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By Reuters

Volkswagen and the Justice Department reached a deal in principle to address excess diesel emissions in nearly 600,000 polluting vehicles that will include buyback offers and a possible fix, a federal judge said Thursday.

U.S. Judge Charles Breyer said the settlement is expected to include a buyback offer for nearly 500,000 2.0-liter vehicles and a possible fix if regulators agree on it. The settlement will include an environmental remediation fund and additional compensation to owners to sell back or have vehicles fixed.

Read More: Volkswagen Shares Surge as U.S. Dieselgate Deal Looms

The government and Volkswagen have until late June to complete a final "consent decree" that will face public comment before taking effect.