"The plaintiffs failed to prove the regulations were preempted," Sessions wrote in his decision.

Automakers General Motors Corp and DaimlerChrysler AG -- which has since sold its Chrysler unit -- sued in 2005 to block the law, arguing that states do not have the authority to regulate the amount of CO2 released by cars, which is closely related to fuel economy.

"It makes sense that only the federal government can regulate fuel economy," said Dave McCurdy, president and chief executive of the Alliance of Automobile Manufacturers, in a statement. "The Alliance will continue studying the decision and considering the options, including an appeal."

The Alliance represents nine major auto manufacturers, including the largest players in the US market --- GM, Toyota Motor Co , Ford Motor Co and Chrysler.

Vermont officials were not immediately available for comment.

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

The automakers argued that they could not meet the new standards, and in court testimony said they would have to pull out of the state as a result.

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

Connecticut, Maine, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Washington have also adopted the rule.