Volkswagen Settlement

News

  • Illinois is now a Beneficiary of the VW Settlement; Illinois Environmental Protection Agency is the designated lead Agency.
  • Illinois has released its draft Beneficiary Mitigation Plan (BMP) for public review. Public input on the draft BMP will be accepted until April 20, 2018.
  • In addition to public input on the BMP, Illinois would like to receive focused feedback on the BMP and funding decisions. Please take Illinois’ VW Settlement Survey. Survey results are also due April 20, 2018.
  • Testimony by Director Messina before the Senate Environment and Conservation Committee of the Illinois General Assembly

Navigation

Overview of the VW Settlement

Vehicle Recall

Zero Emission Vehicle Investment

Environmental Mitigation Trust Fund

Public Input

VW Settlement Survey

Contact

Documents and Links

Introduction

The Illinois Environmental Protection Agency (Illinois EPA) has been designated as the lead agency to administer funds allocated to Illinois from the Volkswagen Environmental Mitigation Trust (Trust). The Trust was established by Appendix D of the VW Settlement (Settlement). Illinois’ initial allocation of funds is $108 million to be used to fund mobile source projects. The funds are to be used for projects that reduce emissions of nitrogen oxides in Illinois. As directed by the Trust Agreement, the Illinois EPA has developed a draft Beneficiary Mitigation Plan which addresses Illinois’ planned use of the funds. After consideration of public input, the Beneficiary Mitigation Plan will be submitted to the Trustee. The BMP must be submitted prior to the Illinois EPA submitting its first funding request to the Trustee.

Overview of the VW Settlement

Volkswagen AG and certain of its North American subsidiaries (collectively "VW") have entered into a multi-billion dollar settlement with the federal government for violations of the Clean Air Act. VW publicly admitted to installing "defeat devices" in certain diesel vehicles. The "defeat devices" were software installed which caused the vehicles to operate differently during emission testing compared to normal operation, circumventing federal vehicle emissions standards. Around 580,000 vehicles of model years between 2009 and 2016 containing 2.0 or 3.0-liter diesel engines were affected. A First Partial Consent Decree and a Second Partial Consent Decree describe the details of the settlement (collectively the “VW Settlement” or the “Settlement”). Settlement funds are to be used as a remedy to mitigate the environmental impacts from VW's actions. The remedy consists of three programs:

  1. A vehicle recall and repair program - $10 billion to buy back or repair at least 85 percent of the unlawful vehicles.
  2. Zero Emission Vehicle (ZEV) Investment Commitment - $2 billion to support the use of zero emissions technology such as battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles and charging infrastructure over the next 10 years.
  3. An Environmental Mitigation Trust Fund – $422 million to California and $2.44 billion to be dispersed to the other states and tribes to fund projects to reduce nitrogen oxide (NOx) emissions as mitigation for the unlawful emissions.

Illinois’ Transportation Network

Illinois lies at the heart of the nation’s transportation network. Illinois has one of the greatest multi-modal transportation systems in the nation:

  • the second largest public transportation system,
  • the second largest rail system,
  • the third largest interstate system,
  • the fourth largest highway system, and
  • one of the busiest airport systems.

The diversity of Illinois’ transportation sector lends itself to multiple possible options for the direction of Trust funding and as a focus area for other Settlement funds.

Rail: Illinois is at the center of the nation’s rail network. Chicago is the largest US rail gateway and another major rail center is located in East St. Louis. Rail’s importance to both Chicago and the state is highlighted by the fact that over 1,300 freight, passenger and commuter trains pass through the Chicago region every day. In 2011, Illinois ranked first in the nation in terms of rail freight volume.

Highway: Illinois is at the heart of the country’s interstate highway system. In all, 2,185 interstate miles serve the state, making Illinois the third ranking state in the U.S in the number of miles of interstate highway.

Transit: Across the state, 63 public transit providers serve 96 out of the state’s 102 counties. Illinois transit systems supported more than 736 million trips in 2013.

The Chicago Transit Authority (CTA) operates the second largest public transportation system in the nation, covering Chicago and nearby suburbs, and transporting approximately 500 million riders a year. The CTA system is composed of 129 bus routes and 224 miles of rapid transit rail track. The six-county Chicago region is also served by Metra, the commuter rail agency in Northeastern Illinois, with 11 lines and 241 stations, and an annual ridership of more than 80 million people, and Pace, the suburban bus agency, with over 39 million riders.

Navigable waterways: Illinois has 1,095 miles of navigable waterways that either border or pass through the state. These waterways provide the state with connections to both the Atlantic Ocean (through the Great Lakes) and the Gulf of Mexico (via the Mississippi).

