A dispute between the State of California and the US Environmental Protection Agency (EPA) moved to a new phase yesterday, as California moved to sue the federal body over its decision to block new state rules designed to improve fuel economy standards.

Under the US Clean Air Act California is permitted to set tougher emissions standards than other states in order to tackle its longstanding problems with smog, but must obtain a waiver from the EPA to do so. The EPA has granted permission on over 50 occasions, but after two years of delays the EPA last month denied the State the waiver required to impose its latest standards.

EPA administrator Stephen Johnson said that new US-wide fuel-economy standards included in the recently approved Energy Independence and Security Act of 2007 would prove more efficient in curbing pollution than individual state standards.

The EPA’s move proved controversial, prompting federal regulators to launch an investigation into Johnson’s ruling. In an open letter, California democrat Henry Waxman, chairman of the House of Representatives' Committee on Oversight and Government Reform, said the EPA decision did not appear to have been made on the merits of the situation.

In a statement yesterday confirming California’s lawsuit, state governor Arnold Schwarzenegger said that it was "unconscionable" that the federal government should block the state’s proposals, "ignoring the will of millions of people who want their government to take action in the fight against global warming".

The legal action is being backed by 15 other states that have pledged to adopt the California standards if passed, including New York, New Jersey, Connecticut and Pennsylvania, as well several environmental lobby groups.

California officials plan to challenge the EPA's ruling that the new federal standards would prove more effective than the state's proposals, citing new calculations indicating that in 2016 the Californian standard would cut carbon emissions by 17.2 million tonnes, more than double the 7.7 million tonnes expected to be eliminated by the federal fuel-economy standard.

The US Energy Independence and Security Act will require automakers to raise fuel economy to an average of 35 miles per gallon by 2020, while the California bill aims to increase fuel economy to 36.8 miles per gallon by the earlier date of 2016, beginning with the 2009 model year.

In a statement the EPA stuck to its guns arguing that the US now has "a more beneficial national approach to a national problem which establishes an aggressive standard for all 50 states, as opposed to a lower standard in California and a patchwork of other states".

However, Mary Nichols, chairwoman of the Californian Air Resources Board, dismissed the suggestion that state rules would create an unacceptable compliance burden for automotive manufacturers. Speaking on a teleconference with reporters, she insisted that the Clean Air Act did not permit a "patchwork " of individual state regulations, only allowing California to have independent rules on air pollutants and permitting other states to choose between the federal standards or the tighter rules set by California.

California has already defeated a lawsuit from the automotive industry challenging the legislation, after a federal judge last month ruled that the state had the legal jurisdiction to impose such rules.