SF judge floats penalty for VW diesel cheating

A federal judge in San Francisco Thursday announced a proposed settlement “in principle” in which Volkswagen would repair or buy back 480,000 vehicles sold in the U.S. with emissions cheating software.

U.S. District Judge Charles Breyer, who is presiding over more than 600 lawsuits against the German car maker, ordered details of the settlement to be kept confidential until filed in court.

He set a June 21 deadline for filing the settlement plan and scheduled a hearing for July 26 on preliminary approval of the settlement.

Breyer had previously said he would schedule a trial on the lawsuits this summer if a settlement was not reached by Thursday.

The plan will apply to 480,000 two-liter diesel cars sold in or imported to the United States between 2009 and 2015. An agreement has not yet been worked out for another 80,000 three-liter diesel vehicles. The liter numbers refer to cylinder space in a vehicle.

The so-called “defeat devices” installed in the vehicles circumvented testing for emissions of harmful pollution.

The device could detect when a car was being tested for emissions and would then turn on full controls, but reduced controls and allowed the release of more pollution when a car was being driven normally.

Emissions of nitrogen oxides from two-liter vehicles equipped with the devices are 10 to 40 times greater than the regulatory standards set by the U.S. Environmental Protection Agency, according to the EPA.

Volkswagen said in a statement:

“Volkswagen is committed to earning back the trust of its customers, dealers, regulators and the American public. These agreements in principle are an important step on the road to making things right. … As noted today in court, customers in the United States do not need to take any action at this time.”

Elizabeth Cabraser, appointed by Breyer as the lead counsel in the lawsuits filed by car owners, said:

“On behalf of the consumer class of diesel owners and lessees, I am very pleased with our progress with VW and with the federal and California authorities toward a fair, effective, and integrated solution for consumers and for the environment. … We look forward to working through remaining issues and details, and presenting agreement documentation to the court, class, and public on June 21, 2016.”

Sierra Club California Chapter Director Kathryn Phillips said in a statement:

“Volkswagen’s deceit is as dangerous as the smog left behind by its vehicles’ tailpipes, so the final settlement needs to fix or remove all of the polluting cars still on the road, make whole the consumers who trusted the vehicles were lower polluting, and compensate for the pollution the faulty cars created.”

Kelley Blue Book, an automotive research company, estimated that the cost of buying back the vehicles would be $7.3 billion.

Kelley senior analyst Karl Brauer said:

“This is VW’s first major step toward resolving its diesel issue, though it still needs to be approved and may fall short of regulatory requirements. It’s also a very costly solution, particularly given how much the company has already lost in terms of market value and sales.”