The president is directing the Environmental Protection Agency to reconsider California's request to set its own tailpipe admission standards. This is a plan that was shot down by the previous administration.
State leaders say President Obama's decision is a victory for California and its fight for cleaner air. Clearly this is a sign California can expect a better relationship with Washington.
Governor Schwarzenegger didn't waste any time. Just one day after attending the new president's inauguration, he sent a letter asking that California be allowed to address global warming by setting vehicle emission standards tougher than those at the federal level -- a right given under the 1970 Clean Air Act.
President Obama's new order to the EPA, opens the door to a state mandate reducing tailpipe emissions 30 percent by 2016.
"For too long, Washington has been asleep at the wheel when it comes to the environment. Now, California finally has a partner and an ally in Washington and the White House," says Governor Arnold Schwarzenegger (R) of California.
The Bush Administration denied California a waiver in 2007 allowing it to impose tougher vehicle pollution rules at the state level, despite legal and scientific staff from EPA, recommending its approval.
The rejection was the first time Washington had ever denied the state's application to impose stricter rules. The auto industry lobbied hard against it.
"This is something that indicates what the president has promised which is that science, not special interests, are once again in the driver's seat," said Bernadette Del Chiaro, from Environment California.
President Obama also directed the U.S. Department of Transportation to increase the fuel efficiency of new cars.
The average is about 27.5 miles per gallon. That'll go up to 35 miles a gallon by 2020. The moves will have a dramatic effect on the nation's troubled car industry. California's car dealers warn you'll have to pay more, as manufacturers rush to re-design vehicles that meet the new mileage and emission standards.
"The technology, for instance, in your typical hybrid vehicle is several thousand dollars, anywhere from $2,000 to $6,000 more. On a larger vehicle, it would get up to $8,000 in differential," said Peter Welch, from the California New Car Dealers Association.
"It's about a child's right to breathe clean air. It's about saving drivers money at the pump. And it's about reducing our nation's dependence on foreign oil," said Governor Schwarzenegger.
Like the auto industry, auto dealers want a national standard, rather than possibly 50 different ones. At least 17 other states have already said they will follow California's lead once the waver is approved.