The Los Angeles Times lays out the significance:

Today’s decision sets the stage for the proposed national vehicle emissions standards that President Obama announced in May: New cars and trucks sold in the U.S. will be required to improve their fuel efficiency gradually over the next seven years, reaching an average of 35.5 miles per gallon by 2016 — a 40% improvement over the current 25 mpg level. The federal government agrees to adopt California’s standards as its own, and the state agrees not to toughen the standards before 2017. Automakers agree to drop lawsuits against California’s standards.

California has been pushing the stricter greenhouse gas standards for five years, but the EPA under the Bush administration sided with the auto industry in rejecting them. The argument was that the Clean Air Act doesn’t govern auto emissions — an interpretation that new EPA Administrator Lisa P. Jackson has rejected outright. “This waiver is consistent with the Clean Air Act as it’s been used for the last 40 years,” Jackson said Tuesday in a statement.

Now if only the administration would apply the same logic to the Clean Water Act, it could end mountaintop mining as well.

Those lawsuits haven’t been successful, according to Daniel Becker, who heads the Safe Climate Campaign, but they have stalled state efforts to fight pollution and global warming. “It would be nice to end this process,” Becker said yesterday of the advantage of including the lawsuit language in the bill.

It might not be significant at all. Senate Republicans remain as opposed as ever to the Detroit bailout, and have threatened to kill the proposal in the Senate. What else can the Democrats fold on? We might soon find out.

California has famously applied for an Environmental Protection Agency waiver forcing emission reductions of 30 percent by 2016. But the automakers claim the change would threaten the industry by forcing it to produce two sets of vehicles: one catering to the national standard and another to the stricter standards of California.

Defending the carmakers, the EPA rejected California’s waiver last December.

The EPA denial has only fueled the debate, and more than a dozen other states have signed on to the California proposal. Florida is the latest to move in that direction, after a state panel endorsed the plan just this week. Daniel Becker, who heads the Safe Climate Campaign, said the participating states represent enough of the new car market that the automakers would be forced to make just one set of vehicles complying to California’s stricter standard.

In a Dec. 4 letter to the heads of the Big Three, Florida’s Nelson urges the begging CEOs to quit stonewalling the state waivers:

As I review your proposals for federal financial assistance, I ask you to agree not to oppose Florida’s move to mandate cleaner and more fuel-efficient cars and trucks. Any effort to lobby against or otherwise derail this bipartisan initiative, led by Governor Charlie Crist, would be adverse to America’s long-term energy independence.

The Big Three executives testified before the House Financial Services Committee, headed by Rep. Barney Frank (D-Mass.). Though Frank supports a Detroit bailout, he echoed Nelson’s concerns today, warning the CEOs today that their opposition to the new emission standards isn’t helping their cause. From The New York Times:

“You’re now suing a lot of states that are represented here,” Mr. Frank said. “That’s a serious obstacle.”

Rep. Carolyn Maloney (D-N.Y.) was even more forceful, as quoted by The Detroit Free Press:

Sixteen states have adopted or planned to adopt laws to lower greenhouse gas emission standards. My basic question to you is why in the world should my constituents or taxpayers in New York state or any state provide $38 billion in loans to your companies if you will continue to attempt to undo laws that we have adopted in our states?

Wouldn’t that be equivalent to giving you money to sue us?

The CEOs, of course, denied that would be the case. But these guys can compartmentalize money any way they please. Remember when bailed-out Wall Street banks justified the continued payment of shareholder dividends because they said those checks would come from a pot of money separate from the bailout cash?

Right. It’s happening again.