Multimodal Connectivity: Multimodal connectivity describes the interaction between modes of transportation. Multimodal transportation networks provide choices for users, both in passenger travel and moving freight. In 2012, Illinois had approximately 220 intermodal freight facilities supporting the goods movement industry in Illinois with the majority connecting truck and rail. Other multimodal facilities in Illinois connect between the four transport types (air, truck, rail and water) with several connecting three modes. Most intermodal facilities are located within the seven-county metropolitan Chicago region. The three-county metro-east St. Louis area has the second highest concentration of facilities in Illinois. Other cities with truck-rail intermodal facilities include Bloomington, Decatur, Peoria, Rochelle, Rockford and Quincy.

Vehicle Recall

Under the Settlement, Volkswagen must remove from commerce in the United States or perform an approved emissions modification on at least 85 percent of the affected 2.0 liter and 3.0 liter vehicles covered by the Settlement. In order to achieve the 85 percent recall rate, Volkswagen must offer owners and lessees of the vehicles the opportunity to have their vehicles bought back by Volkswagen at a fair replacement value of the vehicle as of September 17, 2015, or to have their leases terminated at no cost. This buyback or lease termination option has a limited time availability.

Further information on the details of the recall for specific models and years can be found at www.VWCourtSettlement.com

Zero Emission Vehicle Investment

Appendix C of the Settlement requires Volkswagen to invest $1.2 billion in zero emission vehicle (ZEV) charging infrastructure and in the promotion of ZEVs in areas of the country outside of California. Volkswagen Group of America has created a wholly owned subsidiary, Electrify America LLC, to fulfill its Appendix C commitments. Appendix C commits Volkswagen to separately invest $800 million in California on ZEV infrastructure and promotion.

Electrify America will invest the $1.2 billion in 4 cycles over 10 years. National ZEV Investment Plan: Cycle 1 (Cycle 1) is currently being implemented and focuses on developing charging infrastructure in two areas: community charging and a long distance highway network. Charging stations will be located first in the areas with the highest anticipated ZEV demand. Cycle 1 aims to establish a network of more than 2500 non-proprietary chargers across more than 450 individual stations.

Community Charging: Chicago has been selected as one of 11 metropolitan areas for Cycle 1 investment. Within the 11 selected metros, Electrify America plans to build more than 300 stations to serve multi-family homes, workplaces, commercial/retail spaces, community spaces, and municipal lots and garages.

Long Distance Highway Network: Electrify America will build a long distance high speed highway network consisting of charging stations along high-traffic corridors between metropolitan areas and across the country, with an initial target of approximately 240 highway sites installed or under development by the end of Cycle 1. The sites will be located on prominent U.S. interstates and highways and will focus on installation of fast charging stations that will be able to be upgraded in the future as ZEV technology advances.

In Cycle 1, Electrify America identifies prioritized highways, many of which are located in or cross Illinois, including I-80, I-90, I-70, I-24, I-94, I-64, I-39 and I-55. Electrify America has indicated that it has prioritized highways that correlate strongly with alternative fuels corridors as established by the U.S. Department of Energy. Existing charging station locations may be found at the U.S. Department of Energy’s Alternative Fuels Data Center.

Environmental Mitigation Trust Fund

The Settlement establishes an Environmental Mitigation Trust Fund, Appendix D of the Settlement. The Trust is established to provide funding for mobile source projects that reduce emissions of nitrogen oxides as mitigation for the excess nitrogen oxides emitted from the VW vehicles that have been modified with emission defeat software. Wilmington Trust has been chosen as the Trustee to administer the Trust. Illinois is a listed beneficiary and the Illinois EPA is the lead agency to develop Illinois’ Beneficiary Mitigation Plan and administer the subsequent program in Illinois.

Illinois’ initial allocation from the Fund is $108 million. Beneficiaries may not request payout of more than one third of their allocation in the first year and no more than two thirds of their allocation within the first two years; eighty percent of the funds must be obligated within ten years. Illinois EPA anticipates a minimum of three application funding periods. The Settlement allows funds to be used for projects that repower or replace eligible engines or vehicles that fall into ten different categories, listed below. Engines and vehicles may be repowered or replaced with new diesel, alternate fuel or electric engines. Additionally, beneficiaries are allowed to take up to fifteen percent of their allocation in administrative costs. Prior to requesting money from the Fund, the Illinois EPA must develop, accept public input and submit a Beneficiary Mitigation Plan (BMP) to the Trustee. The BMP lays out the beneficiary’s goals and priorities for project funding. The BMP is not binding and may be modified by the beneficiary as needed.

