VW reaches agreement on fixes, buybacks for 80,000 polluting U.S. diesels

By David Shepardson

WASHINGTON (Reuters) - Volkswagen AG has reached an agreement with U.S. regulators for a mix of buybacks and fixes for 80,000 polluting Audi, Porsche and VW 3.0-liter vehicles, two sources briefed on the matter said Tuesday.

The agreement includes a buyback offer for about 20,000 older Audi and VW SUVs and a software fix for 60,000 newer Porsche, Audi and VW cars and SUVs, the sources said. A separate, more complex fix is expected to be offered for the older vehicles. Talks are ongoing between lawyers for the owners and Volkswagen over compensation for the owners ahead of a Nov. 30 court hearing.

The agreement is a major step toward Volkswagen resolving its outstanding diesel emission issues in the United States - after it reached a separate $10.03-billion buyback offer for 475,000 2.0-liter vehicles in June.

Volkswagen has already agreed to spend up to $16.5 billion to resolve U.S. diesel emissions cheating allegations, including the 2.0-liter buyback offer.

Audi said it is still working closely with regulators "to reach an agreement on an approved resolution" ahead of a Nov. 30 court hearing, but declined to comment on confidential talks.

Elizabeth Cabraser, the lead attorney for the owners, said in a statement that any agreement between owners and the company should offer all 3.0-liter owners a choice between a buyback or a fix if approved by regulators.

The U.S. Environmental Protection Agency declined to comment Wednesday.

"While an agreement between the EPA and Volkswagen may address some of the environmental damage, it does not hold the company accountable for the harm caused to consumers. We will continue to pursue a fair resolution on their behalf," she said.

Details of a final settlement are still being worked out but Volkswagen is expected to save potentially billions by avoiding a buyback of all 3.0-liter vehicles.

Volkswagen is also expected to face billions in fines as part of a separate potential settlement with the Justice Department to resolve an ongoing criminal investigation and a civil suit alleging civil violations of the Clean Air Act. Volkswagen also faces legal action by at least 19 U.S. states.

The 475,000 2.0-liter diesel vehicles have software that allowed them to evade emissions rules in testing and emit up to 40 times legally allowable emissions in onroad driving. The 3.0 liter vehicles have an undeclared auxiliary emissions system that allowed the vehicles to emit up to nine times allowable limits.

Court documents show that at least 60 percent of those owners have already signaled they plan to sell the vehicles back.

The 2.0 liter buyback offer includes compensation of $5,100 to $10,000 per vehicle beyond the vehicle's value. Volkswagen wants to offer significantly less compensation to 3.0-liter owners, the sources said.

Audi has also come under scrutiny over whether some gasoline vehicles have separate software that lowered carbon dioxide emissions by detecting whether a car's steering wheel was turned as it would be when driving on a road.

VW has been barred from selling diesel vehicles in the United States since 2015 and has said it has not decided whether it will resume U.S. diesel sales.

(Reporting by David Shepardson; Editing by Chizu Nomiyama and Nick Zieminski)

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