By Rory Carroll and David Shepardson

SAN FRANCISCO/WASHINGTON, Oct 7 (Reuters) - A settlement with U.S. regulators gives Volkswagen AG too much authority over how to spend $2 billion on electric vehicle technology, a U.S. congresswoman from California said this week in a letter, echoing concerns from states and others who fear the German automaker gains undue influence in the deal.

Volkswagen agreed to spend $1.2 billion nationally and $800 million more in California on electric vehicle technology as penalties for equipping hundreds of thousands of diesel vehicles sold in the United States with software designed to cheat tailpipe emissions tests.

The letter from Representative Anne Eshoo comes ahead of an Oct. 18 hearing at which a federal judge will consider whether to give final approval to $15.3 billion in settlements for owners, state and federal regulators or require changes and renegotiation.

A provision "of particular concern" allows VW to make "possible investments in its own proprietary technology and subsidiaries," Eshoo, a Democrat, said in the Oct. 4 letter to Environmental Protection Agency (EPA) Administrator Lisa McCarthy.

The EPA declined to comment. VW was not immediately available for comment. It has urged the court approve the deal.

Eshoo's fears mirror those raised by electric car-charging station companies in August.

Four members of the California state legislature, in comments to the U.S. Department of Justice, also urged independent oversight and administration of the VW funds "to ensure that multiple vendors with cutting-edge technology are able to enter the market."

The Justice Department said last month it received 1,195 comments period from private citizens, state and local government offices and agencies, businesses, and institutions and associations. The DOJ urged the agreements be approved with only minor changes.

Objectors face an uphill battle since U.S. courts generally give the government significant latitude to negotiate settlements.

The Justice Department said nearly half of the comments were submitted on behalf of a company that provides truck-stop electrification services to long-haul truck drivers, IdleAir, urging that the VW program be allowed to fund such projects.

(Editing by Peter Henderson and Leslie Adler)