VW Settlement Update

Dory Larsen | September 18, 2018 | Clean Transportation, Electric Vehicles

In July 2016, Volkswagen (VW) agreed to a multiple-part settlement with the Environmental Protection Agency as a result of the illegal installation of ‘defeat devices’ on their diesel engines in violation of the Clean Air Act. There are two key programs of that settlement that offer emissions reduction opportunities for states:

1. A Zero Emissions Investment Commitment of $2 billion over 10 years to increase the use of zero-emissions vehicle technology in the U.S. The program will be administered by Electrify America, a newly formed subsidiary of Volkswagen Group of America (VW).

2. An Environmental Mitigation Trust Agreement (EMT) of $2.7 billion designed to reduce nitrogen oxide (NOx) emissions where cheating VW diesel vehicles operated. Funds are allocated among beneficiaries (states, tribes, and certain territories) based on the number of impacted VW vehicles in their jurisdictions.

Under the EMT, each state was eligible to become a beneficiary and designate a lead agency to prepare and submit to the Trustee (Volkswagen via Wilmington Trust) a Mitigation Plan before the Trustee will distribute funds to the state. The Southeast is expected to receive more than $427 million through the program.

Tennessee designated the Department of Environment and Conservation (TDEC) to be the lead agency that will distribute the state’s $45.7 million portion of the EMT funding. TDEC released a Proposed Beneficiary Mitigation Plan (BMP) to the public in July for thirty days of comment that ended on August 17, 2018. The plan prioritizes buses (60%) and investments in light-duty charging infrastructure (the maximum 15% allowed). Once the BMP is finalized, TDEC will release funding opportunity announcements and/or project solicitations for programs. TDEC also plans to host workshops throughout the state and/or webinars to engage the public and provide relevant information about the proposal process, eligibility requirements, timelines for implementation and reporting requirements. The first anticipated project solicitation will occur in the third calendar quarter of 2018. To receive notifications regarding TDEC’s public outreach efforts, sign up for the TDEC VW Environmental Mitigation Trust email list here.

North Carolina
North Carolina concluded public comment on their Proposed BMP in May 2018 and released their Final Plan on August 22, 2018. North Carolina will receive $92 million in funding, and the Department of Environmental Quality (DEQ) was selected to oversee the Plan. However, the State Legislature passed a vetoed budget with a provision requiring the General Assembly approve all spending related to the settlement. This new development threatens to delay and perhaps disqualify the state from receiving funds. North Carolina’s Plan includes 40% for school bus replacements – but only 5% on all-electric vehicles – with the lion’s share going to ‘clean diesel’. It also calls for 20% to be dedicated to transit bus replacements, 20% for heavy-duty on-road and off-road replacement projects, 15% for EV charging equipment and 5% for administrative needs. Of note, North Carolina is approaching the BMP allocation as a series of three phases and this plan is only for Phase 1. Phase 1 will spend 33% of the overall funds ($30.68 million dollars) and run from 2018 – 2020. Phase 2 will spend another 33% from 2020-2022 and Phase 3 the remaining 33% from 2022-2024.

South Carolina
South Carolina’s Department of Insurance (DOI) is the lead agency charged with distributing the State’s Environmental Mitigation Trust funding of $33.8 million. South Carolina’s Draft BMP was released in April 2018 with a 45 day public input period for written comments. On July 25, the DOI released a Second Draft Beneficiary Mitigation Plan. Their Second BMP allocates 80% of funds for school, shuttle, and transit bus replacements (diesel, alternative fuel or all-electric) and 10% for EV charging equipment. The 30 day comment period for this plan ended on August 24, 2018. Go here to receive notification updates (select “VW Settlement” under “News Flash” heading).    

The Governor’s Office of Planning and Budget (OPB) is the lead agency charged with the development of Georgia’s Plan and allocation of funds. Public comment ended on January 5, 2018 and they quickly released their Final BMP at the end of the month. Georgia’s allocation of $63.6 million dollars does not carve out the maximum 15% for EV charging stations, instead devotes 100% of the money for transitioning their buses to clean diesel or electric buses. “Two projects have been tentatively selected to receive funding from the State Trust: new diesel and all-electric transit buses for the State Road and Tollway Authority’s (SRTA) Xpress system, and new all-electric terminal-to-terminal transit buses serving Hartsfield-Jackson Atlanta International Airport (HJA). Funding for the HJA all-electric transit buses will include charging infrastructure.”

Planned Allocation of Georgia’s EMT Funds

Source: Beneficiary Mitigation Plan for the State of Georgia

Florida designated the Department of Environment Protection (DEP) to be the lead agency that will distribute the state’s $166 million EMT funding. In March, DEP announced a series of public informational meetings, hosted two webinars, and opened an online public survey for 60 days to solicit feedback. They also created a subscription page to sign up to receive email updates. According to a memo created by DEP, “The Department intends to develop Florida’s draft Mitigation Plan and provide an opportunity for the public to submit comments during summer 2018. After consideration of the public comments received, DEP will finalize and submit the state’s final BMP to the Trustee in Fall 2018.” That timeline appears to have been pushed back as they have yet to release the Draft BMP.

Stay Up To Date
To stay current on the above states’ plans, please go to the Electrify The South website’s VW Settlement page. The page is updated regularly as information becomes available. Additionally, this page has links to the state-designated agencies’ websites with more detailed information. Through each step of the states’ processes, the Southern Alliance for Clean Energy has been submitting letters with partner organizations advocating that the funds be allocated for all-electric transportation solutions as well as maximizing the 15% allowable carve-out for electric vehicle charging infrastructure. Please stay engaged in the process with us as that is the best way to ensure the money is wisely spent on the cleanest energy solutions.

Dory Larsen
Dory joined the Southern Alliance for Clean Energy in 2017 and was named Senior Electric Transportation Program Manager in 2023. She is working to accelerate the transition to electric vehicles…
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