Volkswagen Will Pay U.S. Diesel Car Owners Up To $10 Billion

Volkswagen has agreed to pay up to $10 billion to buy back cars and compensate U.S. vehicle owners in the largest civil settlement in automobile history.

The carmaker will also pay nearly $5 billion in environmental reparations.

The proposed class-action settlement terms were released on Tuesday, a court-imposed deadline to reach a deal in the case of VW's emissions scandal. The details roughly correspond to what has been reported in recent weeks.

The settlement terms still need to be approved by a judge, and NPR's Sonari Glinton reports that customers likely won't see money or repairs for at least several months.

The settlement would resolve lawsuits brought by Volkswagen customers who bought what were touted as "clean" and efficient diesel cars, only to learn that their vehicles were putting out pollution at many times the levels allowed under U.S. regulations.

Around half a million diesel vehicles are covered by the deal. Consumers will be able to choose between selling their car to Volkswagen (for its resale value before the news of the scandal broke) or having their car repaired by the automaker to reduce its emissions in compliance with U.S. law.

Either way, car owners will also receive a "restitution payment" of between $5,100 and $10,000 as compensation for Volkswagen's misconduct. More details on the consumer program are available at VWCourtSettlement.com.

The total amount paid out will depend on how many customers choose the buyback option. If all eligible customers participate and 100 percent choose to sell their cars back to Volkswagen, it will cost the company $10.033 billion.

In addition to settling with consumers, the automaker has reached a partial settlement with the U.S. government. A U.S. civil complaint was filed in federal court in January, when the Department of Justice acted on behalf of the Environmental Protection Agency.

In its agreement with the Department of Justice, Volkswagen will pay $4.7 billion in environmental reparations, to be administered by the EPA.

Those funds will support remediation efforts to mitigate ecological damage, as well as investments in developing new technology for zero-emissions vehicles.

The settlement promises to help close a tumultuous chapter for Volkswagen that was opened last September, when the EPA went public with accusations that the giant carmaker used defeat devices to trick U.S. tests by turning off its diesel cars' full emissions controls unless an examination was underway.

The problem is known to affect some Volkswagen, Audi and Porsche vehicles, in both 2.0- and 3.0-liter diesel engine sizes, that were released from 2009 to 2016. (See the EPA's guide.) Tuesday's settlement covers only 2.0-liter engines in VW and Audi cars.

To help it navigate the payouts, Volkswagen has hired Kenneth Feinberg, a veteran of large and complex compensation cases who oversaw both the September 11th Victim Compensation Fund and administered BP's settlement of claims over its oil spill in the Gulf of Mexico.

Lawyers' fees are being paid by VW on top of the nearly $15 billion in car buybacks, repairs, restitution and remediation.

In a third settlement, VW also said in a statement that it has reached a $603 million deal with more than 40 attorneys general of U.S. states, D.C. and Puerto Rico to resolve state-level consumer protection claims related to the emissions issue.

The settlement with the EPA is the largest Clean Air Act settlement in the agency's history, EPA administrator Gina McCarthy says. The total settlement deal is by far the largest in U.S. auto history, too.

That's not enough for all VW's critics, as NPR's Sonari Glinton noted on Morning Edition.

"Safety advocates say that they want VW executives to go to jail," he said. "But $15 billion — which is 20 percent of VW's worth — you can call it what you want but you can't call it a slap on the wrist."

The settlements, while historic in size, aren't the end of the saga for Volkswagen. Deputy Attorney General Sally Q. Yates said at a news conference Tuesday that there are still outstanding civil complaints against VW, and that the government has not ruled out the possibility of criminal charges.

The carmaker is also facing investigation in other countries.