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Who gets the VW settlement money?

That’s the fifty million dollar question.

Volkswagen faces billions of dollars in fines in Texas for its admitted cheating on emissions tests, but the potential payday is being held up as the state Attorney General and county officials fight in court over which government agencies will get to claim a share of the proceeds from the German auto giant.

Under Texas law, county governments are entitled to half the award that any legal action against Volkswagen brings – with the remainder going to state coffers. But with more than 20 counties suing Volkswagen in the aftermath of the emissions scandal, Attorney General Ken Paxton is attempting to toss out all but two of the counties from the case, leaving the state in charge and the counties with no chance to claim any of the penalties.

The stakes are high for both the state and counties. A single county could reap tens of millions of dollars in penalties, at a time when low oil and gas prices are straining budgets across Texas and leading to cuts in public services.

“It’s extremely important for the counties. We’re all strapped,” said Anthony Constant, a Corpus Christi attorney representing Dallas and other counties in the suit. “I have no idea what (the AG’s office) is doing or why they’re doing it, but it appears to me they have some concern it would somehow be bad for them if the counties were allowed (to) proceed.”

The Attorney General’s Office declined to comment. But in a filing earlier this year, Paxton argued that it was their office’s right to uphold Texas’ environmental laws and allowing the county lawsuits to proceed would lead to “the unconstitutional result” of Volkswagen being tried and fined multiple times for the same violation.

[…]

In Texas, the company settled violations of the state’s anti-fraud laws for $50 million in November. But Volkswagen still faces far more costly violations of the state’s air pollution laws, which could potentially mean fines of between $50 and $5,000 per day for all 32,000 of its clean diesel vehicles registered in Texas. Some, which were sold under both the Volkswagen and Audi brands, have been on the road close to a decade.

But the process of determining the extent of those penalties is being held up by the infighting between the state and counties over who gets to sue Volkswagen.

After the trial court in Austin ruled the counties could remain in the case, the attorney general’s office filed an appeal in October with the Texas Third Court of Appeals. Sensing an opening, Volkswagen’s attorneys filed a motion to delay the entire trial until the question of the county lawsuits was resolved.

With the matter of the county lawsuits potentially headed to the Supreme Court – a process that can take years – the state and counties’ attorneys both argued against delaying the trial. But in January the appellate court sided with Volkswagen.

See here, here, and here for the background. This settlement is from state-level litigation; there was a separate federal lawsuit settlement that netted money for the state, as only the state was involved. As the story notes, Harris and Fort Bend Counties filed their lawsuits first, then the state got involved, and subsequently tried to boot all the counties out as plaintiffs. I personally see no reason for that, but this is what the judge will have to decide.

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4 Comments

  1. Jason Hochman says:

    I had asked my state representative to do away with vehicle emissions testing, but she was too busy with the Man’s Right to Know, HB4260. It’s just a way for the governments to take more money from people and then waste it on bathroom bills.

  2. Bill Daniels says:

    Assessing how much each county should get is painfully simple. Say there were 100 cars in Texas, Harris had 10 of those. Harris gets 10% Brazoria had 6 cars….they get 6%. All counties that had cars should get their share of the money, whether or not they filed a lawsuit.

  3. Jason Hochman says:

    Bill, that sounds great, but really it’s not that simple because, for example, many people might have their car registered in one county but do most of their driving in another county. I might be getting emissions tests on my car because I live in Harris County, but I don’t drive to work, and don’t drive much at all, but do more driving on road trips out of county–where there are no emissions tests. On the other hand, people driving in to Houston for work from Brazos County don’t get the tests. The best use of the money would be to give it to the consumers who were deceived, or to the “Drive a Clean Machine Program,”which helps the real victims of emissions tests: the people who work inside the loop and live outside the loop, with no access to public transportation, who are forced to drive their 1995 Toyota Echo to work, and it needs $3,000 in repairs to pass the emissions test. If they are dirt poor, with a ton of dependents, they can qualify for a maximum of $600 in assistance. This paltry amount is not much help, and they people who qualify probably can’t afford a working car in the first place, or know about the program.

  4. Bill Daniels says:

    Jason:

    I agree there’s the issue of affected cars driving in other, probably adjoining counties, but as a practical matter, it would be difficult to quantify any of that, short of asking diesel VW owners to fill out surveys listing the counties and percentages they drive in. There’s no incentive for them to do that, so I’d expect the response rate to be pretty low. As to how the counties spend their loot, of course I’d prefer to see the money sent to the general fund. If we use the money to fund “Drive a clean machine,” what about the counties that don’t test emissions?