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UPDATE 1-U.S. judge delays court hearing on Volkswagen 3.0-liter diesels

(Adds details on negotiations, background on prior settlement)

WASHINGTON Nov 29 U.S. District Judge Charles Breyer on Tuesday delayed a court hearing set for Wednesday on Volkswagen AG's plan to address 80,000 polluting Audi, Porsche and VW 3.0-liter vehicles.

In a court order, Breyer said negotiations are continuing between the German automaker, regulators and lawyers representing owners, and he set a Dec. 16 hearing, saying he had been advised that a delay "may produce a resolution of the outstanding issues."

Reuters reported on Nov. 15 that VW had reached an agreement with U.S. regulators for a mix of buybacks and fixes for the 80,000 vehicles, but still needed to reach agreement on other issues including compensation for owners.

The agreement includes a buyback offer for about 20,000 older Audi and VW SUVs and a software fix for 60,000 newer Porsche, Audi and VW cars and SUVs, Reuters reported.

In June, VW agreed spend up to $10.03 billion and offered to buy back 475,000 2.0-liter vehicles and offer compensation of $5,100 to $10,000 per owner. VW began buying back vehicles last week.

Two people briefed on the talks said Volkswagen has made progress in the talks with lawyers representing the owners of the vehicles in recent days but has not reached a deal. The 2.0-liter diesel vehicles have software that allowed them to evade emissions rules in testing and emit up to 40 times the legally allowable emissions in onroad driving. The 3.0-liter vehicles have an undeclared auxiliary emissions system that allowed them to emit up to nine times allowable limits.

As part of a 3.0-liter vehicle settlement, Volkswagen is expected to pay additional funds into an environmental trust to offset excess emissions. The company in June agreed to pay $2.7 billion over three years to offset the pollution from the 2.0-liter vehicles. The additional emissions funds will be far less for the 3.0-liter vehicles, in part because there are fewer and they pollute less, the sources said.

Volkswagen has already agreed to spend up to $16.5 billion to date to resolve U.S. diesel emissions cheating allegations. It may face billions more in fines to resolve a U.S. Justice Department investigation. (Reporting by David Shepardson; Editing by Sandra Maler and Leslie Adler)

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