According to media reports on Thursday, Volkswagen reached a deal with American authorities, including the Environmental Protection Agency (EPA), to settle a legal case in US federal court sparked by the carmaker's emissions-cheating scandal, known as Dieselgate.

As part of the agreement, VW would pay each US customer affected by scandal $5,000 (4,400 euros), according to a report by German newspaper Die Welt, citing sources close to the negotiations. The payments were to be made through an owner compensation fund worth more than $1 billion.

In addition, Volkswagen offered to repair polluting diesel vehicles if US regulators approved the proposed fix, the sources said.

According to sources cited by the news agency Reuters, VW will also offer to buy back up to 500,000 2.0-liter diesel vehicles sold in the US that exceeded legally allowable emission levels.

That would include versions of the Jetta sedan, the Golf compact and the Audi A3 sold since 2009. The buyback offer did not apply to the bigger 3.0-liter diesel vehicles also found to have exceeded US pollution limits, including Audi and Porsche SUV models, people familiar with the deal told Reuters.

US owners were to be given around two years to decide whether to sell back vehicles or get them repaired. It was not clear whether VW would be allowed to resell vehicles they buy back, the source said.

Court ruling pending

The framework deal was reached after lengthy talks in recent days at the Washington law office of Robert Mueller. The former FBI director is the court-appointed mediator named to help settle more than 500 civil suits filed against VW. The talks included all the government agencies and lead plaintiffs' attorneys suing VW.

Some elements of the settlement were still being worked out, and details were not expected to be announced Thursday at a court hearing presided over by US District Judge Charles Breyer, the people briefed on the matter said.

In March, Judge Breyer gave VW until Thursday to announce a "concrete proposal for getting the polluting vehicles off the road."

Breyer said the proposal may include a vehicle buy-back plan or a fix approved by the relevant regulators that allows the cars to remain on the road with certain modifications.

It is not clear if the deal will resolve the US Justice Department's civil suit filed in January against VW, or if VW will agree to pay a civil penalty. VW also faces ongoing criminal investigations by the Justice Department and other prosecutors around the world.

VW has yet to make a comment on the proposed settlement.

Following the news, however, VW shares rose 5.3 percent in early European trading on Thursday boosted by investors' hopes Europe's biggest carmaker may end costly litigation in the US.

uhe/kd (dpa, Reuters)