VW Settlement 2019 Program Fact Sheet


Alaska is a beneficiary of $8.125 million from the federal Volkswagen Settlement for Volkswagen's installation of illegal software in diesel vehicles designed to cheat emission tests. 

AEA has developed a Beneficiary Mitigation Plan (Plan) through a public process that describes how the state proposes to distribute the funds amongst the eligible mitigation actions defined in the settlement. AEA will begin soliciting Requests for Applications (RFAs) in February 2019.

  • Overview
  • Background
  • Eligible Mitigation Actions
  • Beneficiary Mitigation Plan
  • Tribal VW Settlement
  • Legal Documents
  • Related Websites
  • Emission Calculators
  • Contact us

Beneficiary Mitigation Plan

On January 29, 2018, Alaska became a beneficiary of the Volkswagen Settlement Environmental Mitigation Trust. AEA has developed a Beneficiary Mitigation Plan as required by the Trust Agreement through public input. The Plan summarizes how the State proposes to allocate the mitigation funds among the various Eligible Mitigation Actions to reduce NOx emissions.Alaska will disburse the $8.125 million fund as follows:

 

Public Comment

AEA sought public input to determine what types of eligible pollution-reducing projects are of priority to Alaska communities and to identify possible synergies and partnerships that might leverage Trust funds.

AEA created a preliminary web-based comment form to solicit public input on the types of eligible mitigation actions that were of interest to the public. On May 1, 2018, AEA developed a Draft Beneficiary Mitigation Plan and initiated a 60-day public comment period with a revised web-based form and held several public meetings.  

      The meetings included an overview of the settlement and Draft Plan; offered an opportunity to answer questions; and provided a venue for submitting public comments on the Draft Plan.

Public meetings were be held in Anchorage, Fairbanks, and Juneau:

Fairbanks: June 1, 3:00 – 5:00 and 6:00 – 8:00 pm

Anchorage: June 4, 3:00 – 5:00 and 6:00 – 8:00 pm

Juneau: June 7, 3:00 – 5:00 and 6:00 – 8:00 pm

Webinars: June 20, 1:00 - 3:00 pm; and June 21, 12:00 - 2:00 pm.

 

 

Alaska's Allocation of VW Trust Funds

School Bus Replacement (EMA 2)

Eligible Mitigation Action 2 includes the repower or replacement of Types A-D school buses. Vehicles eligible for scrappage and repower or replacement include those with engine model years of 2009 or older. The engines/buses may be replaced with new cleaner diesel engines/vehicles, alternative fueled engines/vehicles (e.g., CNG, propane, electric hybrid), or all-electric engines/vehicles.

Two request for applications (RFA) will be solicited for the upgrade/replacement of eligible school buses, each allowing for the disbursement of up to $2 million. The first solicitation will occur during February 2019 and the second in fall 2019. As described in Table 2 of the Plan, school bus projects will be evaluated based on:

  • Cost effectiveness ($/lifetime short ton NOx reduction)
  • Location in a NOx emission priority area
  • Location in an air quality priority area
  • Location within at-risk communities
  • Voluntary matching fund

 

Public Transit Bus Replacement (EMA 2)

Eligible Mitigation Action 2 includes the repower or replacement of Classes 4-8 shuttle or transit buses. Vehicles eligible for scrappage and repower or replacement include those with engine model years of 2009 or older. The engines/buses may be replaced with new cleaner diesel engines/vehicles, alternative fueled engines/vehicles (e.g., CNG, propane, electric hybrid), or all-electric engines/vehicles.

