In San Francisco this morning, US District Judge Charles Breyer said Volkswagen Group would buy back nearly 500,000 2.0L diesel vehicles which were discovered in September to have software that illegally disabled the emissions control system during normal driving conditions.

VW Group is facing some 600 lawsuits that Judge Breyer is overseeing collectively, and the German automaker was compelled by court order to present a plan for fixing the faulty vehicles by today. Specifics of the plan will be hammered out in the coming months.

Volkswagen will also set up a fund for people who bought certain diesel Jettas, Golfs, Passats, Beetles, and Audi A3s after 2009. Breyer said this would offer customers "substantial compensation," on top of the car buyback.

Yesterday, rumors surfaced that VW Group would be repaying purchasers of faulty cars according to what their car was worth before news of the diesel emissions scandal broke in September. Rumors also suggested that customers will have about two years to claim their buyback and any compensation from the company’s compensation fund. According to USA Today, Breyer also issued a gag order on the parties involved, scolding them for leaking details of the plan yesterday.

At today's hearing, Breyer said VW Group would also be required to set up an environmental fund to invest in green technology. Again, financial details were not given.

It is not clear whether the cars VW Group buys back will be allowed to be resold in markets where emissions rules are more lax. This agreement also only applies to VW Group’s affected 2.0L diesels—a number of 3.0 diesel Audi and Porsche SUVs were also found to be running the illegal software, and remediation for that group of cars is still pending.

VW Group is also facing a lawsuit from the Federal Trade Commission (FTC) claiming that VW Group falsely advertised its cars with the tagline “clean diesel.” The company is claiming that its executives knew nothing about the illegal software, instead pinning the blame on a few “rogue engineers.” Still, the Justice Department is conducting a criminal investigation regarding the matter.

Judge Breyer has assigned former FBI Director Robert Mueller to oversee the long, drawn-out negotiations between the EPA and VW Group. Today's hearing was a short one, and details will be announced in the months ahead. According to Reuters, "the government and Volkswagen have until late June to complete a final 'consent decree' that will face public comment before taking effect."

If Volkswagen can come up with a way to fix the diesels to comply with EPA emissions standards in the near future, the automaker will be allowed to offer that fix as well. So far no details on any potential fix have been offered. In January, VW Group offered a potential fix for the faulty cars, but California’s Air Resources Board (CARB) rejected it, saying that the company's proposed plan did not address how the fix would impact the vehicle’s overall operation.

VW Group clearly still has details to iron out, but by presenting a fairly well-fleshed-out plan to compensate customers at today’s hearing, the company has lessened the risk of having to go to trial this summer, which Judge Breyer told VW Group would happen if it failed to meet his deadline for a plan.