Volkswagen Reaches US Settlement in Emissions Debacle

Volkswagen has reached a settlement in principle with the U.S. Environmental Protection Agency, California regulators, California attorney general’s office and consumers over a plan to fix or buy back nearly half a million vehicles that violated emissions standards.

The deal includes “substantial compensation” for owners of cars powered by two-liter “clean diesel” engines that were fitted with software to cheat emissions tests, U.S. District Judge Charles Breyer said in a hearing from a courtroom in San Francisco.

The accord could finally bring about a solution to a crisis that has bedeviled Volkswagen engineers, who have been unable to deliver a fix that was acceptable to the EPA.

Former FBI director Robert Mueller, who was appointed to pursue a settlement, had reached an agreement with all the major parties on a fix for vehicles and a plan to pay vehicle owners.

Volkswagen will also be required to invest funds to “promote green automotive” initiatives, the judge said.

Justice Department attorney Joshua Van Eaton said the Federal Trade Commission is also expected to support the deal. The FTC recently sued Volkswagen over the German automaker’s “clean diesel” advertising, which the agency called deceptive.

The agreement helps Volkswagen avoid a trial over the emissions violations and economic losses to consumers, which Breyer had threatened to schedule if VW did not meet Thursday’s deadline to reach an agreement.

Attorneys for the U.S. government, state regulators and consumers worked 14 hours a day, seven days a week since a March 24 hearing to reach a deal, the judge said.

To be sure, the agreement is far from the end for Volkswagen’s emissions scandal. For starters, the Justice Department is conducting a criminal investigation into Volkswagen’s intentional evasion of emissions standards, which was first exposed by the EPA and California Air Resources Board in September.

The company is also facing several investigations in Germany, its headquarters, where it has much larger sales.