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It’s Deadline Day For VW – And No Solution in Sight

Volkswagen Wrestles With Diesel Emissions CrisisVolkswagen Wrestles With Diesel Emissions Crisis
The Volkswagen logo. Photograph by Jim Dyson — Getty Images

Volkswagen AG (VLKAY) has asked for a 14-day extension to a court deadline for fixing its emissions problems in a way that is acceptable to U.S. regulators.

The German automaker has been in talks for months with the U.S. Justice Department, Environmental Protection Agency and California Air Resources Board (CARB) over how to address the excess emissions in its diesel vehicles (click here to read Fortune’s in-depth investigation of the Volkswagen emissions scandal)

U.S. District Judge Charles Breyer had set a March 24 deadline for Volkswagen to state whether it has found an emissions fix that is acceptable to U.S. regulators.

Volkswagen and regulators are likely to tell Breyer they are making good progress toward reaching a deal, but have not reached an agreement, a person briefed on the matter said, adding that a potential deal could still be weeks away.

VW’s talks with regulators about how to address the issue, have included a potential buyback offer for an unknown number of vehicles, along with possible financial incentives for owners to get their vehicles repaired.

One central issue is whether the EPA will accept a fix that does not completely address excess on-road emissions. EPA spokeswoman Laura Allen declined to comment on that question, or the status of the talks.

Earlier this month, a California official said the state may allow partially repaired Volkswagen diesel cars to continue operating on its roads because a full fix may be impossible.

The cars are equipped with “defeat devices” that allow them to pass laboratory emissions tests despite exceeding federal standards by up to 40 times when they are driven on roads.

Todd Sax, chief of CARB’s enforcement division, said this month he did not believe a fix was available that would allow the cars to comply with the emissions standards or the onboard diagnostic requirements.

“We will have to decide what the best approach is to dealing with these vehicles, and one of the options potentially would be to accept something less than a full fix,” he said.

A VW spokeswoman declined to comment on the status of the talks.

Regulators could also require VW to set aside money to address excess pollution as part of a settlement.

The U.S. Justice Department in February sued Europe’s biggest automaker for up to $46 billion for violating U.S. environmental laws. VW and its Audi and Porsche brands remain barred from selling any new 2016 diesel models in the United States.

VW’s attempts to fix its emissions problems in Germany have also run into trouble. A nationwide recall of affected Passat sedans for retrofitting has been delayed amid reports of differences with the national type approval authority, the Kraftfahrtbundesamt, or KBA.

VW aims to recall over 2.5 million cars in Germany in the course of this year for various hardware and software fixes. The company is under heavy scrutiny to see how its vehicles perform after they have been fixed.