Your City Can Receive Funding From the Volkswagen Settlement

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Cities can use funds from the Volkswagen Clean Air Act settlement to invest in new vehicles, improve energy efficiency, provide public energy infrastructure and more.

Funds from the VW settlement can cover up to 100 percent of the cost to upgrade, repower or replace diesel-powered government vehicles with either newer, cleaner-burning models or vehicles that run on alternative energy. (Getty Images)

The settlement of the Volkswagen (VW) Clean Air Act violation case has created a unique opportunity for cities across the country to take advantage of more than $2 billion available for investment in new, cleaner vehicles and improve energy infrastructure in their communities.

In punishment for VW’s violation of the Clean Air Act by cheating on the emissions tests of more than 500,000 vehicles, VW will pay out $14.7 billion to alleviate the environmental damage created by their actions. $2.7 billion of this settlement will go into an Environmental Mitigation Trust that will be given directly to states to fund projects that reduce Nitrogen Oxide (NOx) emissions at the local level.

The funds will be given out proportionally based on the number of violating vehicles bought and used in the state, ranging between $381.28 million for California and $7.5 million for Wyoming, with states like Florida, Oklahoma and Washington receiving $152.38 million, $19.09 million and 103.96 million respectively. Cities are well positioned to take advantage of this money – and taking the initiative now ensures that local governments can put these funds to use in their communities.

The Environmental Mitigation Trust will be managed by a trustee, who will be confirmed in the coming weeks. To access the funds, each beneficiary must submit a certification form, signed by the governor, which designates a state agency to manage fund allocation no later than 60 days after the trustee’s confirmation. The designated agency will then have 150 days to create and submit mitigation plans detailing how the funds will be used, who the recipients will be, and how it will oversee the distribution. This document from the National Association of State Energy officials provides a complete breakdown of the Environmental Mitigation Trust’s timeline.

Cities can use the funds in a variety of ways to improve energy efficiency and provide public energy infrastructure, and many of the projects can be fully funded through this trust. Specifically,

  • the trust funds can cover up to 100 percent of the cost to upgrade, repower or replace diesel-powered government vehicles with either newer, cleaner-burning models or vehicles that run on alternative energy;
  • the trust funds can cover up to 75 percent of the cost to replace or repower non-government vehicles;
  • the trust funds may be used to buy, install, operate and maintain new Zero Emission Vehicle (ZEV) supply equipment such as LV1, LV2 and DC fast-charging stations in public areas, work places and multi-unit dwellings; and
  • other uses for the funds are allowed under the Diesel Emission Reduction Act (DERA) Clean Diesel Grant program, including truck stop electrification plans and idle reduction equipment. More information on eligible programs can be found on the U.S. Environmental Protection Agency’s DERA website.

Cities can get involved in this program in several ways to secure available funding for use in their communities. For example, cities should prepare by identifying local projects that seek to reduce NOx emissions in their communities in collaboration with state agencies, local EPA offices, Clean Cities coalitions, and other community stakeholders. Cities should also identify which agencies will be charged with creating the mitigation plan in their state, and what the process and timeline will be for accepting public comments. Much of this information can be found online through state websites or governor’s offices. Once the beneficiaries have been chosen by the trustee, cities can submit their project proposals to the designated agencies to have their projects added to the state’s mitigation plan.

More information and details on the settlement and its associated time tables and deadlines, along with additional tools designed to help cities effectively submit their proposals, can be found in this document released by the Center for Climate and Energy Solutions.

About the author: Will Downie is a federal advocacy intern at the National League of Cities. He is a senior at George Washington University studying political science and international affairs with a concentration in economics.