VW Gets Initial Approval for $14.7B U.S. Emissions Settlement

Volkswagen AG’s $14.7 billion settlement of its U.S. diesel emissions cheating scandal cleared another legal hurdle on Tuesday, as a federal judge gave the automaker preliminary approval to buy back up to 475,000 vehicles.

U.S. District Judge Charles Breyer in San Francisco set an Oct. 18 hearing for final approval. Preliminary approval means Volkswagen will soon enable owners of the 2.0 liter diesel-powered vehicles to access a website to learn how much they are eligible to receive.

The settlement, announced in June, centers around the largest-ever automotive buy-back offer in the United States. Coupled with possible vehicle repairs and payments to governmental agencies, that component of the settlement carries a $10 billion price tag.

Volkswagen said it continues to work with regulators to get fix approvals. VW told dealers last week that a planned fix could consist of software upgrades and some new catalytic converters.

Volkswagen also plans to offer a new proposal to fix 85,000 polluting 3.0 liter vehicles after regulators rejected an earlier plan, a Justice Department lawyer said on Tuesday. Earlier this month, the California Air Resources Board rejected as insufficient a plan to fix the vehicles, which include VW and Audi luxury cars from model years 2009-2016.

At the hearing, Justice Department lawyer Joshua Van Eaton said the German automaker had been meeting with regulators in recent weeks and planned to offer a new fix proposal in August.

Breyer said he wants another update on the 3.0 liter vehicle talks at an Aug. 25 hearing.

VW plans to hire between 250 to 300 people in Michigan to process settlement claims and will be overseen full-time by 40 VW Group of America employees. If needed VW could double the number of people it is hiring to process claims, said VW lawyer Sharon Nelles. VW is contracting for storage space to house vehicles it repurchases, she said.

VW admitted in September that it installed secret software that allowed U.S. vehicles to emit up to 40 times legally allowable pollution.

Under the Justice Department deal, VW will provide $2 billion over 10 years to fund programs to promote construction of electric vehicle charging infrastructure and development of zero-emission ride-sharing fleets and other efforts.

VW also agreed to put up $2.7 billion over three years to enable government and tribal agencies to replace old buses or to fund infrastructure to reduce diesel emissions.

Separately, VW reached a settlement with 44 U.S. states, the District of Columbia and Puerto Rico that will cost at least $600 million, bringing the total to as much as $15.3 billion.

Last week, three states filed new lawsuits, saying that VW violated state environmental laws and seeking hundreds of millions in additional penalties.

(Reporting by David Shepardson; editing by Dan Grebler and Tom Brown)