Volkswagen Diesel Settlement

notice

  • Overview
  • Eligible Mitigation Actions
  • Beneficiary Mitigation Plan
  • Legal Documents
  • Related Websites
  • Contact us

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.

Tribal Allocation
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.

State Allocation
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:

  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. Ocean going vessels shorepower
  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 
  10. Matching funds for projects eligible under the Diesel Emission Reduction Act (DERA)

Next steps

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.

 

Overall, money from the settlement may be used to pay some or all of the cost to repower or replace eligible diesel-powered vehicles with new diesel or alternative fueled or all-electric engines or vehicles within the following 10 catagories:

  • 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 shore power

  • 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)

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 Numbers 1-9 and the DERA option, Number 10

 

The Beneficiary Mitigation Plan 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 developed through a public process, with multiple opportunities for public comment. 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

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

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 Second 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 closes on February 23, 2017.
 

Volkswagen has a web page with information for vehicle owners here: VW settlement page

Volkswagen has a web page with information about their investment in zero emission vehicles (ZEV). Information, including application instructions, concerning the ZEV funding can be found at: https://www.electrifyamerica.com/

You can find information about Volkswagen’s actions, the settlement agreement and what vehicles are affected at the U.S. Environmental Protection Agency’s web site here: EPA general information

The federal court handling the case has a web page with court documents and other information about the case here: Federal court VW page

The U.S. Federal Trade Commission has a general information page about the Volkswagen case here: FTC VW general information

The U.S. Department of Justice has information about the case here: US DOJ VW page

National Tribal Air Association http://www7.nau.edu/itep/main/ntaa/

National Association Of Clean Air Agencies  http://4cleanair.org/
 
 

 

     


For more information contact:

Betsy McGregor
Alaska Energy Authority
Environmental Manager

Tel: 907-771-3000
Fax: 907-771-3044

 

 This page was updated on March 14, 2017