In October 2016, Volkswagen (VW) settled with the U.S. government resolving claims that it violated the Clean Air Act by selling diesel vehicles that violated the U.S. Environmental Protection Agency’s (EPA) mobile source emission standards. The violation involved installation and use of emission testing “defeat devices” in approximately 500,000 turbocharged direct injection (TDI) 2.0-liter diesel engine vehicles sold and operated in the United States from model year 2009 through 2015. In May 2017, VW entered into a second settlement with the U.S. government resolving additional claims that it violated the Clean Air Act by selling approximately 80,000 TDI 3.0-liter diesel engines also equipped with defeat devices.
The defeat devices allowed the 2.0-liter and 3.0-liter diesel vehicles to meet the applicable nitrogen oxides (NOx) emission limits during emissions tests while not meeting these limits during normal vehicle operation. To resolve the 2.0-liter and 3.0-liter diesel engine Clean Air Act violations, VW has agreed to provide approximately $16 billion to fund the following actions:
A requirement that VW spend $11 billion to buy back or install pollution control equipment for at least 85 percent of the 2.0-liter and 3.0-liter TDI engines (more information on vehicle buybacks and modifications is available at www.VWCourtSettlement.com);
$2.925 billion to fully remediate the excess NOx emissions that were emitted by the approximately 500,000 2.0-liter and 80,000 3.0-liter vehicles equipped with defeat devices (the “Mitigation Trust Fund”).
Owners/lessees of VW vehicles should visit www.VWCourtSettlement.com for information on vehicle buyback and modification options under the Class Settlement Program.
Each eligible beneficiary can receive a predetermined share of $2.925 billion, which is based upon the number of 2.0-liter and 3.0-liter diesel vehicles sold in each jurisdiction. Florida’s share is more than $166 million, or 5.68 percent of the overall Mitigation Trust Fund. The $166 million is the combined amount from the 2.0-liter settlement ($152.4 million), as specified in Appendix D-1 to the Final Trust Agreement, and from the 3.0-liter settlement ($12.9 million), as specified in the Appendix D-1A to the Second Partial Consent Decree.
The purpose of Mitigation Trust Fund is to provide money for specified diesel emission reduction projects. These projects are intended to offset excess emissions of NOx caused by the subject vehicles in order to fully mitigate the total, lifetime excess NOx emissions from the 2.0-liter and 3.0-liter vehicles.
Timeline for Participation in the Mitigation Trust Fund
The “Trust Effective Date” is October 2, 2017. For a state to become a Beneficiary, the state must execute and file the Certificate for Beneficiary Status contained in Appendix D-3 by December 1, 2017 – 60 days after the Trust Effective Date.
On November 28, 2017, the State of Florida elected to become a Beneficiary under the Volkswagen Environmental Mitigation Trust Agreement by submitting the completed Certification Form to Wilmington Trust, N.A., the court-appointed Trustee. The Certification designated the Department of Environmental Protection as the Lead Agency in Florida for purposes of participation in the Volkswagen Environmental Mitigation Trust.
On January 29, 2018, Wilmington Trust filed with the court the Notice of Beneficiary Designation, confirming that the State of Florida is a Beneficiary to the Volkswagen Environmental Mitigation Trust.
State Mitigation Plan
Now that the trustee has declared that Florida is a beneficiary, the state is required to prepare and submit to the trustee a Mitigation Plan before the trustee will distribute funds to the state.
The state’s overall goal for the use of the funds;
The categories of Eligible Mitigation Actions that the state anticipates will be appropriate to achieve the stated goals, and the preliminary assessment of the percentages of funds anticipated to be used for each type of Eligible Mitigation Action;
A description of how the state will consider the potential beneficial impact of the selected Eligible Mitigation Actions on air quality in areas that bear a disproportionate share of the air pollution burden within its jurisdiction;
A general description of the expected ranges of emission benefits that the state estimates would be realized by implementation of the Eligible Mitigation Actions identified in the Mitigation Plan; and
An explanation of how the state will seek and consider public input on its Mitigation Plan.
The department will solicit public input to help inform the development of Florida’s Mitigation Plan. Additional information and instructions on how to submit comments will be provided at a future date. The state’s Mitigation Plan is not a formal solicitation for project proposals.
These projects are different from the options available to owners/lessees of VW vehicles. VW owners/lessees should visit www.VWCourtSettlement.com for information on vehicle buyback and modification options under the Class Settlement Program.
Trust funds may be used to pay some or all of the cost to repower or replace eligible diesel-powered vehicles with new diesel vehicles or engines, alternative fueled vehicles or engines, or replacements with all-electric vehicles or engines. Both privately-owned and government-owned fleets are potentially eligible to receive funding. The settlement expressly requires that the old vehicles and/or diesel engines be scrapped.
Repower or replace Class 8 local freight trucks and port drayage trucks with new diesel, alternative fuel or electric engines;
Repower or replace Class 4 – Class 8 school buses, shuttle buses, or transit buses with new diesel, alternative fuel or electric engines;
Repower or replace Class 4 – Class 7 local freight trucks with new diesel, alternative fuel, or electric engines;
Repower or replace Pre-Tier 4 diesel switcher locomotives with new diesel, alternative fuel, or electric engines;
Repower or upgrade diesel-powered ferries and tugs with new diesel or alternative fuel engines;
Provide electric shorepower equipment for oceangoing vessels;
Repower or replace diesel-powered airport ground support equipment with electric engines;
Repower or replace large forklifts and port cargo handling equipment with electric engines;
Build new light duty zero emission vehicle supply equipment (electric charging or hydrogen dispensing stations); and
Use trust funds to provide matching funds for state allocation of funding under the Diesel Emission Reduction Act (DERA). Additional information on Florida’s participation in the DERA program can be found here.
Volkswagen Settlement Timeline
Approximate Time Frame
2.0-Liter Partial Settlement approved by Court
October 25, 2016
3.0-Liter Partial Settlement approved by Court
May 17, 2017
Wilmington Trust selected as Trustee
March 15, 2017
Wilmington Trust filed Final Trust Agreement with Court
September 6, 2017
Trust Effective Date
October 2, 2017
Florida Applies to Become a Beneficiary
November 28, 2017
States Notified of Beneficiary Designation
January 30, 2018
Florida Submits its Mitigation Plan
At least 30 days prior to submitting any project-specific funding request to the Trustee.
Florida Submits Funding Requests
At least 30 days after submitting the state’s Mitigation Plan to the Trustee.
DEP has established an email list for parties interested in following developments related to the State Mitigation Plan and future activity under the Mitigation Trust Fund. Please visit DEP’s subscription page to sign up for email updates.
The Florida Department of Environmental Protection is the state’s lead agency for environmental management and stewardship – protecting our air, water and land. The vision of the Florida Department of Environmental Protection is to create strong community partnerships, safeguard Florida’s natural resources and enhance its ecosystems.