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Volkswagen Settlement - Florida Mitigation Fund

Volkswagen Consent Decree and Partial Settlements

In October 2016, Volkswagen (VW) settled with the U.S. Government resolving claims that it violated the Clean Air Act by selling diesel vehicles that violated the U.S. Environmental Protection Agency’s (EPA) mobile source emission standards. The violation involved installation and use of emission testing “defeat devices” in approximately 500,000 turbocharged direct injection (TDI) 2.0-liter diesel engine vehicles sold and operated in the U.S. from model year 2009 through 2015. In May 2017, VW entered into a second settlement with the U.S. government resolving additional claims that it violated the Clean Air Act by selling approximately 80,000 TDI 3.0-liter diesel engines also equipped with defeat devices.

The defeat devices allowed the 2.0-liter and 3.0-liter diesel vehicles to meet the applicable nitrogen oxides (NOx) emission limits during emissions tests while not meeting these limits during normal vehicle operation. To resolve the 2.0-liter and 3.0-liter diesel engine Clean Air Act violations, VW has agreed to provide approximately $16 billion to fund the following actions:

  • A requirement that VW spend $11 billion to buy back or install pollution control equipment for at least 85 percent of the 2.0-liter and 3.0-liter TDI engines (more information on vehicle buybacks and modifications is available at www.VWCourtSettlement.com);
  • A $2.0 billion investment to promote the use of zero emission vehicles and infrastructure (more information is available in EPA’s response to Frequently Asked Questions); and
  • $2.925 billion to fully remediate the excess NOx emissions that were emitted by the approximately 500,000 2.0-liter and 80,000 3.0-liter vehicles equipped with defeat devices (the “Mitigation Trust Fund”).

Owners/lessees of VW vehicles should visit www.VWCourtSettlement.com for information on vehicle buyback and modification options under the Class Settlement Program.

 

Mitigation Trust Fund

On October 2, 2017, the executed Final Trust Agreement was filed with the Court, establishing the terms and conditions of the Mitigation Trust Fund. The Trustee is Wilmington Trust, N.A. and will manage the trust for the beneficiaries. Under the terms of Final Trust Agreement, all 50 states, the District of Columbia, and Puerto Rico are eligible to become beneficiaries under the Environmental Mitigation Trust Agreement for State Beneficiaries.

Each eligible beneficiary can receive a pre-determined share of $2.925 billion, which is based upon the number of 2.0-liter and 3.0-liter diesel vehicles sold in each jurisdiction. Florida’s share is more than $166 million, or 5.68 percent of the overall Mitigation Trust Fund. The $166 million is the combined amount from the 2.0-liter settlement ($152.4 million), as specified in Appendix D-1 to the Final Trust Agreement, and from the 3.0-liter settlement ($12.9 million), as specified in the Appendix D-1A to the Second Partial Consent Decree.

The purpose of Mitigation Trust Fund is to provide money for specified diesel emission reduction projects. These projects are intended to offset excess emissions of NOx caused by the subject vehicles in order to fully mitigate the total, lifetime excess NOx emissions from the 2.0-liter and 3.0-liter vehicles.

 

Timeline for Participation in the Mitigation Trust Fund

The Environmental Mitigation Trust Agreement for State Beneficiaries provides a process that the states must follow to become beneficiaries under the Mitigation Trust Fund.

The “Trust Effective Date” is October 2, 2017. For a state to become a beneficiary, the state must execute and file the Certificate for Beneficiary Status contained in Appendix D-3 by December 1, 2017 – 60 days after the Trust Effective Date.

 

State Mitigation Plan

Once the Trustee declares that a state is a beneficiary, the state is required to prepare and submit to the trustee a Mitigation Plan before the trustee will distribute funds to the state.

The Environmental Mitigation Trust Agreement for State Beneficiaries specifies that the following issues be addressed in the Mitigation Plan:

  • The state’s overall goal for the use of the funds;
  • The categories of Eligible Mitigation Actions that the state anticipates 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;
  • A description of how the state 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;
  • A general description of the expected ranges of emission benefits that the state estimates would be realized by implementation of the Eligible Mitigation Actions identified in the Mitigation Plan; and
  • An explanation of how the state will seek and consider public input on its Mitigation Plan.

The Department will solicit public input to help inform the development of Florida’s Mitigation Plan. Additional information and instructions on how to submit comments will be provided at a future date. The state’s Mitigation Plan is not a formal solicitation for project proposals.

 

Eligible Mitigation Actions

Appendix D-2 of the Environmental Mitigation Trust Agreement for State Beneficiaries specifies 10 types of projects eligible for the Mitigation Trust Fund.

These projects are different from the options available to owners/lessees of VW vehicles. VW owners/lessees should visit www.VWCourtSettlement.com for information on vehicle buyback and modification options under the Class Settlement Program.

Trust funds may be used to pay some or all of the cost to repower or replace eligible diesel-powered vehicles with new diesel vehicles or engines, alternative fueled vehicles or engines, or replacements with all-electric vehicles or engines. Both privately-owned and government-owned fleets are potentially eligible to receive funding. The settlement expressly requires that the old vehicles and/or diesel engines be scrapped.

Appendix D-2 to the Environmental Mitigation Trust Agreement for State Beneficiaries provides detail on eligible equipment categories, model years, and the percentages of matching costs that funding recipients must provide. There are ten categories of Eligible Mitigation Actions:

  1. Repower or replace Class 8 local freight trucks and port drayage trucks with new diesel, alternative fuel or electric engines;
  2. Repower or replace Class 4 – Class 8 school buses, shuttle buses, or transit buses with new diesel, alternative fuel or electric engines;
  3. Repower or replace Class 4 – Class 7 local freight trucks with new diesel, alternative fuel, or electric engines;
  4. Repower or replace Pre-Tier 4 diesel switcher locomotives with new diesel, alternative fuel, or electric engines;
  5. Repower or upgrade diesel-powered ferries and tugs with new diesel or alternative fuel engines;
  6. Provide electric shorepower equipment for oceangoing vessels;
  7. Repower or replace diesel-powered airport ground support equipment with electric engines;
  8. Repower or replace large forklifts and port cargo handling equipment with electric engines;
  9. Build new light duty zero emission vehicle supply equipment (electric charging or hydrogen dispensing stations); and
  10. Use trust funds to provide matching funds for state allocation of funding under the Diesel Emission Reduction Act (DERA). Additional information on Florida’s participation in the DERA program can be found here.

 

Volkswagen Settlement Timeline

Event

Approximate Time Frame

2.0-Liter Partial Settlement approved by Court

October 25, 2016 

3.0-Liter Partial Settlement approved by Court

May 17, 2017 

Wilmington Trust selected as Trustee

March 15, 2017

Wilmington Trust filed Final Trust Agreement with Court

September 6, 2017

Trust Effective Date

October 2, 2017

Florida Applies to Become a Beneficiary

By December 1, 2017 (no later than 60 days after the Trust Effective Date)

States Notified of Beneficiary Designation By January 30, 2018 (no later than 120 days after the Trust Effective Date)
Florida Submits its Mitigation Plan At least 30 days prior to submitting any project-specific funding request to the Trustee.
Florida Submits Funding Requests At least 30 days after submitting the state’s Mitigation Plan to the Trustee.

 

News and Updates

Sign up for News and Info DEP has established an email list for parties interested in following developments related to the State Mitigation Plan and future activity under the Mitigation Trust Fund. Please visit DEP’s subscription page to sign up for email updates.

 

Informational Links

 

Last updated: October 04, 2017

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