Up to $800,000 will be made available for the upgrade/replacement of eligible public transit buses through an RFA in February 2019. Alaska will require 80% matching funds from applicants for the upgrade/replacement of eligible public transit buses because there are federal funds available to the state and urbanized areas for the replacement of public transportation and fixed-route buses via both state formula allocation and competitively. VW Trust funds may be used as mandatory cost-share for these federal funds. As described in Table 2 of the Plan, public transit bus projects will be evaluated based on:

  • Cost effectiveness ($/lifetime short ton NOx reduction)
  • Location in a NOx emission priority area
  • Location in an air quality priority area
  • Location within at-risk communities
  • Voluntary matching funds

 

Commercial Marine Vessel Upgrade (EMA 4; EMA 10)

Ferries or tugs equipped with unregulated, Tier 1, or Tier 2 marine engines may be repowered under EMA 4. These tugs and ferries may be repowered with any new Tier 3 or Tier 4 diesel or alternate fueled engine, or with all-electric engines. In addition, under the DERA Option (EMA 10), commercial marine vessels with pre-Tier 3 engines operated at least 1,000 hours per year are eligible for upgrade.

Alaska intends to allocate 10% of the VW State Trust to upgrade eligible marine vessels, require mandatory matching funds, and cap the funds at $200,000 per project.

Up to $800,000 will be made available for the upgrade/replacement of eligible marine engines through an RFA issued in fall 2019. Projects will require mandatory matching funds and be capped at $200,000 per project. These projects will be evaluated based on:

  • Cost effectiveness ($/lifetime short ton NOx reduction)
  • Alaska residency or Alaska-based business
  • Voluntary matching funds
  • Applicant experience with managing grants

 

Installation of Electric Vehicle Charging Stations (EMA 9)

Alaska intends to allocate 15% of the EMT funds to electric vehicle charging infrastructure regionally based on populations within the connected road systems beginning Q1 2019 as follows:

  • Railbelt and Copper Valley Region (79% statewide population) - $950,000
  • Southeast Region (10% statewide population) – $125,000
  • Other areas of the state combined (11% statewide population) - $135,000

The funds will be made available to each of the areas as early as spring 2019. The Railbelt/Copper Valley and Southeast regions will each be required to develop a regional comprehensive plan that includes AEA, DEC, utilities, statewide and local transportation planners, local government, fleet owners, electric vehicle owners, and car dealerships. The plans will include locations of existing infrastructure and proposed locations for new level 2 and level 3 charging stations, rationale for site selections, prioritization of site installation, and schedule. Within each region funds will be prioritized based on the population of the area served, traffic volumes/commuting corridors, average miles of road traveled, and the amount of anticipated NOx reduction. Plans will need to demonstrate how the EV stations are sited in the most cost-effective manner and will need to include agreements with the entities who will own and maintain each site (e.g., local utility or government). All installations will be required to have interoperability.

For areas outside of these two regions, an RFA will be solicited and projects will be evaluated following the same criteria for prioritizing charging sites described above.

 

Replacement of Diesel Engines used for Prime Power (EMA 10 DERA)

To fully leverage federal funds for projects in rural Alaska, Alaska intends to set aside approximately $250,000 of the EMT annually for the state’s voluntary match under the State DERA program for five years. VW State Trust funds will be made available for these projects winter 2018/2019, spring 2019, spring 2020 and spring 2021. The Alaska Energy Authority will determine which projects receive VW Trust funding based on the same criteria used to prioritize state Rural System Power Upgrade (RPSU) projects.

For the first round of funding, eligible diesel engines will be replaced in the powerhouses located in Circle, Takotna, Tuluksak and Chignik Lake. The projects are funded by the EPA through the state DERA program ($746,174), the Denali Commission ($53,234), State of Alaska capital funds ($276,643), and the VW State Trust ($572,066), for a total cost of approximately $1,648,117. These projects will be completed in 2019.

Other Funding Opportunities

The following grant funding opportunities and loans are available that may be used as match for projects that are eligible for Volkswagen Trust funding.

DERA

EPA grants are now available to reduce emissions from diesel engines in Region 10 (Alaska, Idaho, Oregon and Washington). The EPA will accept proposals requesting up to $1,000,000 in grant funds. Grants are prioritized for diesel engine fleets in areas facing air quality challenges. Eligible applicants include regional, state, local or tribal agencies, or port authorities with jurisdiction over transportation or air quality. Applicants may apply until March 6, 2019.

