Volkswagen and attorneys for the U.S. Justice Department are nearing a settlement that is expected to cost the company $10.2 billion to settle U.S. claims resulting from its emissions scandal. Photo by Earl S. Cryer/UPI | License Photo

SAN FRANCISCO, June 24 (UPI) -- Volkswagen has agreed to a $10.2 billion settlement to resolve its emissions scandal, sources close to negotiations between the U.S. government and the company said.

The U.S. Justice Department sued Volkswagen AG in January, on behalf of the U.S. Environmental Protection Agency, after it was discovered that nearly 500,000 cars with two-liter, diesel engines had software installed to reduce their air pollution readings during government tests but allowed higher-than-advertised pollution ratings on the highway. The cheat devices, eventually found on 11 million diesel-powered Volkswagen, Audi and Porsche cars, allowed the cars to release over 40 times the legal limit of nitrogen oxide.


Volkswagen also faces potential litigation in the United States over emissions problems in cars with larger diesel motors, as well as claims by customers alleging lower resale value of their cars and litigation sponsored by other governments for the same emissions issue.

The broad U.S. litigation is consolidated in a federal case in San Francisco. U.S. Judge Charles Breyer gave both sides until June 28 to reach a settlement.

While details are still in negotiation, Volkswagen will offer to buy back those cars with the distorting software, and provide additional compensation to owners, between $1,000 and $7,000 each, depending on the car's age. It will also pay over $4 billion for environmental impact.

Volkswagen previously said it had reserved $18.4 billion for payments to resolve the scandal.