and ten of the largest auto manufacturers to increase gas mileage and reduce greenhouse emissions from new cars. Under the agreement, the federal government will harmonize its automobile emission reduction standards with California’s standards beginning in 2012. The federal standards will be implemented jointly by two agencies, the Department of Transportation, which will tighten corporate average fuel economy standards to 35.5 mpg by 2016, and the EPA, which will act according to its authority under the CAA, once it finalizes the “endangerment finding” it proposed in April of this year.