VW expected to pay diesel owners up to $7,000
Company is taking steps to settle claims from emissions scandal
DETROIT— Volkswagen has agreed to take a series of steps with a total cost of about $10.2 billion (U.S.) to settle claims from its unprecedented diesel emissions cheating scandal in the U.S., two people briefed on the matter said Thursday.
Most of the money would go to compensate 482,000 owners of cars with 2.0-litre diesel engines that were programmed to turn on emissions controls during lab tests and turn them off while on the road, said the people, who asked not to be identified because a judge has issued a gag order in the case.
VW will provide cash payments worth between $1,000 and $7,000, depending on the vehicle’s age and other factors, to compensate consumers, the people said.
One of the sources said the agreement was tentative and could change by the time the terms are officially announced by the judge on Tuesday.
The bulk of the cash would be used to fix the cars or buy them back and compensate owners. Some funds would go to government agencies as penalties and for a program to remediate the environmental damage caused by pollution, the source said.
Owners would have a choice between selling their vehicles back to VW at the value before the scandal broke on Sept.18, 2015, or keeping the cars and letting the company repair them.
The EPA has said the cars, which include many of VW’s most popular models, can give off more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems in humans. About 11 million cars worldwide also had the cheating software, but nitrogen-oxide emissions standards aren’t as stringent outside the U.S.
The Wolfsburg, Germany-based carmaker has admitted that since 2009 it rigged cars to pass U.S. Environmental Protection Agency and California Air Re- sources Board emission tests. VW, the EPA, CARB and the Justice Department, and attorneys representing affected consumers are scheduled to present a settlement agreement on Tuesday.
The parties reached a tentative agreement in April, although discussions on the details are still continuing and may change before being submitted, the sources said.
Jeannine Ginivan, a spokeswoman for Volkswagen, and Nick Conger, a spokesman for the EPA, declined to comment.
Car owners will be faced with complex calculations to figure out how much cash they might receive from Volkswagen, two of the sources said, which could upset them and harm the carmaker’s relationship with buyers even further.
Regulators are looking at a small-but-popular diesel-emissions cleanup program as a model for a VW remediation fund, according to the sources. The Diesel Emissions Reduction Act grant program is funded by the EPA but partially administered by states with severe diesel pollution.
The deal is expected to include penalties for breaking U.S. clean-air laws, money to buy back vehicles, to compensate consumers and to settle class-action claims
The so-called DERA program funded projects like retrofitting older diesel buses or scrapping and replacing fleets of diesel-powered drayage trucks at ports.
The new fund will have an administrator hired by the Justice Department, one person said. States will be allocated funds, but they’ll have to submit projects for approval based on criteria laid out in the court agreement. The fund administrator will audit projects. VW hasn’t had any input into details regarding the remediation plan, the source said.
The deal is expected to include penalties for breaking U.S. clean-air laws, money to buy back vehicles, to compensate consumers and to settle class-action claims. The company also faces a Federal Trade Commission action for false advertising.
It’s likely that VW won’t have a final sign-off on its plan to fix the 2.0-litre cars, the person said. That’s making the plan to compensate for environmental damage more important to regulators, since the diesel-powered cars remain on the road, exceeding pollution limits.