In developing the BMP, the Settlement directs beneficiaries to summarize their plans for use of the mitigation funds, addressing:

  1. The Beneficiary’s overall goal for the use of the funds;
  2. The categories of Eligible Mitigation Actions the Beneficiary 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;
  3. A description of how the Beneficiary 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; and
  4. A general description of the expected ranges of emission benefits the Beneficiary estimates would be realized by implementation of the Eligible Mitigation Actions identified in the Beneficiary Mitigation Plan.
  5. The process by which the Beneficiary shall seek and consider public input on its BMP.

The eligible categories of vehicles are listed below.

  1. Class 8 Local Freight Trucks and Port Drayage Trucks (Eligible Large Trucks)
  2. Class 4-8 School Bus, Shuttle Bus, or Transit Bus (Eligible Buses)
  3. Freight Switchers
  4. Ferries/Tugs
  5. Ocean Going Vessels (OGV) Shorepower
  6. Class 4-7 Local Freight Trucks (Medium Trucks)
  7. Airport Ground Support Equipment
  8. Forklifts and Port Cargo Handling Equipment
  9. Light Duty Zero Emission Vehicle Supply Equipment
  10. Diesel Emission Reduction Act (DERA) Option

Beneficiary Mitigation Plan

Illinois EPA has prepared a draft Beneficiary Mitigation Plan. In developing the BMP, Illinois EPA has taken into account the factors required by the Settlement and the characteristics unique to Illinois as a crossroads in the national transportation system and a leader in public transit. Over the past year, the Agency has met with, listened to and communicated with numerous interested parties regarding administration of Volkswagen Trust funds in Illinois. This included environmental, consumer and other advocacy groups, school districts and universities, transit agencies, regional planning organizations, municipalities, counties, other State agencies, trade groups, utilities, vehicle suppliers, consulting groups, manufacturers, other private businesses, and individuals. This input was valuable to the development of a balanced draft BMP that drives emission reductions while still providing funding to help push technological change. Below are the criteria evaluated in developing the draft BMP.

VW Vehicles

Distribution of VW vehicles with defeat devices installed: The goal of the Settlement is to mitigate excess emissions from the vehicles with defeat devices installed and improve air quality in the beneficiary State. Illinois has identified the location of the affected vehicles; scroll over the map to see the number of affected cars in each county. The largest concentration of affected cars, more than 69 percent, are found in the six county metropolitan Chicago area, with almost 32 percent of the cars in Cook County. Almost 5 ½ percent of the affected cars are in the metro-east St. Louis counties of Madison, Monroe and St. Clair. The rest of the state accounts for 25 percent of the affected vehicles with seven counties each having one percent or more of the total cars in the state.

Disproportionate Impact

Air Quality in Illinois: USEPA has a primary National Ambient Air Quality Standard (NAAQS) for ozone. Nitrogen oxides contribute to the formation of ozone. The metropolitan Chicago area (Cook, DuPage, Lake, Will, McHenry, Kane and certain townships in Kendall and Grundy Counties) is a moderate non-attainment area for ozone; the Metro-East St. Louis area (Madison, St. Clair and Monroe Counties) is marginal non-attainment for ozone. Ambient air quality monitoring in the Metro-East St. Louis area for the past three years shows compliance with the ozone NAAQS. In May 2017, the Illinois EPA formally requested USEPA to redesignate the three Metro-East St. Louis counties to attainment of the ozone NAAQS.

Mobile Sources: Mobile sources represent almost 75 percent of nitrogen oxide emissions in Illinois, more than 87 percent of nitrogen oxide emissions in the metropolitan Chicago area, and more than 69 percent of the nitrogen oxide emissions in the Metro-East St. Louis area. As a result, reducing nitrogen oxide emissions from diesel engines is an important strategy in improving air quality in Illinois and bringing Illinois’ two non-attainment areas into compliance with the federal NAAQS for ozone.

Environmental Justice: Illinois EPA is committed to protecting the health of the citizens of Illinois and its environment, and to promoting environmental equity in the administration of its programs to the extent it may do so legally and practicably. The Illinois EPA supports the objectives of achieving environmental equity for all of the citizens of Illinois.

Environmental Justice is based on the principle that all people should be protected from environmental pollution and have the right to a clean and healthy environment.

Illinois EPA has defined “potential” EJ community as a community with an income below poverty and/or minority population greater than twice the statewide average.

Illinois EPA has developed the EJ Start tool to identify areas of the state, at the census block group level, that meet this definition of an EJ area.

