Vermont is suing Volkswagen and its affiliates, saying VW's diesel emissions-rigging scheme violated the state's consumer and environmental laws.
VW agreed this summer to spend as much as $15 billion to settle lawsuits and complaints about the cheating.
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Attorney General William Sorrell said Thursday that Vermont has rejected the proposed settlement by Volkswagen that would have paid $1,000 per vehicle for violating consumer protection laws.
Sorrell says Volkswagen, Audi AG, Porsche AG and their American subsidiaries polluted Vermont's air, covered up their wrongdoing to mislead environmental regulators and sold the vehicles at a premium while deceptively advertising them as "clean," ''green" and "environmentally friendly."
He says on a per capita basis, Vermont bought more of these vehicles than any state other than Oregon.
Volkswagen didn't immediately respond to the complaint.