Volkswagen settlement 101

The Volkswagen settlement was approved by a federal court in California on October 25, 2016. VW is required to pay $2.9 billion into an environmental mitigation trust fund to be shared among the states and tribes. Minnesota expects to receive $47 million from the trust between 2018 and 2027. The money will be used to offset the excess air pollution caused by VW's actions. 

Separate parts of the settlement would require Volkswagen to spend $10 billion to buy back affected vehicles, terminate leases early, or repair the vehicles. Additionally, Volkswagen is required to invest $2 billion over 10 years in electric vehicle infrastructure, access, and awareness-building. VW, the U.S. Environmental Protection Agency (EPA), and California will administer these parts of the settlement.

What were the environmental impacts?

Aerial shot of thousands of cars in lotVW admitted that about 11 million of its vehicles made between 2009 - 2016 were designed to cheat on required emissions tests. Cars are equipped with emission-control equipment to reduce NOx,  but VW designed the software in its vehicles to activate the equipment only during emissions tests, not during regular driving. As a result, NOx emissions from these vehicles far exceeded the federally allowed limits. Federal air-quality standards for NOx are designed to prevent health effects such as asthma, emphysema, bronchitis, and other respiratory diseases.

How will Minnesota use the settlement money? 

The Minnesota Pollution Control Agency is the designated environmental authority to oversee the how the funds allocated to Minnesota are used. Because the settlement money is meant to offset VW's excess pollution by reducing NOx emissions elsewhere in the transportation sector, the national agreement limits how the $47 million dollars may be spent.

Process

To be approved to invest settlement funds, states must submit a Beneficiary Mitigation Plan. This is a high-level, summary description of general activities states plan to fund. Minnesota is seeking comments on its draft plan through March 19, 2018. Read the draft plan and find out how to provide public input. 

The plan must describe the state’s overall goals for the funds, the types of projects the state plans to fund, expected emissions reductions from those projects, and how the projects will advance environmental justice

The trustee who is managing the VW funds for the country must review and approve the Beneficiary Mitigation Plan. After the draft plan is reviewed by the public, the MPCA will submit it to the trustee for approval. Once the trustee approves the plan, the MPCA can begin developing requests for proposals (RFP) to fund projects. The RFPs will be shaped by the priorities outlined in the plan. People with projects they wish to have funded will need to apply for funding through the request for proposals process.

Mitigation activities eligible for funding

Appendix D-2 of the Consent Decree outlines specific details of how trust funds may be used. Overall, money from the settlement may be used to pay some or all of the cost to repower (change the engine) or replace eligible diesel-powered vehicles with new vehicles. The replacements can be powered by diesel or alternative fuels, or electricity. The settlement funds can be used for these 10 project types:

  • Electric vehicle charging sign Class 8 local freight trucks and port drayage trucks
  • Class 4-8 school buses, shuttle buses or transit buses
  • Pre-Tier 4 diesel 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 infrastructure (e.g. charging stations)
  • Matching funds for projects eligible under the Diesel Emission Reduction Act (DERA), which includes construction equipment and other heavy-duty diesel equipment

The focus of the court case and program is NOx reductions, but within the limits of the settlement, we have some ability to use the funds to more broadly benefit Minnesotans. For instance, projects that reduce NOx can also reduce other harmful air pollutants such as particulate matter and greenhouse gases. 

Why diesel vehicles and equipment?

Diesel engines are the workhorses of our economy because of their power, efficiency, and longevity. However, older heavy-duty diesel vehicles and equipment can produce massive amounts of harmful air pollution, while modern equipment and engines are much cleaner and can drastically reduce emissions. A modern diesel truck produces over 97% less fine particulate matter than an older one. There are also alternative fuels such as propane, natural gas, and electricity that can power many heavy-duty vehicles and equipment.  

Diesel equipment can last for decades, though, so it can take a long time for the older, dirtier equipment to be retired and replaced with cleaner options. According to the EPA, diesel retrofits, “repowers,” and replacements are some of the most cost-effective methods for reducing air pollution and gaining health benefits.

Volkswagen settlement timeline 

All dates are estimates and are subject to change

Event Approximate time frame 

Court approved the partial settlement 

October 25, 2016

Trust takes effect

October 2, 2017
Minnesota designated a beneficiary

 

January 29, 2018

Draft plan out for public comment Until March 19, 2018
Minnesota submits its plan for using the funds Spring 2018
First projects to be funded in Minnesota 2018

 

We want to hear from you! Send your comments to vwsettlement.pca@state.mn.us. We're also holding public meetings around the state. Learn more about Minnesota's draft plan

Additional resources