The U.S. Environmental Protection Agency (EPA) said today that it will let California set its own tailpipe emissions standards under a fresh interpretation of the Clean Air Act, The Los Angeles Times reports.

“This decision puts the law and science first,” EPA Administrator Lisa Jackson said in a statement.

The announcement represents a compromise among the auto industry, environmental groups and the Obama administration. As a concession to automakers, the state has promised not to break from the federal standard until 2017. The new national requirement, approved in May, will require all new cars and trucks to get 35.5 miles per gallon by 2016.

Passed four decades ago, the Clean Air Act gave Calif. a “waiver” to petition the federal government for permission to impose its own benchmarks, but the Bush administration had denied the request.

Gov. Arnold Schwarzenegger told the Times that the ruling is a “huge step for our emerging green economy.”

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