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A federal judge said on Thursday that Volkswagen AG (VOWG_p.DE) has reached an agreement in principle to provide “substantial compensation” to the owners of about 80,000 3.0-liter polluting diesel vehicles, a key hurdle to resolve the German automaker’s emissions scandal.

U.S. District Judge Charles Breyer did not disclose the amount of owner compensation, which is not included in a $1 billion settlement announced earlier this week between VW and U.S. regulators. Half of the compensation will be paid at the time Breyer gives final approval of the settlement. Some fixes for the 3.0 liters may not approved until 2018, Breyer said.

Earlier this week, Volkswagen reached the $1 billion settlement with U.S. regulators, offering to buy back about 20,000 of the vehicles, fix the remaining 60,000 and pay $225 million into an environmental trust fund to offset the vehicles’ excess emissions.

 

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