WASHINGTON — Volkswagen will spend up to $15.3 billion to settle consumer lawsuits and government allegations that it cheated on emissions tests in what lawyers are calling the largest auto-related class-action settlement in U.S. history.
Up to $10 billion will go to 475,000 VW or Audi diesel owners, who thought they were buying high-performance, environmentally friendly cars but later learned the vehicles' emissions vastly exceeded U.S. pollution laws. VW agreed to either buy back or repair the vehicles, although it hasn't yet developed a fix for the problem. Owners will also receive payments of $5,100 to $10,000, depending on the age of their vehicles.
In Massachusetts, the settlement effects the owners of 12,500 registered vehicles.
The settlement also includes $2.7 billion for environmental mitigation and another $2 billion for research on zero-emissions vehicles. The German automaker also settled claims with 44 states, Washington, D.C., and Puerto Rico for about $603 million. It still faces billions more in fines and penalties as well as possible criminal charges.
Volkswagen has admitted that the cars, equipped with 2-liter diesel engines, were programmed to turn on emissions controls during government lab tests and turn them off while on the road. Investigators determined that the cars emitted more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems in humans. The company got away with the scheme for seven years until independent researchers discovered the scheme and reported VW to the Environmental Protection Agency.
"Using the power of the Clean Air Act, we're getting VW's polluting vehicles off the road and we're reducing harmful pollution in our air — pollution that never should have been emitted in the first place," said Gina McCarthy, administrator of EPA. "It should send a very clear message that when you break the laws designed to protect public health in this country, there are serious consequences."
Final approval needed
The settlement still must be approved by U.S. District Judge Charles Breyer, who has set a hearing for preliminary approval on July 26. Final approval is expected in October.
If the settlement is approved, owners who choose to have VW buy back their cars would get the National Automobile Dealers Association clean trade-in value from before the scandal became public on Sept. 18, 2015. That would be $12,500 to $44,000, depending on the model, age, mileage and options on their car, the Justice Department said in a statement.
Models covered by the settlement include the 2009-2015 Jetta and Audi A3, the 2010-2015 Golf, and the 2012-2015 Beetle and Passat, all with 2-liter diesel engines.
Owners can also have VW repair the cars for free — assuming it comes up with a fix. According to court documents filed Tuesday, there currently is no repair that can bring the cars into compliance with U.S. pollution regulations.