Phase 2 - Volkswagen Settlement

North Carolina Volkswagen Phase 2 Mitigation Plan

North Carolina’s Phase 2 beneficiary mitigation plan is the final phase of funding combining the previously proposed phases 2 and 3 into one final phase. This plan addresses Phase 2 (2022 - 2024) only. DEQ plans to invest the remaining funds ($67.9 million) during this period.

DEQ will manage the Volkswagen Settlement funds through two main programs: the Diesel Bus & Vehicle Replacement Program, and the Zero-Emission Vehicle (ZEV) Infrastructure Program. Each program will have several funding opportunities.

Diesel Bus & Vehicle Replacement Programs

The Diesel Bus & Vehicle Replacement Programs target funding for the replacement of older diesel vehicles with new, cleaner alternatives. These programs will prioritize funding to electrification projects.

School Bus Replacement Program

Transit and Shuttle Bus Replacement Program

Clean Heavy-Duty Equipment and Vehicle Replacement Program

Diesel Emission Reduction Act Program

Zero-Emission Vehicle Infrastructure Programs

The ZEV Infrastructure Programs provide grants and rebates for the funding of two types of electric-vehicle charging infrastructure: DC Fast chargers and Level 2 chargers. Eligibility in each program depends on the location and purpose of the chargers.

DC Fast Infrastructure Program

Level 2 Infrastructure Program

Phase 2 Plan Goals

DEQ solicited input from North Carolinians across the state on how the VW Phase 2 mitigation trust funds should be spent in the state. We used the public feedback to set goals to guide the DEQ on how to allocate the funds over the duration of the program.

Phase 2 prioritizes vehicle electrification projects. DEQ will continue to 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.

Phase 2 Timeline

DEQ released the first Phase 2 Requests for Proposal (RFPs) in February 2022 and will continue to release Phase 2 RFPs through spring and summer 2022. Once a program's RFP is released, applications must be submitted within 90 days to be considered.

RFPs now available

Program	Timeline
Transit and Shuttle Bus Program	Applications CLOSED: Awards announced July 2022
DC Fast Program: Priority corridors	DEADLINE EXTENDED: Applications due May 18, 2022
Level 2 Program: State Agency	Applications due May 31, 2022
School Bus Program	Applications due June 6, 2022
Level 2 Program: Publicly accessible	Applications open now and will be accepted on first-come, first-served basis until funds exhausted
DC Fast Program: Existing site upgrades	Applications due July 11, 2022
Level 2 Program: Multi-Unit Dwellings	Applications open June 13, 2022, and will be accepted on first-come, first-served basis until funds exhausted
Clean Heavy-Duty Equipment & Vehicle Replacement Program	Applications due Aug. 15, 2022

Upcoming RFPs

Level 2 Program: Workplace - June 2022

Phase 2 programs (2022 – 2024)

NC Grant Programs (2022-2024)		Eligible Mitigation Action Category		Eligible Fuels	Targeted Percentage*	Targeted Funding Amount
Diesel Bus & Vehicle Replacement Program	School Bus Replacement Program	Class 4-8 school buses**		All (electric, diesel, propane, natural gas) Priority will be given to electric replacements	40%
						$27,196,866
	Transit Bus Replacement Program	Class 4-8 transit and shuttle buses			20%	$13,598,433
	Clean Heavy-Duty Equipment & Vehicle Replacement Program	Class 4-8 equipment and vehicles such as local freight trucks, ferries, forklifts, and switcher locomotives			20%	$12,918,511
		Diesel Emission Reduction Act (DERA) Program				$679,922
ZEV Infrastructure Program		DC Fast Program	Public Access – Priority Corridors	Not Applicable	15%	$4,997,424
			Public Access – Existing Site Upgrades			$2,141,753
		Level 2 Program	Public Access			$1,070,877
			Workplace			$489,544
			Multi-Unit Dwelling			$489,544
		State Government	Level 2 – Fleet, Workplace & State Attractions Charging
						$1,009,684
DEQ Administrative Costs				Not Applicable	5%	$3,399,608
Total:						$67,992,166

*Percentage of available settlement funds targeted in these eligible categories for 2022 – 2024.

**DEQ is prioritizing electrification with the goal of awarding at least 50% to electric school bus replacements.

Public Outreach

DEQ has developing an outreach program to help counties that historically do not have the resources to effectively identify eligible vehicles and ZEV infrastructure opportunities for grant programs and submit quality applications. Applications from these counties may also receive scoring bonuses.

As part of the Historically Under-Resourced County Outreach Program, DEQ staff will hold in-person outreach meetings in communities across North Carolina to discuss grant opportunities.

Learn More

Public Involvement

DEQ is committed to using the Volkswagen 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.

DEQ released a draft of the state plan and gave North Carolinians the opportunity to provide input. We received 301 comments which helped shape the final plan and requests for proposals for Phase 2. During the draft mitigation plan comment period, DEQ held four virtual public stakeholder meetings to discuss the draft plan and answer questions.

DEQ will also provide opportunities to receive input throughout the settlement program. A summary of the comments DEQ received on the draft Phase 2 mitigation plan is available here.