Volkswagen Settlement

North Carolina Volkswagen Mitigation Plan

Governor Roy Cooper has designated the N.C. Department of Environmental Quality (DEQ) to manage North Carolina’s share of the VW Settlement, an agreement between the German automaker and the U.S. Department of Justice on behalf of the U.S. Environmental Protection Agency (EPA).

States must develop plans for using their settlement funds and submit them for approval to the Trustee, Wilmington Trust, managing the funds nationally. North Carolina’s plan involves three phases of funding for five programs for the duration allowed by the consent decree.

North Carolina’s beneficiary mitigation plan is structured in three phases, so DEQ can seek additional input and make changes as needed along the way. This plan addresses Phase 1 (2018 - 2020) only. DEQ plans to invest 33% of the overall funds ($30.68 million) during this period. DEQ will manage the VW settlement funds through five programs.

School bus replacement program
Transit bus replacement program
Clean heavy-duty on-road equipment program
Clean heavy-duty off-road equipment program
Zero Emission Vehicle infrastructure program

Plan goals

DEQ solicited input from North Carolinians across the state on how the VW mitigation trust funds should be spent in the state and used the public feedback to set goals to guide the DEQ on how to allocate the funds over the duration of the program. DEQ will use the funds to achieve significant NOx emissions reductions across the state. Based on the distribution of violating vehicles registered across the state, DEQ plans to allocate the funds between urban/suburban counties (68%) and rural counties (32%). DEQ will submit requests to the Trustee of the Environmental Mitigation Trust to use funds for eligible projects throughout the state that will reduce or eliminate emissions of NOx focusing on the most cost-effective projects, the quantity of NOx emission reductions and other factors.

Phased program approach

DEQ plans a phased approach for North Carolina’s $92 million allocation, and will seek additional input and make changes as needed between phases. This plan addresses Phase 1 (2018-2020) only.

The first phase of funding represents the beginning step in achieving our multi-year goals for the program. The proposed three phases of funding are:

Phase 1: $30.68 million (33% of overall funds) – 2018 – 2020
Phase 2: $30.68 million (33% of overall funds) – 2020 – 2022
Phase 3: $30.68 million (33% of overall funds) – 2022 – 2024

For Phase 1, eligible public projects include:

projects submitted by local, state, and tribal government organizations,
projects submitted by public or private nonprofit organizations,
projects submitted by public-private partnerships where the lead applicant represents a public sector, public or private nonprofit entity, and
both public and private projects will be eligible for the light-duty ZEV infrastructure program.

Phase 1 programs (2018-2020)

During the initial 2018 – 2020 period, DEQ will allocate 33% ($30.68 million) of North Carolina’s overall funding. The state’s ability to fund projects in each category at the target levels will depend on the applications received. The exact percentages may shift with demand. It should be noted that nothing in this table is binding, and the information is intended to only provide a reasonable amount of detail such as to provide the public with a high-level vision for the use of the mitigation funds. If DEQ does not receive sufficient applications in a category, DEQ would shift funds between categories in Phase 1 or return funds to the trustee for use in the next funding phase.

Summary of Programs, Phase 1 (2018-2020)

NC Grant Programs (2108-2020)	Eligible Action Category	Eligible Fuels	Targeted Percentage*	Targeted Funding Amount
School bus replacement program	School buses	Diesel - 25%	40%	$12,272,754
		Natural gas & Propane - 10%
		All-electric 5%
Transit bus replacement program	Transit buses	All (diesel, propane, natural gas, electric)	20%	$6,136,377
Clean heavy-duty on-road equipment program	Class Local Freight 4-8 trucks	All (diesel, propane, natural gas, electric)	10%	$3,068,189
Clean heavy-duty off-road equipment program	Switcher locomotives, ferries, tugs, forklifts, port cargo handling equipment, ocean-going vessel shore power, airport ground support equipment, Diesel Emission Reduction Act (DERA)**	All (diesel, propane, natural gas, electric)	10%	$3,068,189
ZEV infrastructure program		Not Applicable	15%	$4,602,283
DEQ administrative costs		Not Applicable	5%	$1,534,094
	Total			$30,681,886

*Percentage of available settlement funds targeted in these eligible categories for 2018 – 2020.
**EPA provides a detailed comparison between VW Eligible Mitigation Actions (EMAs) 1-9 and Eligible Mitigation Action #10, the DERA Option, VW-DERA Comparison.

Public Involvement

DEQ is committed to using the VW settlement funds in ways that reflect the input and interests of North Carolinians. DEQ will have an open and transparent process that includes the input of a wide range of citizens. Before drafting the state plan for phase 1, DEQ held five public stakeholder meetings, kept interested people up to date with informational email bulletins, we received 872 written comments and responses to our request for information. DEQ released a draft of the state plan and gave North Carolinians the opportunity to provide input and we received 563 comments which helped shape the final plan for phase 1. DEQ will also provide opportunities to receive input throughout the settlement program. A summary of the comments DEQ received on the draft mitigation plan is available here.

If you would like to receive email updates about this topic, please send an email with the word Subscribe in the subject line to daq.NC_VWGrants@ncdenr.gov.