Volkswagen agrees to pay billions to drivers over emissions scandal

Volkswagen has agreed to pay $10.2 billion to settle its US emissions scandal case, according to the Associated Press, citing two anonymous people briefed on the matter, in what would be one of the largest payouts by an automaker in history.

The case stems from the carmaker's 2015 admission that 11 million vehicles worldwide had cheating software designed to get around emissions tests. The settlement will compensate owners of 482,000 vehicles with two-liter diesel engines that were programmed to turn off emissions measurement data outside of laboratory settings.

The German automaker will pay owners between $1,000 and $7,000 per vehicle in compensation and promised to fix the cars free of charge to keep them from spewing 40 times the legal limit of harmful nitrogen oxides, according to the AP. Of the $10.2 billion, about three-fourths would go to car owners, with the rest paying off government fines.

U.S. District Judge Charles Breyer has imposed a gag order on settlement discussions. Official announcements of the settlement are set for Tuesday.

Spokesmen for Volkswagen, the Environmental Protection Agency and the U.S. Department of Justice declined to comment.

"This should be a wake up call that cops need to be on the beat and the government needs the resources to stay on top of these issues," said John DeCicco, a research professor at the University of Michigan Energy Institute. "What came out in the course of the current diesel scandal is a history of scofflaw attitudes on the part of Volkswagen in regards to emissions that dates back to the 1970s."

The $10.2 billion settlement, if approved by the court, far exceeds other payouts by carmakers and nears some of the largest settlements reached with the government of all time.

BP in 2015 reached a $20.8 billion settlement over the 2010 Deepwater Horizon oil ring explosion, funds that were paid out to businesses, victims, local governments, clean-up efforts, and other entities. It separately agreed to pay another $4 billion in a criminal case.

Toyota paid $1.1 billion after in 2012 after its gas-pedal recall.

General Motors in 2015 agreed to pay $900 million after an ignition-switch defect.

Because prosecutors found Volkswagen's violations worse, any settlement would dwarf previous penalties, said Carl W. Tobias, a professor of law at the University of Richmond.

"The regulators and the courts must hold Volkswagen fully accountable for its polluting practices. If accurate, these early reports suggests the settlement is getting closer to holding Volkswagen accountable, but not close enough," Sierra Club California Director Kathryn Phillips said in a statement.

"Volkswagen's deceit is as dangerous as the smog left behind by its vehicles' tailpipes - some of which may still be left on the road. If that's true, it's doubly important that penalties in the settlement are high enough to make a difference. The money needs to be spent in a way that communities hit hardest by Volkswagen's pollution - those located along highways and other busy traffic corridors - feel the benefit."

Volkswagen said last week it plans to add 30 electric models to its lineup by 2025 and sell 2 million to 3 million of them each year, in an attempt to rebound from the emissions scandal, which led to the resignation in 2015 of chief executive Martin Winterkorn.

But industry observers remain skeptical of the company's commitment to cleaner cars.

"Part of this is the public-relations piece," Tobias said. "If people lose confidence in the company, they're not going to buy the vehicles. Remember we're just talking about the U.S. We're not talking Germany or anywhere else overseas where they've sold the diesels."

"Volkswagen has been a repeat violator on this issue, so sure they're going to try to buff their image," DeCicco said. "They have a deservedly poor image on environmental integrity and unfortunately they've earned it."