Approximately 79 percent of census block groups that meet the Illinois EPA definition for EJ are located in the five county Chicago metropolitan area with almost 70 percent of the block groups in the state that meet the definition located in Cook County. Approximately 4.1% of census block groups that meet the Illinois EPA definition for EJ are located in the three county Metro-East St. Louis area.

Goals, Priorities and Expected Benefits

Goals: Illinois’ draft BMP establishes three overall goals for use of the Trust funds.

    1. Reduce NOx emissions in areas where the affected Volkswagen vehicles are registered while taking into consideration areas that bear a disproportionate share of the air pollution burden, including environmental justice areas;

    2. Maximize emissions reductions; and

    3. Maximize and leverage funding.

Priority Areas: In the draft BMP, Illinois EPA has established three priority areas and anticipates funding projects in all three priority areas. The priority areas are established to realize emission reductions in the areas where the vehicles were located while taking into account the disproportionate air quality impacts in those areas.

  • Priority Area 1: The Chicago metropolitan non-attainment area (Cook, DuPage, Will, Lake, McHenry, and Kane Counties, and Goose Lake and Aux Sable Townships in Grundy County, and Oswego Township in Kendall County)
  • Priority Area 2 – Metro-East St. Louis non-attainment area (St. Clair, Madison and Monroe Counties)
  • Priority Area 3 – Seven counties, each with more than 1% of the total affected VW vehicles (Champaign, DeKalb, LaSalle, McLean, Peoria, Sangamon and Winnebago Counties)

Categories and Percentages: Illinois has categorized the types of eligible mitigation actions (EMAs) that it will consider funding by project type:

  1. On-road projects;
  2. All-Electric School Bus projects;
  3. Non-road projects;

To spread the Trust funds to as many projects as possible, Illinois will require cost shares. For non-government applicants, Illinois will require a cost share of at least 50 percent, or a higher cost share where specified by the Trust Agreement or DERA. For government applicants, Illinois will require a cost-share of at least 25 percent, or a higher cost share where specified by DERA. Federal agencies will be treated as non-government applicants consistent with the definition of “government” in the Trust Agreement.

To promote electric vehicle infrastructure, meet the purpose of the Trust Agreement and Illinois' goal to reduce and maximize NOx reductions, and ensure against stranded electric vehicles or infrastructure, Illinois proposes to fund electric charging infrastructure in projects when needed. For electric vehicle projects, Illinois will require project applicants to demonstrate adequate charging opportunities on site or nearby. This infrastructure investment will supplement the $2 billion ZEV portion of the Volkswagen Settlement.

On-Road Projects: Up to 20 percent total (approximately $21,735,935) for Class 8 local freight trucks and port drayage trucks; Class 4-8 school buses, shuttle buses and transit buses; and Class 4-7 local freight trucks. These on-road projects include replacements or repowers with new diesel, alternative fuel, or electric vehicles and engines and associated electric charging infrastructure, if needed.

All-Electric School Bus projects: Up to 10 percent (approximately $10,867,968) allocated to replace diesel school buses with all-electric school buses and associated charging infrastructure, if needed.

Off-Road Projects: Up to 65 percent (approximately $70,641,789) for freight switcher locomotives; ferries/tugs; passenger locomotives under the DERA option, and associated electric charging infrastructure, if needed.

Administrative Expenditures: Illinois intends to take up to 5 percent of its allocation (approximately $5,433,984) for administrative expenditures.

Expected Benefits: Illinois' believes that it can achieve 1800 tons of NOx reductions while still providing substantial funding to promote and support on-road alternate fuel and zero emission vehicle transition. Actual emissions reductions will be dependent on the types of projects submitted during the application periods and which are selected for funding.

Public Input

To reach and inform a broad range of the public and potential applicants, and to make public participation easy and convenient, the Illinois EPA has established this website, set up a survey and e-mail to solicit input, and will be promoting these tools through social media, direct e-mail notification, speaking events and a press release.

Prior to submitting Illinois’ BMP to the Trustee, the Illinois EPA is requesting public review and input on its draft BMP. Comments must be received by April 20, 2018 and should be submitted to EPA.VWSettlement@illinois.gov

VW Survey

A survey has been developed to help inform the Illinois EPA on projects and public priority expectations related to project funding. Please review the BMP and other online documents and then take a few minutes to complete the VW Survey. The Survey will close on April 20, 2018. The survey is additional to any other comments that you may want to submit to the Agency.

Contact

Questions about the BMP, how to submit input, or the VW survey should be directed to:

Brad Frost
Illinois EPA
(217) 782-7027