A day after reports surfaced that Volkswagen was in talks with federal regulators to reach a second $1 billion settlement stemming from its “dieselgate” scandal, the Environmental Protection Agency, along with the Department of Justice and state of California, announced a deal in which the carmaker will buy back or fix 83,000 3.0-liter VW, Audi, and Porsche vehicles equipped with so-called “defeat devices” that skirt federal emissions standards. 

The agencies announced a settlement on Tuesday — which largely mirrors the $15 billion agreement the parties reached related to 2.0-liter vehicles earlier this year — that will see the company paying an estimated $1 billion to buy back or fix 83,000 model year 2009 to 2016 3.0-liter vehicles that are alleged to be in violation of the Clean Air Act and California law.

Specifically, the company is required to offer to buy back the vehicles or terminate leases, and must offer emissions modification to reduce emissions if such a fix is created and approved by regulators.

Like VW’s other affected vehicles, details of how the company actually plans to fix the cars has not been agreed upon by the EPA and California Air Resources Board.

CARB previously rejected two proposed fixes from VW related to both 2.0-liter and 3.0-liter vehicles, saying the plans were “incomplete, substantially deficient, and fall far short of meeting the legal requirements to return these vehicles to the claimed certified configuration.”

Similar to VW’s previous settlement over 2.0-liter vehicles, owners will have two options depending on the vehicle they own.

Older affected vehicles — referred to as “generation 1” vehicles — include model year 2009 to 2012 Volkswagen Touareg and Audi Q7 diesel models.

Because VW cannot modify these vehicles to meet EPA-certified exhaust emissions, the company is required to offer owners the option to have the company buy back the car or to offer lessees a lease cancellation at no cost.

The affected newer vehicles — referred to as “generation 2” vehicles — include model year 2013 to 2016 Volkswagen Touareg diesels; 2013 to 2015 Audi Q7 diesels; 2013 to 2016 Porsche Cayenne diesels; and 2014 to 2016 Audi A6 quattro,; A7 quattro; A8; A8L; and Q5 diesel models.

Regulators believe that it is possible that these vehicles can be fixed to comply with emissions standards. If this is the case, the company will simply recall the vehicles to make the fix.

If, after testing, the solution does not perform as expected, the agreement requires the company to offer to buy back the vehicles.

As with the earlier settlement, VW must achieve an overall recall rate of at least 85% for each generation 1 and generation 2 vehicle affected by the deal.

The buyback and lease termination program for generation 1 vehicles will begin within 30 days following court approval of the settlement.

Any vehicle modifications will become available to eligible owners and lessees once the modifications are approved by regulators. The buy back and remedy program is expected to cost about $775 million.

In addition to buying back or fixing vehicles, VW is required to pay $225 million to fund projects across the country that will reduce emissions of nitrogen oxide where the 3.0-liter vehicles were located.

Of the $225 million payment, the state of California will receive $66 million.

“Volkswagen exploited Californians seeking environmentally friendly vehicles, harming consumers and our environment in pursuit of profit,” AG Harris said in a statement. “We will continue to pursue every possible avenue to hold Volkswagen accountable for violating our environmental protection laws, mitigate the damage that was done, and secure relief and compensation for consumers who were deceived.”

The emissions reduction program will help reduce NOx pollution that contributes to the formation of harmful smog and soot, exposure to which is linked to a number of respiratory- and cardiovascular-related health effects as well as premature death, the EPA says in a statement.

“This settlement highlights the fact that cheating to get a car certified has consequences for air quality and the public’s health — and that cheaters will be caught and held accountable, CARB Executive Officer Richard Corey said in a statement.

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