Volkswagen of America said on Thursday it is creating an independent claims program for the owners of nearly 600,000 diesel vehicles that emit up to 40 times legally allowable emissions.
The German automaker (VOWG_p.DE) said it was naming compensation expert Ken Feinberg, who administered compensation funds for the Sept. 11, 2001 attacks, BP Plc (BP.L) Deepwater Horizon oil spill and General Motors Co (GM.N) ignition switch crashes, to create and administer the program.
VW has acknowledged that 482,000 2.0 liter 2009-2015 diesel cars and 85,000 3.0 liter SUVs and larger cars have higher-than-allowed emissions and faces more than 500 U.S. lawsuits.
VW said Feinberg "will develop an independent, fair and swift process for resolving these claims."
Camille Biros, deputy administrator of the VW claims program, said it is too early to say if the program would offer buybacks to vehicle owners, cash or other specific compensation for mileage or performance harmed by emissions repairs. "Everything is on the table," Biros said.
Feinberg said the program would need to know what VW's recall fixes are before it can move forward.
"Until we have an understanding of the remedies" we can't predict costs, Feinberg said on a conference call.
One goal of the program is to get claims out of the legal system, Feinberg said. In other similar compensation programs participants have agreed to forgo lawsuits, but no decisions about that have been made, he said.
While Feinberg is highly respected in the legal community, some attorneys representing Volkswagen plaintiffs said they were concerned that the fund could undermine litigation already underway in California.
“I’m suspicious and I’m concerned, but I’m open-minded,” said plaintiffs’ lawyer Chris Seeger.
VW Group of America President and Chief Executive Officer Michael Horn said Feinberg's "extensive experience in handling such complex matters will help to guide us as we move forward to make things right with our customers."
Separately, a group of business leaders including Tesla Motors Inc (TSLA.O) Chief Executive Elon Musk on Thursday urged the California Air Resources Board to order VW to transition to electric vehicles, rather than try to fix diesel vehicles.
The state board and the Environmental Protection Agency are investigating VW's conduct and considering potential fixes. VW is still barred from selling 2016 diesel vehicles as regulators consider their repair plans.
"A giant sum of money will thus be wasted in attempting to fix (VW diesel) cars that cannot all be fixed," the business leaders wrote.
Instead, Musk and others urged California to order VW to accelerate the sale of zero emission electric vehicles.
The letter argues EVs would significantly offset diesel emissions and California should require VW to invest in manufacturing in the state. VW declined to comment.
"A satisfactory way to fix all the diesel cars does not likely exist, so this solution sidesteps the great injury and uncertainty that imposing an ineffective fix would place on individual diesel car owners," Musk and others wrote.