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UPDATE 2-US Court upholds tough Vermont auto emissions law

(Recasts lead, adds quotes)

BOSTON, Sept 12 (Reuters) - In a blow to the U.S. auto industry, a federal court in Vermont upheld on Wednesday a state law that calls for a 30 percent cut in planet-warming carbon dioxide emissions from cars and certain light trucks.

The decision by U.S. District Court Judge William Sessions in the widely watched case -- the first of its kind in the nation -- could influence lawsuits by the auto industry challenging similar laws in other states.

Vermont is one of about a dozen states that followed California’s lead in adopting the strict standard, which is tougher than federal rules and intended to reduce the rise in global temperatures and changing weather patterns associated with emissions of heat-trapping greenhouse gases.

Automakers General Motors Corp GM.N and DaimlerChrysler AG DAIGn.DE -- which has since sold its Chrysler unit -- sued in 2005 to block the standard, arguing that states do not have the authority to regulate the amount of carbon dioxide released by cars, which is closely related to fuel economy.

Sessions found the Vermont law which regulates greenhouse gas emissions did not conflict with federal regulations.

“The plaintiffs failed to prove the regulations were pre-empted,” Sessions wrote in his 244-page decision.

A Chrysler spokesman said the company was still reviewing the decision. Vermont officials praised the verdict.

“This is a great day for those concerned about global warming and the role that auto emissions play in that,” said Vermont Attorney General William Sorrell.

FIRST TO TRIAL

Sorrell said he hoped the judge’s decision would influence auto industry challenges of stricter emission standards in California and Rhode Island. Automakers also sued those states, though the Vermont case went to trial first.

The Alliance of Automobile Manufacturers, which represents nine major auto manufacturers, including GM, Toyota Motor Co 7203.T, Ford Motor Co F.N and Chrysler, may appeal, said Alliance president and chief executive Dave McCurdy.

The automakers have until Nov. 13 to appeal.

The governors of 13 U.S. states, including California and Rhode Island, called on the industry to drop its appeal.

“We do not believe it is productive for your industry to continue to fight state implementation of clean tailpipe standards,” the governors said in a statement issued after the Vermont decision. Industry executives had argued they could not meet the new standards, saying they would have to pull out of Vermont.

“The Court remains unconvinced automakers cannot meet the challenges of Vermont and California’s (greenhouse gas) regulations,” Sessions wrote. “History suggests that the ingenuity of the industry, once put in gear, responds admirably to most technological challenges.”

California, which is allowed under federal clean air laws to adopt its own standards on auto emissions, developed the new rule calling for a 30 percent reduction in CO2 emissions by cars and light trucks, starting with 2009 models.

Connecticut, Maine, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Washington also have adopted the rule. Arizona, Maryland and New Mexico are considering it.

The rules are still subject to approval by the U.S. Environmental Protection Agency.

“Unless the EPA approves California’s standards ... nothing’s going to happen,” said Patrick Parenteau, senior counsel to the Environmental and Natural Resources Law Clinic at Vermont Law School, in South Royalton, Vermont.

((Editing by Jason Szep and Vicki Allen; Telephone: +1 617-367-4106)) Keywords: CLIMATE AUTOS/VERMONT

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