Volkswagen AG, trying to put a massive emissions-cheating scandal behind it, has asked a U.S. judge to reject a lawsuit by Wyoming potentially seeking more than $1 billion in additional penalties for environment damages.
The ruling could help decide whether other environmental claims against VW brought by about 15 states and some counties in Texas will go forward. In total, VW could face billions of dollars in additional costs.
VW already has agreed to spend up to $25 billion to address claims from U.S. owners, environmental regulators, states and dealers, and offered to buy back about 500,000 polluting U.S. vehicles. The company pleaded guilty in March to intentionally cheating on emissions tests.
The current issue is whether federal law preempts most states from filing environmental enforcement suits against automakers.
VW lawyer Robert Giuffra told U.S. District Judge Charles Breyer in a court hearing in San Francisco on Monday "you run the math on the Wyoming penalties. It would be higher than the (U.S. Environmental Protection Agency) penalty Volkswagen paid, which was $1.45 billion," according to a transcript of the hearing released on Tuesday.
Volkswagen has settled with Wyoming and most other states over consumer claims for more than $600 million but not over environmental matters.
Federal law allows California and states that adopt its emissions rules to enforce vehicle rules. VW has settled environmental claims with most of those states.
Giuffra said that allowing Wyoming to bring its own lawsuit would be "unprecedented" and if the state won "it would make it impossible in the future for auto manufacturers to actually enter into the kinds of global settlements that Volkswagen did."
Elizabeth Morrisseau, Wyoming senior assistant attorney general, urged Breyer to reject Volkswagen's argument. "This case really comes down to ... a struggle between Congress telling the states, You don't get to design cars, but you do get to control how they work on your roads," she said.
Breyer expressed skepticism over Wyoming's arguments. The fact that no similar case had been brought is "a yellow flag, not a red flag," he said.
Last week, U.S. regulators approved a fix for 326,000 older 2.0-liter Volkswagen diesel cars. The fix includes hardware and software upgrades, including replacing an emissions catalyst.