UPDATE 1-US appeals court orders new fuel economy standards

(Adds comments from Sierra Club, automakers, background)

LOS ANGELES, Nov 15 (Reuters) - A U.S. appeals court on Thursday ordered the government to formulate new fuel economy standards for upcoming models of light trucks to take into account the environmental impact of their emissions.

The 9th U.S. Circuit Court of Appeals also ordered the National Highway Traffic Safety Administration to close a loophole allowing SUVs and other light trucks to satisfy lower fuel efficiency standards than cars.

The opinion, which came in response to a lawsuit brought by 11 states, public interest groups and others, also requires the NHTSA to set fuel economy standards for large pickup trucks that so far have been exempt from current rules.

The court agreed with the plaintiffs that the agency had failed to assign adequate value to carbon dioxide emissions reduction, and said its environmental study of the new rule was inadequate.

The states and other entities sued to challenge what they described as "arbitrary and capricious" Corporate Average Fuel Economy, or CAFE, standards for light trucks, including sport utility vehicles, minivans and pickup trucks, for model years 2008 through 2010.

The lawsuit was filed in May 2006 in response to light truck fuel economy standards finalized by the Bush administration a month earlier.

Pat Gallagher, director of the Sierra Club's Environmental Law Program, described the decision as "a stinging rebuke to the Bush Administration, its continued insistence on ignoring the law, and its stubborn refusal to take meaningful steps to address global warming pollution from automobiles."

"It's currently under review and we're considering our options," Justice Department spokesman Charles Miller said of the ruling.

The Auto Alliance, which represents major automakers, said in a statement that standards for the 2008-2010 model year "represented the largest fuel economy increase in the history of the CAFE program."

Auto Alliance President and Chief Executive Dave McCurdy said automakers "support aggressive fuel economy increases" to raise CAFE standards for all vehicles to up to 35 miles per gallon by 2022.

The U.S. Senate in June passed a bill that would raise fuel economy standards by 40 percent to a combined average for cars and trucks of 35 miles per gallon by 2020. Debate on the bill has shifted to the House of Representatives.

U.S. carmakers have argued that the higher standards would be too expensive and could erode their competitive position at a time when they can least afford it.

Supporters of stricter standards and environmentalists agree that mandating greater fuel efficiency is the quickest and most effective way to lower energy consumption and reduce oil imports.

Light trucks represent over half of sales in the U.S market and have traditionally been the most profitable for automakers.

Under current rules, light trucks must achieve 24 miles per gallon by 2011. There are no changes planned for sedans, compacts and wagons which have had to achieve 27.5 miles per gallon for the past 17 years.

The plaintiffs in the suit included the states of California, Maine, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Minnesota, the District of Columbia, the city of New York, the Sierra Club and the National Resources Defense Council Inc. (Reporting by Gina Keating, editing by Gary Hill)