An anonymous source connected to negotiations being conducted between Volkswagen AG and the U.S. government has indicated that the company will pay owners of its diesel cars up to $7,000 as part of a $10 billion settlement.

Under the terms of the agreement, VW will compensate owners with cash payments of between $1,000 and $7,000, depending on the age of their vehicle and other considerations. The amount of cash to be awarded will reportedly be determined using a complicated calculation that sources say could create further discord between owners and the automaker.

In addition to the compensation payouts, VW will also commit to funding an environmental remediation program to help offset the pollution caused by its vehicles and face penalties for violating U.S clean-air laws.

In September, VW admitted that it had used engine control software in its diesel-powered vehicles to manipulate the results of emissions tests.

VW, the Environmental Protection Agency, the California Air Resources Board, the Justice Department and lawyers acting on behalf of owners are expected to present a settlement agreement on June 28.