Following up on a campaign promise, Mr. Obama instructed the Environmental Protection Agency to take a second look at whether to allow California to set its own fuel economy standards. In 2007, the Bush administration's EPA director, Stephen Johnson, denied California's request for a waiver to adopt tougher fuel economy standards than the federal government requires.
That decision pleased the auto industry, but touched off investigations and lawsuits by environmental groups and Democrats who said it was motivated by politics rather than science, according to the Associated Press.
In his first press conference in the East Room of the White House, President Obama instructed the EPA to reconsider the decision.
"The federal government must work with, not against, states to reduce greenhouse gas emissions," he said. "The days of Washington dragging its heels are over."
The EPA is expected to move quickly to carry out Obama's instructions. At her confirmation hearing, incoming EPA director Lisa P. Jackson said that she would "aggressively" review California's waiver application.
Mary Nichols, head of California's Air Resources Board, told the New York Times: "Assuming that it is favorable to our request, we're delighted that the president is acting so quickly to reverse one of the worst decisions by the Bush administration and to get the E.P.A. back on track."
If the waiver application is accepted, 13 other states have promised to follow California's lead.
Obama also on Monday instructed the Transportation Department to finalize new fuel-efficiency guidelines. The Bush administration had declined to issue guidelines to comply with a 2007 law that required carmakers to reach an average fuel-efficiency standard of 35 miles per gallon by 2020.
President Obama instructed the department to issue guidelines that would begin to affect new car production as soon as 2011.