Power Project Loan Fund

AEA provides loans to local utilities, local governments or independent power producers for the development or upgrade of power facilities. These loans may be used as mandatory cost-share for DERA projects to repower or replace diesel engines or gensets in diesel powerhouses. The loan term is related to the life of the project. Interest rates are between tax-exempt rates at the high end and zero on the low end.

Commercial Fishing Loan Fund - Engine Fuel Efficiency Upgrade

The Division of Economic Development offers loans for the upgrade of commercial fishing vessel engines to improve the fuel efficiency of the propulsion engine or generator engine replacement on an existing vessel.

National Zero-Emission Vehicle (ZEV) Investment Plan

Volkswagen is required to invest $2 billion ($800 million within California and $1.2 billion outside of California) in four 30-month investment cycles over 10 years in ZEV infrastructure, access, and awareness initiatives. For each investment cycle, project proposals are submitted to Volkswagen, and Volkswagen develops an investment plan to be reviewed and approved by the EPA. The first second of project proposals closed March 20018. Proposals for the third round are currently being accepted. Additional information is available at www.electrifyamerica.com.

Background

On January 24, 2016, the United States and the State of California filed a lawsuit against Volkswagen alleging it had manufactured diesel cars sold and operated in the U.S. beginning in 2009 with emission control systems intended to defeat emissions tests. These systems allowed vehicles to emit nitrogen oxide (NOx) pollution at levels that significantly exceeded the amounts allowed under the Clean Air Act.

Volkswagen agreed to settle these allegations. The first partial settlement, regarding the installation and use of emission testing defeat devices in 2.0 liter diesel vehicles, was approved by a federal court in California on October 25, 2016. On December 20, 2016 an agreement was reached in a second partial settlement regarding the installation and use of emission testing defeat devices in 3.0 liter diesel vehicles. The overall settlement consists of three major parts:

Buyback, Lease Termination, Vehicle Modification and Emissions Compliant Recall Program

Volkswagen was required to earmark about $11.2 billion ($10.033 billion from the first 2.0 L consent decree and $1.2 billion from the second 3.0 L consent decree) to buy back affected noncompliant vehicles, terminate leases early, or repair the vehicles by 2019 or 2020 depending on the make and model. Volkswagen administers this part of the settlement directly with affected vehicle owners.

Additional information is available at www.VWCourtSettlement.com

National Zero-Emission Vehicle (ZEV) Investment Plan

Volkswagen was required to invest $2 billion ($800 million within California and $1.2 billion outside of California) in four 30-month investment cycles over 10 years in ZEV infrastructure, access, and awareness initiatives. The form of the Trust Agreement can be found in Appendix C of the first partial consent decree. This part of the settlement is administered by Volkswagen as a subsidiary named Electrify America, the U.S. EPA and California. For each cycle, project proposals are submitted to Electrify America, and Electrify America develops an investment plan to be reviewed and approved by the EPA. The first round of project proposals closed January 16, 2017. Electrify America is currently implementing the Cycle 1 National ZEV Investment Plan, the Cycle 1 California ZEV Investment Plan, and the Supplement to the California ZEV Investment Plan. Proposals for the third round are currently being accepted. The second round of project proposals closed March 2018. Additional information is available at www.electrifyamerica.com

While AEA does not administer these funds, AEA is seeking information from interested parties to identify projects and partnering opportunities. Go to the "Contact us" tab to submit a contact form, send an email, or subscribe to the list serve to receive program related email updates..

Environmental Mitigation Trust

Volkswagen is required to fund an Environmental Mitigation Trust in the amount of $2.925 billion ($2.7 billion from the first 2.0 L consent decree and $225 million from the second 3.0 L consent decree) to be used to offset the lifetime excess air pollution emitted by the Volkswagen vehicles that violated the Clean Air Act. The form of the Trust Agreement can be found in Appendix D of the first partial consent decree. The fund is distributed among states, territories and federally-recognized tribes based on the proportion of affected VW diesel vehicles registered in each jurisdiction.

