A $15 billion settlement over Volkswagen's emissions cheating scandal cleared a key hurdle Tuesday, with a federal judge giving preliminary approval to a deal that includes an option for owners to have the carmaker buy back their vehicles.
Attorneys for Volkswagen owners sought approval from U.S. District Court Judge Charles Breyer, who is overseeing consumer lawsuits and government allegations that the company's diesel engines cheated on U.S. emissions tests.
The terms call for the German carmaker to spend up to $10 billion buying back or repairing about 475,000 Volkswagens and Audi vehicles with 2-liter diesel engines and paying their owners an additional $5,100 to $10,000 each. Details about the vehicle repairs have not been finalized.
The judge's decision allows attorneys to notify vehicle owners of the terms, including using a settlement website to determine how much compensation they would get. The owners could object and opt out, allowing them to pursue legal action against Volkswagen on their own.
Breyer, who is expected to make a final decision in October, has kept close tabs on the negotiations and praised the efforts of attorneys and a court-appointed settlement master who helped broker the deal.
"I don't know that I need to make any grand observations about the settlement," he said. "It appears in your presentation today as it appeared when you filed your documents that an enormous effort has been devoted to achieving a series of goals."
The settlement also includes $2.7 billion for unspecified environmental mitigation and an additional $2 billion to promote zero-emissions vehicles. It does not cover about 85,000 more powerful Volkswagens and Audis with 3-liter engines also caught up in the emissions scandal.
Volkswagen has acknowledged that the cars were programmed to turn on emissions controls during government lab tests and turn them off while on the road. Investigators found that the cars emitted more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems.
The company still faces billions more dollars in fines and penalties and possible criminal charges.