Volkswagen gets brief legal reprieve, but deadlines loom

On Thursday, a US District Court judge gave Volkswagen an extra month to work with regulators to find an appropriate solution to the hundreds of thousands of American cars implicated in a scandal over falsified diesel emissions tests. The German carmaker now has until April 21 to find a solution that the federal government finds satisfactory or face trial.

At a hearing in San Francisco, Judge Charles Beyer, representatives from Volkswagen, and US regulators agreed that progress has been made in negotiations, but that more time will be required to reach an agreement.

"We're working around the clock" Volkswagen attorney Elizabeth Cabraser told Reuters as she left the briefing. "I'll sleep when they're fixed."

In September 2015, Volkswagen executives admitted to installing “defeat devices” in diesel Volkswagen and Audi car models manufactured as far back as 2009. The devices detect when the car is undergoing emissions testing and temporarily activate strict emissions controls. The device then turns the emission controls off during normal driving, effectively deceiving regulators and emitting far more pollution into the atmosphere than reported.

The company now faces a range of civil lawsuits as well as a colossal $46 billion Justice Department suit. Nearly 600,000 cars in America are estimated to have the defeat devices installed. Volkswagen originally was tasked with providing a fix for the cars by March 24.

Judge Breyer said April 21 was a firm deadline for "a concrete and detailed proposal for getting the polluting cars fixed or off the road," according to Reuters.

If no proposal is made, the lawsuit would continue and the courts would decide what steps Volkswagen is required to take and how much compensation they would provide buyers of the affected vehicles.

One possible hold up for an agreement between federal regulators and Volkswagen is that the diesel models could be impossible to bring up to current legal emission levels.

Former vice chairman of General Motors and longtime Volkswagen competitor Bob Lutz told the New York Times that his company's attempts to match Volkswagen's diesel-engine efficiency were in vain. Now he knows why.

“There’s no way to fix these noncompliant cars,” Mr. Lutz told the New York Times.

If that’s the case, it is unclear if US regulatory agencies would allow a partial fix that would at least improve the emission levels of the vehicles, but not bring them up to legal standards. If not, the company may have to buy the vehicles back at above market value, according to the Times, adding to what could already be an extraordinary financial burden.

“Using a defeat device in cars to evade clean air standards is illegal and a threat to public health,” said Cynthia Giles, an EPA official, in September.