Volkswagen Settlement: Impact on MinnesotaMinnesota Pollution Control Agency

Technical Stakeholder MeetingJune 1, 2017

Volkswagen Settlement: Impact on MinnesotaMinnesota Pollution Control Agency

VW Consent Decree Settlement Discussion –• What happened?• What pollution are we talking about?• What equipment is eligible?• How and where should MN focus our efforts?

BACKGROUND ON THE SETTLEMENT

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Volkswagen: What happened

§ Volkswagen intentionally tampered with engines

§ VW’s exceeded tailpipe emissions standards by more than 30 times for nitrogen oxides (NOx) over the past seven years.

§ Each bad VW is equal to an old garbage truck

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Volkswagen: Court cases§ Multiple lawsuits against VW§ Consumer Fraud§ Tampering§ Environmental Mitigation

Settlement

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Environmental Settlement is what we’ll be talking about today

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§ Nationwide- 580,000 VW vehicles affected –46,000 tons excess NOx§ MN- 9,300 VW vehicles

affected- 600 tons excess NOx

Volkswagen: How Many Cars

VW environmental settlement

Settlement = VW pays $14.9 billion§ Paid over next 10 years§ $10 billion is for repurchase/repair defective cars§ $2 billion is for Zero Emissions Vehicle infrastructure§ $2.9 billion is for states, Puerto Rico and tribes:§ To make up for air pollution from faulty engines§ $$ according to number of affected vehicles

registered in each jurisdiction/state

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VW environmental settlement

Federal Court set up a “Mitigation Trust” for the $2.9 Billion going to states/tribes§ Estimated for Minnesota = $47 Million§ Court will appoint a Trustee to hold and disburse

state and tribe funds§ Dollars flow from Trustee to State/Tribe to grantee§ Court: Strictly limits expenditures § Goal: Make up for pollution from VW engines

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Public Meetings

Technical Stakeholder Meetings

Beneficiary Mitigation Plan Development and Submittal

Winter 2017/2018: Request for Proposals open?

2018: First round of grants awarded?

VW settlement milestones

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VW settlement terms

§ Trustee must approve each emission reduction project

§ Grantees can be local government, private company, nonprofit, state, or tribal government

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ELIGIBLE EQUIPMENT

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§ Class 8 local freight trucks and port drayage trucks

§ Class 4-8 school buses, shuttle buses or transit buses

§ Pre-Tier 4 diesel switcher locomotives§ Ferries and tugs§ Ocean going vessel shore power§ Class 4-7 local freight trucks§ Airport Ground Support Equipment§ Forklifts and port cargo handling equipment§ Light Duty Zero Emission Vehicle Supply

Equipment§ Matching funds for projects eligible under

the Diesel Emission Reduction Act (DERA)

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Settlement limits spending to specific categories:

§ 1992-2009 Class 4-8 diesel trucks and buses

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Settlement limits spending to specific categories:

§ Pre-Tier 4 diesel switcher locomotives§ Ferries and tugs§ Ocean Going Vessels Shore Power§ Airport Ground Support Equipment§ Forklifts and port cargo handling equipment§ Matching funds for projects eligible under

the Diesel Emission Reduction Act (DERA)

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Settlement limits spending to specific categories:

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§ Light Duty Zero Emission Charging Stations Charging Stations

Settlement limits spending to specific categories:

BENEFICIARY MITIGATION PLAN

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Beneficiary Mitigation Plan

§ Requirement of the settlement§ Must summarize how the state plans to use

the funds, including:§ Overall goals for the program§ Priorities for eligible technologies§ Environmental justice considerations§ Estimated emissions benefits

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Beneficiary Mitigation Plan

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Beneficiary Mitigation Plan

Public Input

Technical Stakeholder Input

Agency Input

Submit to Trustee

Legislative Interest

Michigan Department of Environmental Quality Volkswagen Environmental Mitigation Trust

Draft Beneficiary Mitigation Plan Introduction

The following proposal is in response to the approximate $60.3 million Michigan is poised to receive in settlement funds under the proposed partial Consent Decree with the United States District Court for the Northern District of California in the lawsuit entitled In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, Case No: MDL No. 2672 CRB (JSC). Appendix D-2 of the Consent Decree specifies eligible mitigation actions and expenditures for the Mitigation Trust Fund. The MDEQ will administer these funds and proposes to implement the following strategy to reduce nitrogen oxides (NOx) emissions in Michigan. The MDEQ, Air Quality Division, has identified areas in Michigan that currently have the highest NOx emissions and counties likely to be designated as “Nonattainment” with the United States Environmental Protection Agency (U.S. EPA) 2015 ozone National Ambient Air Quality Standards (NAAQS). NOx is a precursor to ozone. The MDEQ proposes to prioritize use of the settlement funds to reduce NOx emissions in ozone nonattainment areas and areas under maintenance plans for fine particulate matter (PM2.5). The MDEQ is also encouraging other areas of the state to apply for funds to improve air quality through the early replacement of school buses. Children are among the most vulnerable to the negative health impacts from exposure to NOx emissions and would benefit from the cleaner air associated with new, clean diesel buses. Project Descriptions The MDEQ is proposing to allocate the Mitigation Trust Fund dollars in four categories designed to implement projects that reduce NOx and PM2.5. The types of projects included with this proposal are durable, sustainable solutions for the long-term benefit of communities. Project outcomes will be quantified with the U.S. EPA Diesel Emissions Quantifier. Additionally, the MDEQ is seeking input regarding the proposal criteria outlined in Table 1, including:

• Project types. • Allocations. • Grantee match requirements.

