Rejection hurts. And late Wednesday afternoon, California felt the pain when the U.S. Environmental Protection Agency denied the state's request to regulate vehicle emissions.

Under the Federal Clean Air Act, California has the right to set its own vehicle-emissions standards as long as it obtains a waiver from the EPA.

But the EPA wasn't having it. In an effort to explain its decision, the federal agency pointed to the country's energy bill that was signed into law earlier in the day by President Bush (see President Signs Energy Bill).

The bill calls for car manufacturers' fleets to average 35 miles per gallon by 2020. According to the White House, that's up 40 percent from a requirement of 25 miles per gallon today.

"The Bush Administration is moving forward with a clear national solution -- not a confusing patchwork of state rules -- to reduce America's climate footprint from vehicles," said EPA Administrator Stephen L. Johnson in a written statement.

During a press conference Thursday, President Bush said he backs the EPA's decision.

"The question is how to have an effective strategy," he said. "Is it more effective to let each state make a decision as to how to proceed in curbing greenhouse gases or is it more effective to have a national strategy?"

But California plans to fight back. On Thursday, California Gov. Arnold Schwarzenegger said he would challenge the decision by filing a lawsuit in the next three weeks, if all goes as planned in the District of Columbia Court of Appeals.

"It is disappointing that the federal government is standing in our way and ignoring the will of tens of millions of people across the nation," he said in a written statement. "California sued to compel the agency to act on our waiver, and now we will sue to overturn today's decision and allow Californians to protect our environment."

Also Thursday, Rep. Henry Waxman, D-Calif., chair of the House Oversight and Government Reform Committee, sent off an angry letter to the EPA.

"Your decision appears to have ignored the evidence before the agency and the requirements of the Clean Air Act," he wrote.

Waxman accused the EPA of overruling unanimous recommendations of its legal and technical staffs in rejecting California's petition, and asked the agency to hand over all documents, including e-mails and other communications to the White House, related to the decision.

Over the past 30 years, the EPA has granted more than 40 such waivers while denying none, according to Schwarzenegger.

But the EPA said it's different this time around. Previous waiver petitions were granted for pollutants that impacted local and regional air quality.

And since greenhouse gases are fundamentally "global in nature," they essentially affect every state in the union.

So according to the EPA and its interpretation of the Clean Air Act, separate California standards aren't needed.

A Drawn-Out Decision

The decision is a blow to the California's five-year effort to enforce a law, passed in 2002, to reduce vehicle emissions by 30 percent by 2016.

Just last week, a federal judge upheld a ruling that California has the right to set its own vehicle-emissions standards (see Judge Upholds California Auto-Emission Law). The EPA decision also came after the U.S. Supreme Court ruled in April that the federal agency could regulate carbon-dioxide emissions, countering the agency's stance that it couldn't.

The saga of the waiver began almost two years ago, when California first requested it. The waiver would have allowed the state to enact emissions standards to reduce greenhouse-gas emissions from automobiles more than required by federal levels.

Since the Golden State put in its request, 16 other states -- making up about 45 percent of all U.S. auto sales -- have adopted or are considering adopting California's standards. And last month, the state sued the EPA for taking too long to respond to a request to reduce emissions from vehicles (see California Sues EPA for Greener Vehicles).

The EPA responded that it would make a decision by the end of the year, but the decision didn't end up being what the state had hoped for.

"We are deeply disappointed that the administrator has chosen to deny our waiver. And we are even more discouraged that he did it on such flimsy ground," said California Air Resources Board Chair Mary Nichols in a press conference shortly after the decision was announced. "As you can tell, we are not happy."

California doesn't plan to back down, she added. "We will sue and sue and sue again until we get our legal rights."

A Sigh of Relief

No doubt major car manufactures, at least, are breathing a sigh of relief.

Auto manufacturers have opposed California's efforts, arguing that if the waiver was granted it would essentially allow the state to set fuel-economy standards, which only the federal government is allowed to set (see Judge Upholds California Auto-Emission Law).

But the outraged reactions from federal lawmakers, including House Speaker Nancy Pelosi and Waxman, imply the fight will continue.