From 2009 to 2016, the Volkswagen Group of America and certain related entities (collectively Volkswagen or VW) violated the federal Clean Air Act (CAA) by selling vehicles that did not adhere to established standards. Specifically, VW sold 580,000 vehicles with 2.0 liter and 3.0 liter diesel engines that emitted more air pollution than the CAA allows. VW admitted to this violation and to cheating on their federal emission tests which tried to hide the excess pollution.
As a result of these violations, VW has been required to pay $2.9 billion into an environmental mitigation trust fund to be administered to various state governments. The hope is these funds, through appropriate use, will offset the emissions of VW.
What is the Clean Air Act?
Put into effect on December 17, 1963, the Clean Air Act is a United States federal law designed to control air pollution on the national level. Initially, it aimed to improve, strengthen, and accelerate programs for the prevention and abatement of air pollution. The Act has been amended multiple times over the years, once in 1977 and again in 1990, to establish new goals/dates to achieve the National Ambient Air Quality Standards (NAAQSs) and to address emerging problems, such as acid rain, ozone depletion, and toxic air pollution. To read more about the Clean Air Act, please click here.
Colorado expects to receive $68.7 million from the environmental mitigation trust, which will fund certain eligible projects to reduce NOx emissions from the transportation sector. Acting as the lead agency for Colorado’s air quality and environment, the Colorado Department of Public Health and Environment (CDPHE) compiled the Proposed Beneficiary Mitigation Plan for Colorado, which proposes how to use the $68.7 million to best benefit the state of Colorado.
They plan to divide the acquired funds up into the following ways:
- Alternative Fuel Vehicle Replacement Program: $18 million to replace approximately 400-450 medium and heavy duty trucks, school and shuttle buses, and airport ground support equipment with alternative fuel or electric vehicles.
- Transit Bus Replacement Program: $18 million to replace Class 4-8 transit buses with alternative fuel or electric vehicles, and to install necessary charging infrastructure for these new electric transit buses.
- ZEV Supply Equipment Program: $10.3 million for the acquisition, installation, operation, and maintenance of new light duty zero emission vehicle (ZEV) supply equipment located in public place, workplaces, or multi-unit dwellings.
- Diesel Emissions Reduction Act (DERA) Option: $5 million to reduce emissions from diesel engines eligible for funding through the DERA option, which will support local projects and actions to accomplish this goal.
- Implementation/Admin Costs: $5.2 million will be distributed through existing programs of the CDOT, CEO, and RAQC over the next 5 years to effectively implement the programs above. These funds will cover the costs of program outreach, project applications, accounting, audits, legal compliance, record-keeping, reporting, and related costs.
- Flex Funds: The remaining $12.2 million will be allocated among the eligible mitigation actions in response to market demand and the uptake of trust funds. These funds can be thought of something similar to emergency funds.
Below is the projected timeline of events for the VW Settlement:
|Event||Approximate time frame|
Trust Effective Date (TED)
*Wilmington Trust selected as Trustee – March 2017
|October 2, 2017|
|Colorado files beneficiary certifications||December 1, 2017|
|Colorado proposes Beneficiary Mitigation Plan for public comment||August 28, 2017
*public comments were accepted through October 13, 2017
|Beneficiary designation||January 30, 2018|
|Colorado files a Beneficiary Mitigation Plan||NO later than 30 days prior to submitting the first funding request|
|Colorado requests/receives funds||2018|
For more information on the Proposed Beneficiary Mitigation Plan for Colorado, please click here.
Other states have developed their own Mitigation plans, some of which have already been submitted for review/evaluation. If you would like to read up on the plans submitted by other states, please click here.
The National Association of State Energy Officials (NASEO) have compiled a great amount of information on the settlement, which includes information on how your state and your business can get involved. If you would like to learn more, please click here.
If you still have pressing questions concerning the VW Settlement, please don’t hesitate to reach out to us. We will do our best to answer any questions you may have and direct you to information you need. Feel free to email us or give us a call at 303-847-0276.