Category 1: • DERA type projects: Approximately 72% of funds ($43,455,000).

o Vehicle replacement: Class 8 local freight trucks and port drayage (eligible large trucks). o School bus replacement: Class 4-8. o Freight switcher replacement.

Michigan BMP

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Michigan BMP

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§ 4 pages§ Describes spending plans:§ 72% for engine and vehicle replacement§ 4% DERA Match§ 14% ZEV supply/infrastructure§ 10% Staff/Gov’t oversight

Technical stakeholder input

§ What are your thoughts?§ Where should MN focus these projects?§ What eligible strategies are important to you?§ What type of projects are important to you?§ What are your concerns?

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Additional Info

§ For more information:§ www.epa.gov/vw§ www.pca.state.mn.us/vw

§ VW owners:§ www.vwcourtsettlement.com

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UNDERSTANDING DIESEL IN MINNESOTA

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Nitrogen oxides

§ Caused by burning fuels at high heat§ Health effects:§ Respiratory irritation§ Increased risk of respiratory infection§ Aggravating asthma and other respiratory diseases

§ Reacts with other chemicals to form ground-level ozone and particulate matter

§ Contributes to acid rain, haze, and nutrient pollution in water

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Diesel particulate matter

§ Caused by incomplete combustion§ Health effects of both short- and long-term

exposure:§ Irritation of the eyes, nose, throat, and lungs§ Exacerbates asthma§ Likely carcinogen

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MN NOx inventory

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Explore the inventory: https://www.pca.state.mn.us/air/statewide-and-county-air-emissions

Total NOx emissions (2011)

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Diesel exhaust health risks

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The map shows the inhalation risk from diesel exhaust emitted by all sources.

§ The darker orange color highlights the areas in MN where diesel concentrations are above the inhalation health benchmark.

§ A health benchmark is a concentration level that is unlikely to result in health effects even after a lifetime of exposure.

• A benchmark ratio less than 1, is below the health benchmark and suggests lower prioritization.

• A ratio greater than 1 suggests that the pollutant requires further investigation and higher prioritization.

Annual NOx emissions by category

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Annual NOx emissions per unit

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Comparative NOx emissions

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MPCA Diesel Grant examples

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MPCA has given 25% grants to replace old diesel trucks with new trucks that reduce NOx by over 90%.

Garbage truck replacement

§ 25% grant§ Reduces 1.4 tons of NOx per year

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Electric vehicle infrastructure

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What’s next?

§ Making data available on the web§ Cost effectiveness§ Exposure

§ What data do you have?

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What data do you have?

§ For diesel equipment:§ How many units do we have in MN?§ How much does each run?§ How much does it cost to retrofit, repower, or

replace?

§ For electric vehicle infrastructure:§ What kinds of infrastructure are best?§ Where should infrastructure be installed?

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INPUT ON STATE PRIORITIES

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Public and technical input

§ Website: https://www.pca.state.mn.us/air/volkswagen-settlement

§ Three public meetings so far§ Open comment period§ Online survey§ Technical stakeholder meetings

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Dotmocracy

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View it online: https://www.pca.state.mn.us/air/volkswagen-public-input

Comment letters

§ Electrification and electric vehicles§ Other alternative fuels§ Environmental justice and health impacts§ Other ideas

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Reminders

§ Comment period closes June 30, 2017. § Submit comments via email at:

vwsettlement.pca@state.mn.us

§ Online survey: http://survey.mn.gov/s.asp?k=149210448953

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Discussion

What high-level priorities should be expressed in MN’s Beneficiary

Mitigation Plan? Why?

(Examples: health benefits, environmental justice, investing statewide, etc.)

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Consider for future meetings

§ In your mind, what equipment has the most opportunity for emissions improvements? Why?

§ What does it cost to replace, repower, or retrofit this equipment?

§ Which equipment is best suited for replacement vs. repower vs. retrofit?

§ What are the associated costs with this equipment that cannot be covered by the settlement?

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Also consider: What data do you have?

§ For diesel equipment:§ How many units do we have in MN?§ How much does each run?§ How much does it cost to retrofit, repower, or

replace?

§ For electric vehicle infrastructure:§ What kinds of infrastructure are best?§ Where should infrastructure be installed?

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Rocky SiskProgram Coordinator

Minnesota Pollution Control Agencyvwsettlement.pca@state.mn.us

651.757.2173

Website: https://www.pca.state.mn.us/air/volkswagen-settlement

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