After admitting last year to installing "defeat devices" in 475,000 of its diesel cars, Volkswagen has agreed to pay up to $15 billion to settle claims that it intentionally misled regulators and consumers, an attorney for the plaintiffs in the case announced this morning. Affected owners will have the choice of having Volkswagen repair or buy back the polluting vehicle and owners of the affected vehicles can expect to receive up to $10,000 in cash compensation.
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The fixes offered to Volkwagen owners are designed to lower emissions but are expected to compromise the performance of the car. The company could start buying back the vehicles as early as this fall. Consumers have until May 2018 to make the decision as to whether they will have Volkswagen buy back or fix their car, the Department of Justice announced today.
“By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our atmosphere,” Deputy Attorney General Sally Q. Yates said a joint press conference with the Department of Justice, the Environmental Protection Agency and the Federal Trade Commission.
"This partial settlement marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public’s trust. And while this announcement is an important step forward, let me be clear, it is by no means the last. We will continue to follow the facts wherever they go," Yates added.
According to Yates, this does not resolve the government's "active and ongoing" criminal investigation into Volkswagen's actions.
In a conference call with reporters today, Elizabeth Cabraser, the plaintiffs' lawyer, explained that this was exactly the settlement they were hoping for.
“There has never been a commitment of this level for these types of claims that we are aware of in U.S. history,” said Cabraser, a class-action veteran who previously had worked on the litigation involving the Exxon Valdez disaster.
“Compare it to something like the Exxon Valdez oil spill,” Cabraser continued. “That did not come close to the amount of money and effort and commitment that has been pledged in these [Volkswagen] settlements.”
“This settlement I hope will be a model for future resolutions in which private plaintiffs and government entities can collaborate and work together to forge resolutions that, like this one, are ... as a whole, greater than the sum of their parts,” she continued.
John Cruden, head of the DOJ’s Environment and National Resources Division, agreed that while the settlement is "historic in every way," it's just a first step.
"This is the largest automobile settlement in our history. It's the first buyback that we are aware of that has occurred," he said. "It's the largest mitigation fund for states. It's the first partnership of this kind, putting consumers and the environment together with FTC and with EPA and the California Air Resources Board."
Cabraser said the German automaker will put $2.7 billion into a trust to fund environmental remediation and commit another $2 billion to promote and educate people about "Zero Emissions Vehicle technology."
The scandal came to light last September when Volkswagen admitted that some of its diesel vehicles used illegal "defeat device" software. Regulators said Volkswagen's diesel cars emitted nitrogen oxides, or NOx, at 10 to 40 times the federal limit.
Volkswagen equipped certain 2.0 liter vehicles with software that detected when the car was being tested for EPA compliance, thus producing emissions that were different from actual on-the-road emissions.
The Justice Department also said Volkswagen violated EPA regulations by applying for certification with certain vehicle designs but then imported vehicles with different designs.
The affected vehicles are: 2009-14 Volkswagen Jetta SportWagen TDI, 2009-15 Volkswagen Jetta TDI, 2010-15 Audi A3 TDI, 2010-15 Volkswagen Golf TDI, 2012-15 Volkswagen Beetle TDI, 2012-15 Volkswagen Beetle Convertible TDI, 2012-15 Volkswagen Passat TDI and the 2015 Volkswagen Golf SportWagen TDI.
Owners of the affected vehicles can expect to receive $5,100 to $10,000 in compensation. The DOJ explains, however, that the buyback payment will be adjusted if the car has higher or lower than standard mileage when the owner brings it into a dealership to participate in the settlement program, and the minimum amount owners will receive will not be less than $5,100.
ABC News' Becky Perlow contributed to this report.