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VW, U.S. Justice Department reach diesel emissions deal

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(Reuters) — Volkswagen A.G. and the U.S. Justice Department have reached a deal in principle to address excess diesel emissions in nearly 600,000 polluting vehicles that will include buyback offers and a possible fix, a federal judge in San Francisco said on Thursday.

U.S. Judge Charles Breyer said the settlement is expected to include a buyback offer for 482,000 2.0-liter vehicles and a possible fix if regulators agree on it, or cancel an outstanding lease.

The settlement is a major step toward the German automaker’s efforts to move past the issue that first came to light in September when VW admitted to using secret software to allow 11 million vehicles worldwide to emit up to 40 times legally allowable pollution.

The settlement will include an environmental remediation fund to address excess emissions and additional “substantial compensation” to owners to sell back or have vehicles fixed, Judge Breyer said.

Two people briefed on the matter and several analysts say VW may have to spend more than $10 billion to comply with the U.S. agreement.

The government and Volkswagen have until June 21 to complete a final “consent decree” that will face public comment and need judicial approval before taking effect. VW will commit additional funds to “promote other green automotive technologies,” Judge Breyer said.

“Volkswagen is committed to winning back the trust of its customers, its dealers, its regulators and all of America,” said VW lawyer Robert Giuffra. The agreements are “an important step forward on the road to making things right,” Mr. Giuffra added.

The deal will offset all environmental harms and fully compensate owners, Mr. Giuffra said.

Judge Breyer said the agreement does not cover nearly 90,000 larger cars and SUVs with 3.0-liter engines that a separate excess emissions issue.

Judge Breyer said he expects that the issues of Justice Department fines and resolving the 3.0 liter engines will be addressed “expeditiously.”

Reuters first reported many of the details on Wednesday of the settlement including the buyback offer.

Judge Breyer said he was imposing a gag order on all the parties until a final agreement is reached.

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