Volkswagen Settlement Fund
Overview
In May of 2014, researchers found German automaker, Volkswagen (VW), to be in violation of the Clean Air Act by installing software in their 2.0 liter and 3.0 liter diesel engine vehicles that disabled emission controls under normal use, but turned the controls on when being tested. On January 4, 2016, an official complaint was filed by the United States on behalf of the Environmental Protection Agency (EPA) alleging that approximately 590,000 vehicles were sold with these “defeat devices”. By cheating federal emissions tests, the vehicles emitted amounts of nitrogen oxides significantly greater than EPA compliant levels, posing serious health and environmental concerns. The civil enforcement case against Volkswagen was resolved through a series of three partial settlements that focus on mitigating the damages from excess emissions.
2.0 Liter Partial Settlement
The 2.0 liter partial settlement requires Volkswagen to buy back or modify at least 85 percent of the affected 2.0 liter vehicles nationally and 85 percent of the affected vehicles in California by June 2019. If Volkswagen fails to meet the 85 percent recall rate, they must pay additional funds to the mitigation trust determined by the number of percentage points they fell short. Additionally, Volkswagen must fund a $2.7 billion Environmental Mitigation Trust, which will be allocated to states proportionally and allow them to fund eligible mitigation actions that reduce excess emissions of nitrogen oxides. Volkswagen must also invest $2 billion in Zero Emission Vehicle (ZEV) charging infrastructure nationwide.
3.0 Liter Partial Settlement
Similar to the 2.0 liter partial settlement, this settlement requires Volkswagen to buy back or modify at least 85 percent of the affected 3.0 liter engine vehicles nationally and in California. Volkswagen must meet the 85 percent recall rate for the generation 1 affected 3.0 liter vehicles by November 30, 2019, and the generation 2 affected 3.0 liter vehicles by May 31, 2020. If they fail to reach 85 percent by the deadline, VW must pay additional funding to the Mitigation Trust Fund. The 3.0 liter partial settlement also requires Volkswagen to contribute an additional $225 million to the Environmental Mitigation Trust Fund.
Third Partial Settlement
The third partial settlement requires Volkswagen to pay a $1.45 billion civil penalty for the violations of the Clean Air Act and take various actions to prevent future problems.
Florida
The state of Florida will recieve $166 million from the Environmental Mitigation Trust. The Florida Department of Environmental Protection was designated as the Florida State Beneficiary and is responsible for administering the State Mitigation Plan. The FDEP sought public input to develop the Mitigation Plan through Requests for Information (RFI), a public survey, five in-person public informational meetings, two informational webinars, and a public comment period. On July 17, 2019, the FDEP released a draft Mitigation Plan for public comment. The Department considered all public comments and then released a revised plan on October 8, 2019. At this time, the Department also published a Notice of Funding (NOFA) for an initial Electric School Bus Project totaling $5 million and three RFIs from those interested in receiving funding for the project types selected in the Mitigation Plan. The deadline to submit these documents is November 7, 2019 at 5:00 PM EST.
Additionally, the Department opened funding applciations for electric buses and requested for submittal to the Trustee in October, 2019.
Plan Summary
Primary Goal: to reduce emissions of NOx, particle matter, and hazardous air pollutants in areas where people live, work, and visit.
- Prioritize projects that replace eligible units with electric-powered and/or alternative fueled units
- Identify the areas in Florida where the largest number of people are impacted by higher levels of emissions from diesel-powered vehicle and equipment
- Identify cost-effective mitigation projects, factoring in the prioritized fuel types
Funding Breakdown
School, Transit, and Shuttle Buses - 70% ($116M)
This eligible mitigation action consists of the repower or replacement of a Class 4-8 School Bus, Shuttle Bus, or Transit Bus. The funding can be used to retrofit or replace the current vehicles with alternative fuel or all-electric engine vehicles.
Light-Duty ZEV Supply Equipment - 15% ($25M)
Each Beneficiary may use up to fifteen percent (15%) of its allocation of Trust Funds on the cost necessary for, and directly connected to, the acquisition, installation, operation, and maintenance of new light-duty zero emissions vehicle supply equipment. Light-duty ZEV equipment includes Level 1, Level 2, or fast charging equipment that is located in a public place, workplace, or multi-unit dwelling.
Diesel Emissions Reduction Act (DERA) - 15% (25M)
The DERA State Grant Program is funded in part through federal grants administered by the EPA. The DERA funding program was designed as a voluntary means to reduce diesel emissions from existing diesel engines that were not manufactured to meet more stringent post-2006 emissions standards. Since the program aligns with the goals of the Final Trust Agreement, beneficiaries may use Trust Funds for their non-federal voluntary match to DERA.
Priority Areas
The Final Trust Settlement Agreement requires beneficiaries to specify how they “will consider 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 within its jurisdiction.” Most air pollutants in Florida occur in concentrations well below the National Ambient Air Quality Standards (NAAQS), though some air pollutants can occur in concentrations in local or regional areas that could potentially affect human health. To identify areas that bear a disproportionate share of air pollution burden, the DEP used:
- The 2014 National Emissions Inventory
- Design values in Florida for NO2, ozone, PM2.5, and PM10
- The Environmental Justice Screening tool (EJSCREEN)
- U.S. Census population data
Using these four factors, the DEP identified five air quality priority areas throughout the state of Florida. The Department will prioritize these areas for certain mitigation projects because it will lead to more significant environmental benefits.
Resources
Vehicle Buy Back
As a requirement of the Court Settlement, VW must spend $11 billion to buy back or install pollution control equipment for at least 85% of vehicles.
Electrify America
A subsidiary of Volkswagen established to invest $2 billion into Zero Emission Vehicle (ZEV) infrastructure in the next decade, as required by the Court Settlement.
CFLCC August Newsletter
We released a special newsletter in August outlining the Florida VW Settlement Draft Plan along with our comments and recommendations.
