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 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 has agreed to settle some of 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. On February 14, 2017, a federal judge preliminarily approved the second partial settlement. A final approval hearing is currently scheduled to take place on May 11, 2017. The overall settlement consists of three major parts:
Buyback, Lease Termination, Vehicle Modification and Emissions Compliant Recall Program
Volkswagen is 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.
A federal judge preliminarily approved this portion of the second consent decree on February 14, 2017. A final approval hearing is currently scheduled to take place on May 11, 2017. The judge's preliminary approval allows consumers to weigh in with comments and learn how much compensation to expect.
Additional information is available at www.VWCourtSettlement.com
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) over 10 years in the zero emissions vehicle (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 will be administered by Volkswagen, the U.S. EPA and California in four 30-month investment cycles. For each round, project proposals are submitted to Volkswagen, and Volkswagen develops an investment plan to be reviewed and approved by the EPA. The first round of project proposals closed January 16, 2017. Proposals for the second round are currently being accepted. 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.
Nearly $54.5 million of the Mitigation Trust were allocated to federally-recognized tribes, to be disbursed annually over 6 years. The Department of Justice will consult with tribes to determine how these funds will be allocated among the tribes. Tribes are not required to submit Beneficiary Mitigation Plans. Tribes may submit funding requests annually, due September 1 each year. Certification is due at the time of the first funding request.
Alaska expects to receive $8.125 million dollars from the Environmental Mitigation Trust. The Alaska Energy Authority (AEA) has been designated as the lead State agency to oversee how Alaska’s allotted $8.125 million will be distributed and spent. 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.
AEA must develop a Beneficiary Mitigation Plan that summarizes how the State allocation of mitigation funds will be distributed among the various eligible mitigation actions to reduce NOx emissions. The Plan will be based on eligible mitigation actions that can produce the greatest air quality benefit in terms of NOx emission reductions, reduced public exposure, and the promotion of clean vehicle technologies. The Plan will be developed through a public process, with multiple opportunities for public comment. Once the Beneficiary Mitigation Plan is approved by the Trustee, 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. These funding requests can be submitted at any time once the Beneficiary Mitigation Plan has been approved.
Eligible Mitigation Actions
The Trust establishes a process to administer the funds, and identifies 10 categories of mitigation actions that will be eligible for funding along with reimbursement rates for these actions. Eligible actions focus on reducing NOx pollution from primarily diesel-powered trucks and buses. Generally, the types of approved actions include replacing older diesel-powered trucks, buses, industrial vehicles and other powered equipment with new, lower emissions equipment. Categories of eligible vehicles and equipment are as follows:
- Class 8 local freight trucks and port drayage trucks
- Class 4-8 school buses, shuttle buses or transit buses
- Freight switcher locomotives
- Ferries and tugs
- Ocean going vessels shorepower
- Class 4-7 local freight trucks
- Airport ground support equipment
- Forklifts and port cargo handling equipment
- Light duty Zero Emission Vehicle supply equipment
- Matching funds for projects eligible under the Diesel Emission Reduction Act (DERA)
A number of steps must be completed before states can begin requesting state-allocated funds from the Trust. The court must first grant final approval of the settlement agreement. The court has granted final approval of the first partial settlement agreement, of which Alaska will be allotted $7.5 million. A final approval hearing for the second partial settlement agreement is currently scheduled to take place on May 11, 2017.
The court must approve a Trustee who will be responsible for administering the Trust and approving projects proposed by beneficiaries, and then finalize the Trust agreement, establishing the Trust Effective Date. Once the Trust Effective Date has been set, a timeline begins for each state to take required actions to qualify to receive funds. The Trust Effective Data has not yet been set, but is expected to be established during the spring 2017.
Within 60 days of the Trust Effective Date, Alaska must submit a Certification Form, signed by the Governor, explaining how Alaska qualifies to be a Beneficiary under the Trust. If no one objects to Alaska’s request for certification, the Trustee can grant the request and designate Alaska as a Beneficiary. We anticipate Alaska will be designated as a Beneficiary during summer or early fall 2017.
Within 90 days of Alaska being deemed a Beneficiary, AEA must submit a Beneficiary Mitigation Plan to the Trustee for approval. The final Plan will likely be submitted during the fall 2017.
Request for Public Comment
AEA is currently accepting comments from the public and interested parties 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. Following this informal public input, AEA will post a draft Beneficiary Mitigation Plan for a formal public comment period.
Please complete the Contact Form and submit comments to AEA regarding your interest in the National ZEV Plan and the Mitigation Trust.
Please Subscribe to the list serve to stay up to date on activities related to the VW Settlement.
You will find all of these links located under the "Contact us" tab on this page.