Through a series of three partial settlements, the EPA has resolved a civil enforcement case against Volkswagen AG, Audi AG, Dr. Ing. h.c. F. Porsche AG, Volkswagen Group of America, Inc., Volkswagen Group of America Chattanooga Operations, LLC, and Porsche Cars North America, Inc. (collectively “Volkswagen”), subject to reservations set forth in each of the partial settlements. First, on June 28, 2016, the United States lodged with the United States District Court for the District of Northern California the first partial settlement with certain of these Volkswagen entities addressing vehicles containing 2.0 liter diesel engines (the “2.0 liter partial settlement”). On October 25, 2016, the court approved the 2.0 liter partial settlement. Second, on December 20, 2016, the United States lodged with the court the second partial settlement with Volkswagen addressing vehicles containing 3.0 liter diesel engines (the “3.0 liter partial settlement”). On May 17, 2017, the court approved the 3.0 liter partial settlement. Third, on January 11, 2017, the United States lodged with the court the third partial settlement with Volkswagen addressing civil penalties and injunctive relief to prevent future violations (the “third partial settlement”). On April 13, 2017, the court approved the third partial settlement.
The CAA 2.0 liter partial settlement will require Volkswagen to fund a $2.7 billion mitigation trust fund. The mitigation trust fund will pay for defined eligible projects that reduce NOx (eligible mitigation actions). The total $2.7 billion funding for the mitigation trust fund is intended to fully mitigate the total, lifetime excess NOx emissions from the 2.0 liter vehicles. NOx is the major excess pollutant from these vehicles and is a significant health concern.
The mitigation trust will be administered by a trustee. On March 15, the court appointed Wilmington Trust, N.A. to serve as trustee. The trust effective date will be that day when the United States files the finalized trust agreement with the court, which may occur as early as May 2017. Within 60 days of the trust effective date, potential government beneficiaries must elect to become beneficiaries under the CAA 2.0 liter partial settlement and the trust agreement. All 50 States, Puerto Rico, the District of Columbia, and Indian tribes may elect to become beneficiaries. Each participating beneficiary will receive a specific allocation of funds from the total $2.7 billion that can be used for any of the listed eligible mitigation actions. The allocation structure is primarily based on the number of registered illegal Volkswagen vehicles within the boundaries of the beneficiary. Therefore, those beneficiaries with more illegal 2.0 liter cars will receive a larger allocation of trust funds.
Eligible mitigation actions include projects to reduce NOx from heavy duty diesel sources near population centers, such as large trucks that make deliveries and service ports, school and transit buses, and freight switching railroad locomotives. Thus, for example, eligible mitigation actions could include replacing or repowering older engines for newer engines at a rail switchyard, or could include replacing older city transit buses with new electric-powered transit city buses. Eligible mitigation actions may also include, in a more limited capacity, charging infrastructure for light duty zero emission passenger vehicles. Beneficiaries have the flexibility to choose which projects on the list of eligible mitigation actions are the best options for their citizens.
Under the CAA 3.0 liter partial settlement, Volkswagen must contribute an additional $225 million in funding to the mitigation trust fund. This additional funding is intended to fully mitigate the total, lifetime excess NOx emissions from the 3.0 liter vehicles. As with the 2.0 liter partial settlement, each participating beneficiary will receive a specific allocation of funds from the total $225 million that is primarily based on the number of registered illegal Volkswagen vehicles within the boundary of that beneficiary. These funds can be used for any of the listed eligible mitigation actions.
Any member of the public interested in specific eligible mitigation actions should contact their State attorney general’s office.
The CAA 2.0 liter partial settlement requires Volkswagen to invest $2 billion in ZEV charging infrastructure and in the promotion of ZEVs. To that end, Volkswagen will invest $800 million in California and $1.2 billion throughout the rest of the nation, over the next decade. Volkswagen will invest more in California than in other states due to California’s pivotal role in the case and the market demand for charging infrastructure in California. The ZEV investments required by the CAA 2.0 liter partial settlement are intended to address the fact that consumers purchased these illegal vehicles under the mistaken belief that such vehicles were lower-emitting than others. Examples of ZEV investment for which Volkswagen may obtain credit against the $1.2 billion commitment include, for example, level 2 charging at multi-unit dwellings, workplaces, and public sites, direct current fast charging facilities accessible to all vehicles utilizing non-proprietary connectors, and brand-neutral education or public outreach that builds or increases public awareness of ZEVs.
Volkswagen will submit a series of ZEV investment plans to CARB for review and approval, for ZEV investments in California. Volkswagen will submit a series of ZEV national investment plans to EPA for review and approval based on objective criteria, for ZEV investments in the rest of the country. On April 12, 2017, the EPA approved the first ZEV national investment plan. Volkswagen must provide reasonable notice of these opportunities on www.vw.com and www.VWCourtSettlement.com. Therefore, more detailed information for government agencies interested in learning about this process for public comment should visit these websites. Any member of the public interested in Volkswagen ZEV plans should contact their State Attorney General’s Office.
The CAA 3.0 liter partial settlement does not include any additional ZEV investment requirements.
NOx pollution contributes to the formation of harmful smog and soot, exposure to which is linked to a number of respiratory- and cardiovascular-related health effects as well as premature death. Children, older adults, people who are active outdoors (including outdoor workers), and people with heart or lung disease are particularly at risk for health effects related to smog or soot exposure. Nitrogen dioxide formed by NOx emissions can aggravate respiratory diseases, particularly asthma, and may also contribute to asthma development in children.*All information provided above can be found in its entirety online by clicking the following link: https://www.epa.gov/enforcement/volkswagen-clean-air-act-civil-settlement