The 9th U.S. Circuit Court of Appeals said it will not revisit its June decision that would allow two counties to seek potentially billions in penalties from Volkswagen for violation of their laws prohibiting tampering with emission-control systems.
VW plans to appeal the ruling to the U.S. Supreme Court.
The three-judge panel unanimously denied Volkswagen's petition for a rehearing or rehearing "en banc," according to a court document filed Monday.
The action comes after the Alliance for Automotive Innovation filed an amicus brief this month in support of VW's petition to the court to reconsider the ruling that would allow state and local governments to regulate modifications to emission-control systems once a vehicle is sold.
In the filing, the alliance echoed the German automaker's position that permitting state and local governments "to apply their own prohibition on tampering to post-sale, model-wide changes" to vehicles would scrap regulatory certainty and create chaos.
The 3-0 ruling in June would allow Florida's Hillsborough and Utah's Salt Lake counties to seek additional penalties from VW over its diesel emissions scandal. The court ruled VW must face anti-tampering claims by the two counties over fixes made to its diesel vehicles after they were sold.
The ruling would allow all 50 states and thousands of local governments to regulate emissions software updates and other modifications after a vehicle is sold and could affect the EPA's ability to exclusively regulate automakers' emissions compliance.
"Volkswagen continues to believe that the counties' claims are preempted by federal law. The 9th Circuit's position conflicts with the rulings of multiple courts, and we intend to seek review by the Supreme Court," a spokesperson for Volkswagen Group of America said in a statement Tuesday on the decision.
"If not corrected, the 9th Circuit's ruling will severely compromise the EPA's ability to regulate vehicle emissions nationwide by granting thousands of state and local governments the same power," the spokesperson said. "This state and local regulation will adversely impact the auto industry's ability to make critical post-sale updates and result in the regulatory chaos Congress sought to avoid in enacting the Clean Air Act."
Volkswagen admitted in 2015 to cheating U.S. emissions tests on diesel engines by installing illegal software. The automaker settled U.S. criminal and civil actions for more than $20 billion, but it did not obtain liability protections from state and local governments, the court said.
