Volkswagen, U.S. make substantial progress toward final deal: judge

Tue May 24, 2016 2:02pm EDT
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By Alexandria Sage and David Shepardson

SAN FRANCISCO/WASHINGTON (Reuters) - Volkswagen AG (VOWG_p.DE: Quote) has made substantial progress toward reaching a final settlement next month with car owners and the U.S. government over the German automaker's cheating on diesel emissions tests, a federal judge said on Tuesday.

But major issues remain, including how much the world's No. 2 automaker may have to pay in fines, which could run in the billions of dollars, to federal and state regulators for violating U.S. clean air rules, as well as an ongoing U.S. Justice Department criminal probe.

U.S. District Judge Charles Breyer in San Francisco reiterated that a settlement will include substantial monetary compensation for U.S. owners of 482,000 polluting vehicles that emit up to 40 times legally allowable pollution.

The so-called Dieselgate scandal has hurt VW's global business as well as its reputation and led to the departure of its chief executive officer and other executives. Dieselgate erupted last September after the company admitted using sophisticated secret software in its cars to cheat exhaust emissions tests. As many as 11 million vehicles worldwide have been affected.

At a brief court hearing, Breyer said lawyers for car owners suing Volkswagen and the U.S. Justice Department, Environmental Protection Agency (EPA), Federal Trade Commission, the state of California and the company were on track to file the final proposed settlements by June 21.

The "parties ... have reported that in the month since we last met they have made substantial progress in intensive daily efforts to finalize the agreement, and most importantly are on track to meet the court's deadline," Breyer said.

The U.S. settlement would also include an environmental remediation fund to address excess emissions and a fund to promote green automotive technology.

Elizabeth Cabraser, lead lawyer for the U.S. car owners, and a Volkswagen spokeswoman both said the parties were pleased with the continued progress and planned to finalize the agreements next month.   Continued...

A U.S. flag flutters in the wind above a Volkswagen dealership in Carlsbad, California, U.S. May 2, 2016.  REUTERS/Mike Blake