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Volkswagen Settlement Information

DEQ administers over $93 million in the Volkswagen Environmental Mitigation Trust (Trust) to reduce air pollution in Virginia. The Trust is the result of settlements resolving allegations that Volkswagen violated the Clean Air Act through the use of emission testing defeat devices designed to cheat on federal emissions tests. Under the settlement, Volkswagen is required to establish a $2.95 billion environmental mitigation trust that is administered by states, territories, and the District of Columbia.

Over 500,000 excessively polluting vehicles were sold in the U.S. More than 16,000 were sold in Virginia, and produced over 2,000 tons of excess nitrogen oxides (NOx) in violation of federal pollution standards.

DEQ administers the Trust through a state Beneficiary Mitigation Plan (Plan). The overall goal of the Plan is to protect human health and the environment by mitigating the excessive NOx and other area pollutants caused by the defeat devices.

Implementation of Eligible Mitigation Actions

Volkswagen settlement project categories

Port Equipment Electrification Project

$14 million from the Trust has been allocated to the Port of Virginia (POV) for a $24,150,000 port equipment electrification project. POV is the third largest container port on the U.S. East Coast, serving as a global gateway to commerce and supporting hundreds of thousands of jobs in Virginia. Nearly two-thirds of POV cargo is transported on trucks, with nearby communities disproportionately impacted by diesel pollution and greenhouse gases that drive climate change. POV will replace two diesel ship-to-shore cranes with all-electric at the Norfolk International Terminal and 160 diesel yard tractors operating at its five terminals, beginning with the Richmond Marine Terminal. POV will contribute $10,150,000 to the project, which will permanently eliminate more than 3,000 tons of diesel pollution, more than 71,000 tons of greenhouse gases and more than 6 million gallons of diesel fuel.

Clean Air Communities Program

$20 million from the Trust has been allocated for the Clean Air Communities Program. Eligible projects will be awarded to state and local governments across the Commonwealth through a competitive application process. Eligible projects will be selected on the basis of emission reductions and cost-effectiveness of emission reductions ($VW/Ton of NOx). Eligible projects require a minimum 25% cost-share. The minimum required cost-share can be provided by the eligible applicant and/or by another government or non-government funding source. Projects with a greater cost-share than the minimum required are likely to be more competitive in terms of cost-effectiveness. Priority will be given to projects located in Virginia’s low income communities, communities of color, or communities listed on the U.S. Environmental Protection Agency 2020 Diesel Emissions Reduction Act Priority List.

Eligible project costs will be reimbursed to awardees in two stages: 50% of the project costs when a verified purchase order is placed; and the remaining 50% upon successful project completion. Additional program requirements are under consideration including establishing minimum and maximum award amounts. The competitive application process will open later this summer. Sign up to receive email notifications regarding the competitive application process.

Eligible Projects

Emission Reduction Strategy

Allowed VW Expenditure Amount

Class 8 Local Freight Trucks & Port Drayage trucks

Replacement; crappage required

Up to 75% for government-owned all-electric replacement, including electric charging infrastructure costs

Class 4-7 Local Freight Trucks

Replacement; scrappage required

Up to 75% for government-owned all-electric replacement, including electric charging infrastructure costs

Class 4-8 Shuttle Buses

Replacement; scrappage required

Up to 75% for government-owned all-electric replacement, including electric charging infrastructure costs

Airport Ground Support Equipment

Replacement; scrappage required

 

Up to 75% for all-electric replacement, including charging infrastructure costs

Freight Switching Locomotives

Repower and replacement; scrappage required

Up to 75% for government-owned all-electric replacement, including electric charging infrastructure costs

Ferries/Tugs

Repower; scrappage required

Up to 75% for governmental owned all-electric repower, including electric charging infrastructure costs

Oceangoing Vessels

Shorepower

Up to 75% for government-owned shore-side infrastructure

Public EV Charging Network

In August 2018, DEQ awarded a contract to EVgo to develop a statewide public electric vehicle (EV) charging network to accelerate EV adoption. This network will:

  • Complement existing and other large-scale deployments of charging infrastructure underway maximizing the Commonwealth’s investment.
  • Prioritize high-powered direct current fast charger deployment along heavily traveled corridors and metropolitan areas, while ensuring charging accessibility across the entire state.
  • Ensure redundancy and will be designed to accommodate additional chargers and/or power.
  • Be developed over three one-year investment cycles.
  • Increase the number of fast charging ports by more than 370% and level two ports by more than 30%. 

Electric Public Transit Buses

$14 million of the Trust has been allocated to replace older diesel public transit buses with all-electric transit buses through a new Clean Transportation Voucher Program implemented through the Department of Rail and Public Transportation’s annual public transportation capital grant cycle known as MERIT. The goal of the program is to provide funding to cover the incremental cost of transitioning from diesel buses to all-electric buses.

During the fiscal year 2020 grant cycle, $9 million of VW Trust funds were awarded to Alexandria, Blacksburg, and Hampton Roads for the replacement of old diesel public transit buses with all-electric buses. The $9 million from the VW Trust will be augmented by $3.5 million from the statewide transit capital program, as well as another $6.5 million in federal and local funds.

The remaining $5 million will be made available for all-electric public transit buses through next fiscal year’s transit grant cycle, which opened on December 1, 2019.

Clean School Bus Program

Approximately 99 percent of the Virginia’s public school bus fleet is diesel; of which: More than 3,500 diesel buses operating in Virginia are model year 2006 or older, and more than 500 of these buses run on the dirtiest unregulated engines prior to the first EPA diesel standards (pre-1998 MY). These pollutants contribute to climate change and a variety of known health impacts, including, lung cancer, asthma and even autism. Children, including children riding on school buses, are among the most vulnerable to the health effects of diesel pollution. Concerns about the effects of diesel exhaust on children’s health are particularly troubling since millions of children spend considerable time each day on diesel buses, and many more attend schools where diesel buses pick up and drop off passengers and often idle with their engines running.

Virginia has dedicated $20 million in VW Trust funds to accelerate the deployment of cleaner school buses across Virginia’s public school districts. This funding allocation will prioritize electric school buses with a set aside for propane school buses. Funding will be awarded to school districts through a competitive application process. Please check back frequently or sign up to receive email notifications as to when the application process will open.

Eligible Mitigation Action Administrative Expenditures

Virginia may use Trust funds for actual administrative expenditures associated with implementing any eligible mitigation action, but not to exceed 15% of the total cost of such action. The 15% cap includes the aggregated amount of eligible administrative expenditures incurred by Virginia and any third-party.

Virginia has capped administrative expenditures at 5% allowing more Trust funds to be spent on actual mitigation actions.

Unallocated

Allocation of the remaining Trust funding for the implementation of additional eligible mitigation actions will be informed by the public process undertaken during the development of Virginia’s Plan. If future revisions to the Plan are necessary, DEQ intends to seek public input on them. Questions and suggestions can be submitted to vwmitigation@deq.virginia.gov. Sign up to receive updates from the VW Settlement email list.

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Virginia Department of
Environmental Quality
P.O. Box 1105
Richmond, VA 23218
(804) 698-4000


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