Environmental Mitigation Trust Agreements
Partial Consent Decrees
The U. S. Department of Justice, California and Volkswagen (and its subsidiaries) filed several partial consent decrees (PCDs) with the U.S. District Court for the Northern District of California (Court) in 2016 and 2017. A primary goal of the first two partial consent decrees is to reduce NOx emissions from specified eligible categories of mobile sources to mitigate the excess unlawful emissions that were, and are still being, produced by the unlawful Volkswagen vehicles. The PCDs address this goal by laying out the Form of Environmental Mitigation Trust Agreement to mitigate excess NOx emissions produced by unlawful vehicles. The first PCD (Court-approved on October 25, 2016) pertains to Volkswagen's 2.0-liter diesel vehicles covering model years (MY) 2009 through 2016. The second PCD (Court-approved on May 17, 2017) pertains to Volkswagen's 3.0-liter diesel vehicles covering MY 2009-2016. A third PCD between the U.S. Department of Justice and Volkswagen (only) relates to the Defendants’ liability under the Clean Air Act for civil penalties and injunctive relief to prevent similar violations in the future. Links to the PCDs are provided below.
State and Indian Tribe Trust Agreements
In its final form, the Form of Environmental Mitigation Trust Agreement was split into two separate agreements, one for State Beneficiaries and one for Indian Tribe Beneficiaries. The U.S. Department of Justice filed the Environmental Mitigation Trust Agreements for State Beneficiaries and Indian Tribe Beneficiaries (State and Indian Tribe Trust Agreements) with the Court on October 2, 2017, which finalized the State and Indian Tribe Trust Agreements and established the Trust Effective Date (TED) as October 2, 2017.
A primary goal of the State and Indian Tribe Trust Agreements is to reduce existing NOx emissions by providing funding for projects that will reduce emissions from specified eligible categories of mobile sources, to mitigate the excess unlawful emissions that were, and are still being, produced by the unlawful Volkswagen vehicles. The State and Indian Tribe Trust Agreements establish a $2.925 million environmental mitigation trust (State and Indian Tribe Mitigation Trusts) for this purpose.
A Trustee, Wilmington Trust, N.A., was approved by the Court on March 15, 2017, to administer the State and Indian Tribe Trust Agreements and disburse the funds from the State and Indian Tribe Mitigation Trusts. The State Trust Agreement establishes the terms of the trust agreement for State Beneficiaries, finalizes the State Beneficiary allocations, and provides guidance and documentation for submitting funding requests to the Trustee. The State Trust Agreement also includes the list of Eligible Mitigation Actions in Appendix D-2. A link to the State and Indian Tribe Trust Agreements is provided below.
Pennsylvania's Role in the State Trust Agreement
Pennsylvania is allocated over $118.5 million in the State Trust Agreement. The amount of money allocated to Pennsylvania is based on the percentage of unlawful Volkswagen vehicles registered in the Commonwealth compared to the number registered nationally. The Pennsylvania Department of Environmental Protection (DEP), on behalf of Pennsylvania, submitted the Certification of Beneficiary Status to the Court and Trustee in November 2017. Pennsylvania anticipates official beneficiary status designation by the end of January 2018, when the Trustee will file the list of beneficiaries with the Court. Pennsylvania designated DEP as the official state agency, or “lead agency,” to receive and distribute funding from the State Mitigation Trust.
Projects – Eligible Mitigation Actions
Under the terms of the State Trust Agreement, Pennsylvania is allocated over $118.5 million from the State Mitigation Trust. The State Mitigation Trust can be used to fund specified categories of projects that repower diesel vehicles, engines or equipment with new engines or replace older diesel vehicles, engines or equipment with new vehicles, engines or equipment (Eligible Mitigation Actions). Some projects to retrofit vehicles with control technologies may also be eligible for funding if completed under an approved state-level Diesel Emission Reduction Act (DERA) funding program (Pennsylvania State Clean Diesel Grant Program).
The list of projects that are eligible for funding is provided below:
- Class 8 Local Trucks and Port Drayage Trucks
- Class 4-8 School Bus, Shuttle Bus, or Transit Bus
- Railroad Freight Switcher Locomotives
- Ocean Going Vessels Shorepower
- Class 4-7 Local Freight Trucks
- Airport Ground Support Equipment
- Light-Duty Zero Emission Vehicle Supply Equipment
- Matching funds for projects eligible under the Diesel Emission Reduction Act
See Appendix D-2 of the State Trust Agreement for more details.
The Court established a Trust Effective Date (October 2, 2017), which triggered some deadlines. DEP submitted Pennsylvania’s Certification for Beneficiary Status to the Court and the Trustee by the December 1, 2017 deadline. The Trustee must make final designations of Beneficiaries of the State Trust Agreement by the end of January 2018. After it is designated as a Beneficiary, Pennsylvania must finalize and submit a Beneficiary Mitigation Plan to the Trustee at least 30 days prior to DEP’s first funding request. Project solicitation for some categories of eligible projects is expected to begin shortly after Pennsylvania is designated as a Beneficiary. Additional information about project solicitations will be posted on this webpage as it becomes available.
Under the State Trust Agreement, the lead agency (DEP) will be responsible for determining if proposed projects are eligible and compliant with the terms and conditions of the State Trust Agreement. DEP will request funds from the Trustee, either in advance or on a project-by-project basis, for eligible, compliant projects that it intends to fund. If the Trustee approves the funding request, the Trustee will disburse State Mitigation Trust funds to DEP, for DEP to distribute to the funding recipient, or will disperse State Mitigation Trust funds directly to the funding recipient, as requested by DEP. In general terms, DEP will receive proposals for projects and rate the projects on established and publicized criteria, such as cost effectiveness, emission reductions, and the air quality where the project is located. DEP will award points for project applications based on specified criteria and determine those projects that are the best eligible projects. Then, DEP will apply to the Trustee for approval to fund what DEP determined to be the best eligible projects.
The State Trust Agreement states that the Trustee may only disburse funds for Eligible Mitigation Actions, and for Eligible Mitigation Action Administrative Expenditures. Pennsylvania, when approved as a Beneficiary, will be authorized to use up to 15 percent of the State Mitigation Trust funds awarded for eligible projects for Pennsylvania's actual administrative expenditures and those of any third-party contractors associated with implementing the projects.
Beneficiary Mitigation Plan
DEP developed a draft Beneficiary Mitigation Plan that provided an overview of how Pennsylvania's portion of the State Mitigation Trust funds will be spent. DEP held a public comment period (May 20, 2017 – July 5, 2017), a webinar on May 23, 2017, and several listening sessions throughout Pennsylvania in June 2017. DEP received public comment on the draft Beneficiary Mitigation Plan during the public comment period. See the Pennsylvania Bulletin notice here.
The draft Beneficiary Mitigation Plan can be viewed at the link below. Recordings of the webinar are also available below. DEP is finalizing the Beneficiary Mitigation Plan after careful consideration of the public comments and testimony it received during the public comment period. DEP anticipates making the final Beneficiary Mitigation Plan publicly available shortly after Pennsylvania is designated as a Beneficiary.
Frequently Asked Questions (FAQ's)
For additional information on the Mitigation Trust, please see the EPA FAQ document.