By Alexandria Sage and David Shepardson
SAN FRANCISCO/WASHINGTON (Reuters) - Volkswagen AG has made substantial progress toward reaching a final settlement by late June with car owners and the U.S. government over the German automaker's cheating on diesel emissions tests, a federal judge said on Tuesday.
U.S. District Judge Charles Breyer in San Francisco also reiterated that a settlement will include "substantial compensation" for owners of 482,000 polluting vehicles that emit up to 40 times legally allowable pollution.
Breyer said lawyers for owners suing Volkswagen and the U.S. Justice Department, Environmental Protection Agency, Federal Trade Commission and the company were on track to file the final proposed settlements by June 21.
The "parties ... have reported that in the month since we last met they have made substantial progress in intensive daily efforts to finalize the agreement, and most importantly are on track to meet the court's deadline," Breyer said.
Breyer said engineering studies and testing were continuing toward a resolution for the owners of 80,000 larger 3.0 liter vehicles but offered no timetable. The vehicles emit up to 9 times legally allowable pollution.
The so-called Dieselgate scandal, which has hurt VW's global business as well as its reputation, erupted last September after the world's No. 2 automaker admitted using sophisticated secret software in its cars to cheat exhaust emissions tests.
VW agreed on April 21 to a framework settlement with U.S. authorities to buy back or potentially fix about half a million cars fitted with illegal test-fixing software, and set up environmental and consumer compensation funds.
The next day, Volkswagen said it will set aside 16.2-billion euros ($18.2 billion) to cover the costs from the scandal and slash its dividend.
There is unrest among investors over the scandal. On Monday, three investor groups called for an independent inquiry, saying the investigations the company has launched may not be sufficiently far-reaching or transparent.
Reuters has reported that a Volkswagen official said an investigation by law firm Jones Day into who was responsible for rigging the emissions tests was dragging on.
Breyer has set a June 21 deadline for VW and U.S. parties to nail down final details before the agreement faces a public comment period. It will need final judicial approval.
The framework of a U.S. deal was hammered out with the Justice Department, the U.S. Environmental Protection Agency, the Federal Trade Commission, the state of California as well as lawyers for car owners who filed class action civil lawsuits.
Volkswagen shares rose 4 percent.
(Reporting by David Shepardson in Washington and Alexandria Sage in San Francisco; Editing by Jeffrey Benkoe)
