U.S. approves first fix for 70,000 polluting VW diesel vehicles

WASHINGTON (Reuters) - The U.S. Environmental Protection Agency has approved a fix for about 70,000 polluting Volkswagen VOWG_p.DE diesel vehicles, involving an initial software change available now, it said on Friday.

A U.S. flag flutters in the wind above a Volkswagen dealership in Carlsbad, California, U.S. May 2, 2016. REUTERS/Mike Blake

A second phase of the fix will start about a year from now when VW will install more software updates and new hardware, including a diesel particulate filter, diesel oxidation catalyst and NOx catalyst.

The vehicles covered by the approved fix are the 2015 diesel Volkswagen Beetle, Golf, Golf SportWagen, Jetta, Passat and 2015 diesel Audi A3.

The German automaker agreed to buy back up to 475,000 polluting 2009-2015 vehicles in June at a cost of as much as $10.033 billion, or fix them if regulators approved.

In October, a federal judge approved VW’s settlement with regulators and U.S. owners of 475,000 polluting diesel vehicles with smaller 2.0-liter engines, including an offer to buy back or fix all of the cars.

VW is still waiting for approval for fixes for about 400,000 remaining 2.0 liter vehicles.

“With today’s approval, VW can offer vehicle owners the choice to keep and fix their car, or to have it bought back,” the EPA said in a statement, adding that test data demonstrated the fix would “not affect vehicle fuel economy, reliability, or durability.”

Volkswagen said Friday about 58,000 of those vehicles are in retail customers hands. The automaker has been eager to win approval so it can offer fixes and deter some owners who have been intentionally damaging vehicles before selling them back to the company.

VW will now be able to resell diesel vehicles that they repurchased once they are fixed.

VW spokeswoman Jeannine Ginivan said the approval was “an important step” and will notify owners so they can implement fixes as soon as possible.

Volkswagen has now agreed to spend as much as $17.5 billion in the United States to resolve claims from owners as well as federal and state regulators over polluting diesel vehicles.

Reuters reported Friday that Volkswagen is in talks and is close to an agreement with the Justice Department to pay more than $3 billion to resolve civil and criminal allegations stemming from its diesel cheating scandal.

Last month, VW also agreed to fix or buy back 80,000 polluting 3.0-liter diesel vehicles sold. The settlement deal covered luxury VW, Audi and Porsche vehicles with 3.0-liter engines and includes a buyback offer for 20,000.

Reporting by David Shepardson; Editing by Lisa Von Ahn, Bernard Orr