Reduce air pollution from faulty VW diesel enginesSchool buses, large diesel vehicles are priorities of the spending plan for Minnesota’s anticipated $47 million in VW settlement funds.

What’s the issue?In 2016, the Volkswagen Corporation was caught violating emissions limits for its diesel engines in cars and SUVs. The federal government took VW to court and won a $15 billion settlement, of which $2.7 billion is to be shared among the states, territories and tribes; Minnesota’s share is $47 million. Governor Dayton designated the Minnesota Pollution Control Agency (MPCA) to manage the settlement funds, which will be spent over 10 years on projects to offset the excess pollution from diesel vehicles.

The federal court settlement limits spending the funds on specific types of diesel vehicles and equipment, such as heavy-duty trucks, buses, locomotives, boats, airport equipment, and forklifts. The federal court requires that these vehicles be replaced with new vehicles or engines that produce far less pollution. The court allows states to use up to 15% of the funds for electric-vehicle charging infrastructure.

States must submit spending plans that meet court-established requirements. These plans must be approved by the court-appointed trustee, Wilmington Trust in Delaware, before a state can being making grants. All grants will be made on a reimbursement basis. Third-party aggregators (that would, for example, gather several applicants together into a single, large grant request) are allowed.

Minnesota’s planThe plan has three phases. During a “pause” after each phase, the plan can be revised to meet demand and to accommodate any new technologies:

Phase 1: 2018-2019 $11.75 million (25% of overall funds) Phase 2: 2020-2023 $23.5 million (50% of overall funds) Phase 3: 2024-2025 $11.75 million (25% of overall funds)

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2018VW settlement 2018

Settlement funds in Phase 1 will be channeled through five programs. The grant percentages and dollar amounts for Phase 1 are targets, because the demand for replacing these vehicles is unknown. If demand is higher than anticipated in Phase 1, the MPCA will request additional dollars from the trustee to fund all qualified Phase 1 grant applications.

Minnesota VW Settlement Plan, Phase 1 (calendar 2018-19)

MN grant categories(2018-2019) Settlement category Eligible fuels

2018-2019 grants (Phase 1)Targeted percent

Targeted dollar amount

School bus replacement program School buses All (diesel, propane,

natural gas, electric) 20% $2,350,000

Clean heavy-duty on-road vehicles program

Transit buses, class 4-8 trucks

All (diesel, propane, natural gas, electric) 35% $4,112,500

Clean heavy-duty off-road equipment program

Switcher locomotives, ferries, tugs, port cargo handling equipment, ocean-going vessel shore power, Diesel Emission Reduction Act (DERA)

All (diesel, propane, natural gas, electric) 15% $1,762,500

Heavy-duty electric vehicle program

School buses, transit buses, trucks, airport ground support equipment, forklifts

Electric 15% $1,762,500

Electric vehicle charging stations

Zero-emission vehicle infrastructure Not applicable 15% $1,762,500

Total: $11,750,000

Once the trustee approves the plan, the MPCA will post requests for proposals (RFPs) with details on each grant type, including criteria to be used in evaluating proposals. RFPs will meet court requirements and plan’s overall goals. Once RFPs are posted, broad public and stakeholder outreach will get the word out. Grant application forms will be streamlined, and technical assistance will be available. Barring any unforeseen issues, we anticipate that grants can be made within calendar year 2018.

Public inputTo develop a plan that benefits all Minnesotans and reflects the needs and desires of people across the state, the MPCA solicited input statewide for more than a year. We:

Held nine public meetings around the state Held four stakeholder meetings on technical aspects and stakeholder needs Kept thousands of interested people up to date via regular emails bulletins Received more than 800 online responses to surveys and more than 300 written comments Maintained a web site and posted new information and data frequently

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Violating VW diesel vehicles registered in Minnesota by zip code

Sixty percent of the violating

VW vehicles in Minnesota were registered in the Twin Cities area and 40% in Greater Minnesota. Thus, 60% of funds will be targeted to grants in the Twin Cities area and 40% to grants in Greater Minnesota.

As required by the federal court, the plan also takes into account communities statewide that are disproportionately impacted by air pollution.

While a wide range of ideas were brought forth, the main priorities Minnesotans expressed were:

Support the growth of electric vehicles Include both Greater Minnesota and the Twin Cities metropolitan area Protect vulnerable populations, such as children and the elderly Achieve significant emissions reductions Reduce exposures in high pollution areas and support public health Consider many fuel types Consider many vehicle and equipment types Reduce emissions of greenhouse gases Look to the long-term future of Minnesota’s transportation sector Strive for cost-effectiveness

For more informationGreta Gauthier, MPCA Legislative Director greta.gauthier@state.mn.usOffice: 651-757-2031 • Mobile: 651-338-8955

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Source: MN Department of Public Safety vehicle registration data

April 2018