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Volkswagen Settlement - Florida Mitigation Fund

Volkswagen Consent Decree and Partial Settlements

In October 2016, Volkswagen (VW) entered into a Partial Consent Decree with the U.S. Government settling 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 Partial Consent Decree with the U.S. government settling 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

Under the terms of Appendix D to the Partial Consent Decree, all 50 states, the District of Columbia, Puerto Rico and federally recognized tribes are eligible to become beneficiaries under the Mitigation Trust Fund. Each eligible beneficiary can receive a pre-determined share of the $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 Partial Consent Decree, and from the 3.0-liter settlement ($12.9 million), as specified in the Mitigation Allocation Appendix 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 Partial Consent Decree provides a process that the states must follow to become beneficiaries under the Mitigation Trust Fund. For a state to become a beneficiary, it must file for beneficiary status not later than 60 days after the “Trust Effective Date,” which is expected to occur in the late summer or early fall of 2017.

 

State Mitigation Plan

Once the Trustee declares that a state is an eligible beneficiary, the state must submit an acceptable Mitigation Plan to the trustee within 90 days. The Partial Consent Decree 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 the Mitigation Plan. Additional information and instructions on how to submit comments will be provided when a draft Mitigation Plan is made available. Please note that a draft Mitigation Plan is not a formal solicitation for project proposals.

 

Eligible Mitigation Actions

Appendix D-2 of the Partial Consent Decree 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, alternative fueled or for replacements with all-electric engines or vehicles. Both privately-owned and government-owned fleets will be eligible to receive funding, which requires that the old vehicles and/or diesel engines be scrapped. Appendix D-2 to the Partial Consent Decree provides detail on eligible equipment categories and model years, as well as the different percentages of the matching cost that recipients of the funding must provide. The 10 categories of Eligible Mitigation Actions are:

  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

Partial Settlement approved by Court 

October 25, 2016 

Wilmington Trust selected at Trustee 

March 15, 2017 

Trust takes effect (Trust Effective Date) 

Late Summer/Fall 2017 (estimate) 

Florida applies to become a Beneficiary 

Within 60 days following Trust Effective Date 

States notified of Beneficiary designation 

Within 120 days following Trust Effective Date 

Florida submits its Mitigation Plan 

Within 90 days following Beneficiary designation 

 

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: August 14, 2017

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