‘Read Econmic News Together’ Series

Volkswagen Faces Long Road Ahead, Even After a Civil Settlement

Evenas the warring parties in Volkswagen’s emissions cheating scandalprepare to offer a peace proposal this week, the German automaker’s travailsare far from over.

Taking shape after months of negotiations is abroad settlement agreement, expected to exceed $10 billion, involvingVolkswagen, the federal government and a half-million car owners. Theprovisions are expected to offer those owners some financial compensation inaddition to fixing or buying back their vehicles.

Thedeal, set to be announced on Tuesday in the case overseen by United StatesDistrict Judge Charles R. Breyer, is also expected to require Volkswagen to paypenalties. The fines would be for the environmental damage caused by thecompany’s diesel engines, which were designed to fool emissions tests and oftenexceeded allowable air pollution limits in on-the-road driving.

Alltold, the civil settlement is set to be the largest in automotive history,dwarfing the $1.4 billion that Toyota paid to settle a class-action lawsuitover flawed accelerators and the more than $2 billion General Motors has paidso far to settle claims from owners of cars with faulty ignition switches.Toyota, in addition, paid $1.2 billion to settle criminal charges, while G.M.paid $900 million.

Evenif Judge Breyer accepts the Volkswagen deal, the company will have manyunsettled issues, with unknown costs, in the United States and abroad.

“It’sclear Volkswagen desperately needed to put this horrible situation in therearview mirror; they’ve negotiated this settlement with breathtaking speed,”said David M. Uhlmann, a former chief of the Justice Department’s EnvironmentalCrimes Section who is now a law professor at the University of Michigan.

Still,Mr. Uhlmann said, “Volkswagen’s legal troubles won’t end on Tuesday.”The deal,moreover, would not end the Justice Department’s criminal investigation intothe company, which could lead to additional fines. Nor would it resolveinvestigations by attorneys general in more than 40 states and the District ofColumbia. And the settlement would still be subject to a period of publiccomment, during which terms could yet change.

BringingVolkswagen to this pass was its admission lastyear that it had installed illegal software in 11 million carsworldwide to make them capable of defeating pollution tests.

During emissionstesting, the cars’ pollution controls systems were turned on, curbing toxicemissions at the cost of engine performance. But on the road, those emissionscontrols were not fully engaged. That allowed more horsepower and better fuelmileage but also enabled Volkswagen’s cars to spew polluting nitrogen oxides atup to 40 times the levels allowed under the Clean Air Act, the Environmental ProtectionAgency has said.

The issues that Tuesday’s settlement proposalis not expected to cover include how Volkswagen will repair its cars — atechnical fix that is still being worked out. Nor will the deal address termsfor the owners of 85,000 Volkswagen and Porsche cars sold in the United Statesthat had a different type of diesel engine but also had emissions problems.

The variedattitudes of car owners, meanwhile, has also complicated negotiations. Ownersare likely to be given the option of having Volkswagen buy back their vehiclesor, if possible, fix them. Either way, they would also receive additionalcompensation of at least several thousand dollars.

Still,some car owners may choose not to participate in the group settlement beingbrokered in the United States District Court for the Northern District ofCalifornia, and instead pursue separate claims. Affected Volkswagen owners arenot bound by the settlement, and some of them may decide to press for evenbetter terms; those owners, however, also risk getting a lesser settlement ornone at all if their separate lawsuits are unsuccessful.

Marjorie HodgesShaw of Rochester, N.Y., is a plaintiff in the class-action suit. But she isnot sure the settlement will address her grievances. Ms. Shaw previously owneda 2012 Volkswagen JettaSportWagen TDI. She traded in her Jetta for a Subaru Forester —taking a loss, she says — soon after she found out that her Volkswagen had beena worse polluter than she had imagined. The automotive website Edmunds.comrecently showed that similar model-year Subaru Foresters were selling for about$4,000 less than Jetta SportWagens.

Ms. Shaw wants Volkswagen to fully own up toits fraud. And she wants to be fully compensated for her loss, including thetime and cost of finding a replacement vehicle.

“Ithought it was clean diesel,” said Ms. Shaw, who is an assistant professor inlaw and bioethics at the University of Rochester Medical Center School ofMedicine and Dentistry. But once she learned of Volkswagen’s deception, shesaid, “I couldn’t continue to drive the car and think of myself as anenvironmentalist.”

Twopeople involved in the class-action negotiations declined to discuss ahead ofTuesday’s court session whether Ms. Shaw would be compensated under thesettlement, because she no longer owned her Volkswagen, or how her compensationmight be calculated. They stressed, however, that the parties had discussed awide range of possibilities in painstaking detail.

Fornegotiators on both sides, the talks have been all-consuming in recent months.

“Allof you have devoted substantial efforts, weekends, nights and days, and perhapsat sacrifice to your family — right?” Judge Breyer said when the parties lastassembled before him in May, eliciting sardonic chuckles and exasperated sighs.Last week the judge extended his June 21 settlement deadline by a week to givethe negotiators time they said they needed to complete their work.

Thefinancial component of whatever deal is offered on Tuesday is expected to fallwithin the forecasts of Volkswagen, which has said it would set aside