Judge Rejects Wyoming's Environmental Lawsuit Against Volkswagen

By Sara Randazzo Features Dow Jones Newswires

Wyoming can't sue Volkswagen AG for environmental damage allegedly caused by the company's polluting diesel vehicles, a federal judge in San Francisco ruled Thursday, finding the penalties resulting from actions brought by consumers and federal authorities are enough.

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The decision, the latest in Volkswagen's long-running diesel-emissions crisis, could put to rest a sizable risk the German auto maker faced if states could separately pursue claims under the federal Clean Air Act and other environmental regulations.

It's been nearly two years since Volkswagen admitted to rigging approximately 600,000 diesel-engine vehicles in the U.S. with illegal software that allowed them to cheat on government emissions tests while polluting far beyond legal limits on the road.

In his ruling, U.S. District Judge Charles Breyer cited the $4.3 billion in civil and criminal penalties Volkswagen agreed to pay under a criminal plea agreement and U.S. Environmental Protection Agency consent decree, as well as separate agreements to invest $2 billion in electric vehicle technology, contribute $2.9 billion to an emissions mitigation trust, and recall or repair affected vehicles.

Wyoming is in line for around $8 million from the trust, according to the ruling.

Wyoming can't separately pursue Clean Air Act claims, Judge Breyer said, because conduct that takes place during vehicle manufacturing is intended to be regulated by the EPA, not the states. "If Wyoming (and other States) are allowed to hold Volkswagen responsible for the same conduct," he wrote, they will be effectively penalizing Volkswagen for producing engines that failed to comply with the federal standards and for concealing or misrepresenting those violations.

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Wyoming Attorney General Peter Michael didn't respond to a request for comment.

Nine other states are pursuing lawsuits against Volkswagen under state environmental laws. The penalties in each state could stack into the hundreds of millions of dollars under the statutes, which typically seek civil penalties for each day each vehicle is in the state in violation of regulations.

Volkswagen said it is pleased with the ruling and plans to use it to file motions to dismiss against the remaining states, starting with Illinois, Minnesota and Ohio.

A spokesman for Ohio's attorney general said they would respond in court. The offices of the Minnesota and Illinois attorneys general didn't respond to requests for comment.

The other states with active suits are Alabama, Missouri, Montana, New Hampshire, Tennessee and Texas. Those lawsuits are all filed in state courts and aren't in front of Judge Breyer.

Volkswagen has separately settled environmental claims with states including Maine, Massachusetts, New York and Pennsylvania, which, unlike Wyoming, have adopted more stringent emissions standards modeled after California.

Write to Sara Randazzo at sara.randazzo@wsj.com

(END) Dow Jones Newswires

August 31, 2017 15:36 ET (19:36 GMT)