 

Tribal Allocation

Nearly $54.5 million of the Mitigation Trust were allocated to federally-recognized tribes nationwide. Tribes may submit funding requests annually. In order to apply for the VW Tribal allocation, Tribes must file to become Beneficiaries of the Trust. Beneficiary certification is due at the time of the first funding request.

The Institute for Tribal Environmental Professionals (ITEP) has been selected as the Technical Assistance Provider for tribes. To request ITEP assistance in accessing this funding opportunity, contact ITEP at http://www7.nau.edu/itep/main/ntaa/VWSettlement .  AEA is also available to assist Tribes interested in accessing these funds for DERA-eligible projects.

 

State Allocation

In November 2017, the State filed the certification for beneficiary status with the Court and the Trustee. On January 29, 2018, Alaska was designated a Beneficiary of the Trust, with AEA identified as the Lead Agency to oversee how the funds will be distributed. In February 2018, as required by the terms of the Trust Agreement, AEA provided a Notice of Availability of Mitigation Action Funds to all federal agencies that have custody, control or management of land within or adjacent to Alaska.

Alaska was allocated $8.125 million dollars from the Environmental Mitigation Trust. All of the funds are to be disbursed within 10 years, with no more than one third disbursed in the first year or two-thirds disbursed in the first two years.

As a Beneficiary, Alaska is required to develop a Beneficiary Mitigation Plan that summarizes how the State allocation of mitigation funds will be distributed among the 10 Eligible Mitigation Actions (EMAs) to reduce NOx emissions in the most cost-effective manner, reduce public exposure, and promote the use of clean vehicle technologies. The Plan was developed through a public process, with multiple opportunities for public comment, and submitted to the Trustee in December 2018. AEA will request applications from stakeholders for eligible projects consistent with the Plan. AEA will submit funding requests for selected projects to the Trustee for approval. Projects may begin once the Trustee releases the funds.

 

 

 

 

The Trust Agreement identifies 10 categories of Eligible Mitigation Actions (EMAs) that reduce NOx pollution and reimbursement rates for these actions. Most EMAs focus on reducing NOx pollution from diesel-powered trucks and buses, locomotives, ferries/tugs, airport ground support equipment, and port cargo handling equipment. Generally, the types of approved actions include replacing older diesel-powered engines or vehicles with newer cleaner diesel engines, alternative fueled engines or all-electric engines. Installation of shorepower for ocean going vessels and electric charging stations are also eligible. Trust funds may be used as voluntary match for projects funded through the Diesel Emission Reduction Act (DERA). The DERA option expands the types of diesel engines eligible for replacement to include non-road engines such as those used for electric generation and construction equipment, and marine vessels with >1,000 hours of use per year. The 10 EMAs defined in the trust Agreement are as follows:

  1. Class 8 local freight trucks and port drayage trucks
  2. Class 4-8 school buses, shuttle buses or transit buses
  3. Freight switcher locomotives
  4. Ferries and tugs
  5. Shorepower for ocean going vessels
  6. Class 4-7 local freight trucks
  7. Airport ground support equipment
  8. Forklifts and port cargo handling equipment
  9. Light duty Zero Emission Vehicle supply equipment  (e.g., charging stations)
  10. Voluntary matching funds for projects eligible under the Diesel Emission Reduction Act (DERA)

 

Appendix D-2 of the First Partial Consent Decree (pdf). 
Appendix D-2 outlines how trust funds may be used for each of the 10 categories of eligible mitigation actions.

Comparison of VW Eligible Mitigation Actions 1-9 and Eligible Mitigation Action 10 - DERA option (pdf).
This EPA document compares the different eligibility requirements and funding levels for Eligible Mitigation Actions (EMAs) 1-9 and the DERA option, EMA 10

The Beneficiary Mitigation Plan summarizes how the State allocation of mitigation funds will be distributed among the 10 Eligible Mitigation Actions to reduce NOx emissions. AEA submitted the Beneficiary Mitigation Plan to the Trustee December 2018.

