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1) This re-establishes the regime that was in place prior to Bush 43 (and that has always been provided for in the Clean Air Act). Was there chaos before? No.
2) States can't just enact their own emissions standards. What the statute says is that states can propose stricter/alternative emissions guidelines that the EPA can then approve at its discretion. So, under Bush 43, basically the EPA was gimped into disallowing all alternative plans, leaving everyone stuck with the national standard.
The result of this change? As others have stated: there will be the national standard and the California standard. Just like it's always been.