HELSINKI: Volkswagen AG (VW), a German automaker, has agreed on two settlements to buy back or fix some of its diesel vehicles sold on the U.S. market with “defeat devices” and to mitigate environmental harms caused by the polluting vehicles.
The settlements, filed by the U.S. Department of Justice (DOJ) on Tuesday, include up to 10.033 billion U.S. dollars for buybacks or fixes, 2.7 billion dollars over three years to fund projects aimed at reducing emissions of nitrogen oxide plus 2 billion dollars over 10 years to fund programs designed to promote electric vehicles or other zero-emission options. The deals were reached between WV and DOJ, the State of California and the U.S. Federal Trade Commission (FTC).
The buyback deal covers 475,000 Volkswagens with 2.0-liter, four-cylinder diesel engines, including Jetta, Beetle, Audi A3, Golf, and Passat, sold between 2009 and 2015. Owners can option to allow VW to buy back their vehicles at retail value as of September 2015, prior to the public disclosure of the emissions cheating scandal, or to get their vehicles repaired for free.
The vehicles were programmed to turn on emission controls during legally mandated tests and turn them off while on the road, emitting up to 40 times the legal limit of nitrogen oxide. Worldwide, about 11 million vehicles were installed with the device to fool tests. It is unclear why the number of vehicles covered in the deal is different from what was in a tentative agreement between VW and vehicle owners, which listed about 482,000 Volkswagens, announced two months ago by Judge Charles Breyer, of the U.S. District Court for the Northern District of California.
The provisions of the deal are contained in a proposed consent decree filed on Tuesday in the San Francisco-based court, as part of the ongoing multi-district litigation, and will be subject to public comment period of 30 days. Judge Breyer has set a hearing for preliminary approval on July 26 and final approval is expected in October.
“By duping regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment,” said Deputy U.S. Attorney General Sally Yates on Tuesday while announcing the settlements and declaring that it was the first step taken, adding that a criminal investigation is underway against multiple individuals related to the cheating scandal.
“While this announcement is an important step forward, let me be clear, it is by no means the last,” she said. “We will continue to follow the facts wherever they go.” The deal does not cover more than 80,000 Volkswagen, Audi and Porsche vehicles with 3-liter, six-cylinder diesel engines sold in the United States.
VW will begin buying back vehicles after Judge Breyer’s approval, and is expected to start proposing fixes and acquire approvals from the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board in November.
According to court documents filed on Tuesday, most vehicle owners will get 5,100 to 10,000 dollars in compensation, and VW must buy back or repair 85 percent of the 475,000 vehicles by June 30, 2019, or face penalties of 100 million dollars for every percentage point it falls below 85 percent. The fine will be put into an environmental trust fund.
Owners who have third party loans at initial buying of the vehicle will have the option of having VW pay off those loans, up to 130 percent of the amount a owner would be entitled to under the buyback. On VW’s part, the automaker announced on Tuesday a separate settlement with 44 U.S. states, the District of Columbia and Puerto Rico, which is likely to cost at least 600 million dollars.