The Plan describes:

  • Alaska’s overall goal for the use of the funds;

  • categories of Eligible Mitigation Actions we anticipate will be appropriate to achieve the stated goals and the preliminary assessment of the percentages of funds anticipated to be used for each type of Eligible Mitigation Action;

  • how the potential beneficial impact of the selected Eligible Mitigation Actions on air quality in areas that bear a disproportionate share of the air pollution burden will be considered;

  • the expected ranges of emission benefits we estimate would be realized by implementation of the Eligible Mitigation Actions identified in the Plan; and

  • the process for seeking and considering public input on the Plan.

 

Nearly $54.5 million of the Mitigation Trust were allocated to federally-recognized Tribes nationwide. Tribes may submit funding requests annually. In order to apply for the VW Tribal allocation, Tribes must file to become Beneficiaries of the Trust. Beneficiary certification is due at the time of the first funding request.

The Institute for Tribal Environmental Professionals (ITEP) has been selected as the Technical Assistance Provider for tribes. To request ITEP assistance in accessing this funding opportunity, contact ITEP at http://www7.nau.edu/itep/main/ntaa/VWSettlement or email Andy Bessler at Andy.Bessler@nau.edu.

AEA is also available to assist Tribes interested in accessing these funds for DERA-eligible projects. Please contact Betsy McGregor at AEA or email VWSettlement@aidea.org if you have questions or to request assistance.

2.0 Liter Partial Consent Decree
On October 18, 2016, the U.S. District Court for the Northern District of California held a hearing on the partial consent decree including amendments made in response to public comment. On October 25, 2016, the court granted the motion to enter into the amended partial consent decree. The approved partial consent decree consists of three major parts:

  • Volkswagen will buy back, terminate leases, or provide approved emissions modifications for subject 2.0 L TDI diesel vehicles.

  • Volkswagen will invest $2 billion over ten years in projects that increase the use of zero emission vehicles.

  • Volkswagen will pay $2.7 billion to an Environmental Mitigation Trust to fund projects to reduce emissions of NOx.

    • Appendix D form of Environmental Mitigation Trust


3.0 Liter Partial Consent Decree
On December 20, 2016, a second partial consent decree addressing 3.0 L subject vehicles was proposed. Notice of the second consent decree was published in the Federal Register on December 29, 2016 opening a thirty day comment period. On February 2, 2017, the comment period was extended February 14, 2017. The proposed partial consent decree consists of two major parts:

  • Volkswagen will buy back, terminate leases, or provide approved emission modifications for subject 3.0 L vehicles.

  • Volkswagen will be required to pay an additional $225,000,000 to the Environmental Mitigation Trust.

     

Third Partial Consent Decree
On January 11, 2017, a third partial consent decree was proposed to address Volkswagen’s liability under the Clean Air Act for civil penalties and injunctive relief to prevent similar future violations. Notice of the third consent decree was published in the Federal Register on January 24, 2017 beginning a thirty day public comment period that closed on February 23, 2017.
 

Volkswagen Settlement Websites

National Association of Clean Air Agencies – repository of VW Settlement Lead Agency contact information

http://4cleanair.org/ 

National Association of State Energy Officials – repository of state planning and implementation tools

http://www.naseo.org/volkswagen-settlement

National Tribal Air Association Volkswagen Settlement Work Group

http://www7.nau.edu/itep/main/ntaa/

Electrify America - National Zero Emission Vehicle Plan

https://www.electrifyamerica.com

U.S. Department of Justice

US DOJ VW page

U.S. Federal Trade Commission

FTC VW general information

U.S. District Court, Northern District of California – court documents

Federal court VW page

U.S. Environmental Protection Agency - VW Settlement website

EPA general information

Volkswagen Emission Settlement Page

VW settlement page

Wilmington Trust, N.A. (the “Trustee”) site for the State Trust

https://www.vwenvironmentalmitigationtrust.com/state-trust.html

For more information contact:

Betsy McGregor
AEA Preliminary Design and
Environmental Manager
Tel: 907-771-3000
Fax: 907-771-3044

 

 This page was updated on January 8, 2019