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Illinois, other states hit roadblocks pursuing environmental claims against VW

Nearly three years after Volkswagen was caught marketing “clean diesel” vehicles equipped with software to beat emissions testing, Illinois and other states are hitting legal obstacles in their attempts to get restitution from the German automaker for allegedly violating state environmental regulations.

Illinois’ effort suffered a setback earlier this month when a Cook County judge dismissed a lawsuit the state attorney general’s office filed against VW in November 2016. Seeking up to $1 billion in restitution, Attorney General Lisa Madigan’s office alleged the company violated Illinois law by tampering with emission control devices on nearly 19,000 clean diesel vehicles sold in the state.

Circuit Judge Kathleen Pantle dismissed the case June 5, saying the federal Clean Air Act pre-empts individual states’ environmental laws.

Pantle wrote in her ruling that although states have the power to set and enforce their own pollution standards, the regulation of automobile emissions falls under the federal government’s authority.

Madigan spokeswoman Eileen Boyce said the office is still reviewing the case.

Mark Gillies, senior manager of product and technology communication for Volkswagen of America, said in an emailed statement, “Volkswagen welcomes the court’s decision to dismiss all claims brought by Illinois and will continue to seek the dismissal of similar state and local environmental claims as preempted by federal law.”

Pantle’s ruling follows a similar federal court decision last year in California, where a judge tossed out a lawsuit the state of Wyoming brought against Volkswagen for the same reason. After that decision, VW said it would move to have the Illinois lawsuit dismissed, along with similar suits from Ohio and Minnesota.

In the Minnesota case, a judge partially dismissed the state’s claims against Volkswagen. The automaker appealed, seeking a full dismissal. Arguments in the Ohio case were heard in the state courts in mid-March, but a decision has not yet been made.

While Illinois and other states recently have struggled to get restitution under state environmental laws, Connecticut, Delaware, Maine, Massachusetts, New York, Oregon, Pennsylvania, Rhode Island, Vermont and Washington settled with Volkswagen in 2017 for $157 million.

Volkswagen sold approximately 590,000 diesel vehicles in the U.S. from model years 2009 to 2016 that were equipped with the software, deceiving both environmental regulators and car owners nationwide, according to the U.S. Environmental Protection Agency.

The U.S. Department of Justice filed a complaint on behalf of the EPA on Jan. 4, 2016, saying the vehicles violated federal law by emitting harmful pollutants at rates up to 40 times acceptable U.S. standards. In March 2017, the company pleaded guilty to conspiracy to commit wire fraud, customs violations and obstruction of justice.

The plea agreement requires Volkswagen to buy back affected models, invest $2 billion in electric and clean vehicle technology in the U.S. over a 10-year period, and pay individual states $2.7 billion based on the number of affected Volkswagen owners, to use as the states see fit.

Illinois is scheduled to receive $108 million from Volkswagen to spend on projects to mitigate environmental harm caused by Volkswagen’s diesel vehicles.

Gov. Bruce Rauner gave the Illinois Environmental Protection Agency authority to spend the funds, but lawmakers are considering a bill to set up a task force and allow for more public input.

Some proposals from the Illinois EPA include using the funds to replace diesel school buses with electric ones, as well as installing electric vehicle charging stations.

Madigan was among 43 state attorneys general that reached a separate $275 million settlement with Volkswagen on June 28, 2016, for violations of state consumer protection laws.

Despite the settlements with the Justice Department and EPA and with the state attorneys general, legal troubles haven’t ended for Volkswagen and its subsidiaries.

Rupert Stadler, CEO of Volkswagen's Audi division, was detained Monday by German authorities as part of a probe into the manipulation of emissions controls.

In the U.S., nine managers, including former CEO Martin Winterkorn, have been charged. Winterkorn and 48 others involved in the scandal are also under investigation in Germany.

The arrest comes just weeks after Volkswagen tapped a new CEO to move the company past its misconduct. Herbert Diess, who was given the top job in April, said that besides focusing on new technologies, like electric cars, he wanted to build a more open, values-based culture to avoid the cheating that led to the emissions scandal.

The Associated Press contributed.

    hmensik@chicagotribune.com

    Twitter @haileymensik1

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