President Barack Obama appears set to let California and 13 other states set emissions and vehicle mileage standards that are more strict than current federal mandates, according to the New York Times.

The President will issue a memo to the Environmental Protection Agency to reconsider its earlier rejection of the state standards. in 2007, the EPA made a controversial decision not to give California a waiver for its standards even nearly all of the agency's lawyers and scientists said the exemption should have been granted. The memo isn't a direct reversal of the rules imposed during the Bush administration, but the EPA is expected to listen to the its new boss.

The decision will be hailed by environmentalists and energy efficiency experts who say that car makers haven't done enough to increase fuel efficiency. Car makers and heavy industry, however, will strongly oppose them. The new rules could force car makers to retool their product plans for the coming year.

One of the chief arguments that you'll hear in favor of the regulations – beyond the usual and strong arguments about saving fuel, national security, economic competitiveness and global warming – will be history. Back in the mid-1970s California imposed strict efficiency guidelines on appliances. Manufacturers fought aggressively against the measure and painted a picture of economic doom. The result? Refrigerators now use less than half the power, hold more food and cost about the same in real dollars. Ever wonder why the top of your dryer isn't as warm as the one you had as a kid – thank those regulations for forcing manufacturers to come up with new types of appliances.

Acid rain? Remember that? The economy didn't come to a screeching halt when scrubbers became mandatory. (U.S. manufacturing began to go overseas, but the main motivation has always been lower labor rates.). In other words, regulations do tend to work in this context.

Obama is also expected to issue orders to the Department of Transportation to finalize regulations for increasing fuel efficiency on a national level, the paper said. Bush outlined these regulations in 2007, but they got stranded.