Paxton said the settlement stipulates that the German automakers pay a civil penalty of $85 million for their unlawful actions. Earlier this month, the Texas Supreme Court has ruled the state environmental lawsuit against Volkswagen and Audi could go forward. Volkswagen, which did not immediately comment Thursday, previously settled U.S. actions prompted by the emissions scandal for more than $20 billion, but that did not shield it from local and state government liability, courts ruled previously.

(Reporting by David Shepardson; editing by Diane Craft)