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Energy and Environment Cabinet

Kentucky and the Volkswagen Settlement

Kentucky and the Volkswagen Settlement

The Kentucky Energy and Environment Cabinet (EEC) has created this page to inform the public about the recent Volkswagen (VW) Partial Settlement (hereafter referred to as the Settlement).  VW has agreed to spend up to $14.73 billion to settle allegations of cheating emissions tests and deceiving customers.  The automaker will spend $10.03 billion to compensate consumers who purchased affected 2.0 liter diesel vehicles, and $4.7 billion to mitigate pollution from these vehicles and invest in zero emission vehicle (ZEV) technology and infrastructure.
The Settlement contains three main components:
 
1.  Consumers -- Buyback or modification on at least 85 percent of the subject vehicles.
 
The partial settlement requires VW to stop selling or perform emissions modifications on at least 85 percent of the affected vehicles in the U.S. with VW 2.0 liter engines.  Volkswagen must offer every owner and lessee of an affected vehicle the option of a buyback or lease termination.  Additionally, if VW submits an emissions modification proposal, and federal EPA and the California Air Resources Board approve it, VW must offer owners and lessees the option of an emissions modification.  Should VW not achieve the 85% recall rate, it must pay additional money into the environmental mitigation trust.  (See Appendices A & B of the Settlement; visit www.vwcourtsettlement.com/en/ for details)
 
2.  Nationwide – $2 billion in programs to promote the use of zero emission vehicles (ZEV) and Infrastructure for those vehicles.
 
The Settlement will require VW to invest $2 billion ($800 million to California, leaving $1.2 billion for the remainder of the U.S.) to promote the use of zero emission vehicle (ZEV) technology across the country.  VW is required to provide notice and opportunities for entities to provide suggestions, comments and recommendations on these programs, but the eventual outcomes will be between VW and U.S. EPA.  States will not be provided funds under this part of the settlement, but can recommend activities within the state.
VW is required to invest these funds over four 30 month cycles, $300 million in each cycle. For each cycle VW will submit to U.S. EPA a draft National ZEV Investment Plan and will approve or deny the final plan.  (See Appendix C of the Settlement; visit www.electrifyamerica.com/our-plan to submit a proposal)
 
Volkswagen's new subsidiary, Electrify America, has released the public version of their National Zero Emission Vehicle (ZEV) Investment Plan: Cycle 1, which outlines the company's spending priorities for the first 30-month investment cycle. Electrify America will invest $1.2 billion over the next ten years in ZEV infrastructure, education, and access outside California to support the increased adoption of ZEV technology in the United States. The National ZEV Investment Plan, which was approved by the U.S. Environmental Protection Agency in early April, describes the $300 million in investments that will be made over the first 30-month cycle. The National ZEV Investment Plan: Cycle 1 can be downloaded here.  
 
3.  States –$2.7 billion environmental mitigation trust fund to be distributed to states to reduce nitrogen oxide (NOx) emissions.  Kentucky’s projected allocation under this program is $19 million over the next 10 years.
 
VW will pay $2.7 billion to remediate the excess NOx emissions from affected 2.0 liter engines.  These funds will be used to establish an Environmental Mitigation Trust that will be administered through a nationwide Trustee, with allocations to states, territories and tribal government beneficiaries to use for specific types of diesel emission reduction projects.  The allocations are based primarily on the number of Volkswagen 2.0 diesel vehicles registered with the jurisdictions. (For state and tribal allocations see Appendix D1 of the Settlement). https://www.epa.gov/sites/production/files/2016-10/documents/amended20lpartial-cd.pdf
 
The Commonwealth of Kentucky will develop and submit a mitigation plan to the Settlement Trustee that summarizes how Kentucky plans to use the funds.  Eligible mitigation projects can be found in Appendix D2 of the Settlement.
 
The Energy and Environment Cabinet is outlining the process for developing Kentucky’s mitigation plan.   In 2017 the EEC will conduct public outreach briefings about the Settlement, and will provide an opportunity for the public to comment on how the mitigation funds should be spent in Kentucky.  Watch this web page for updates on the process as they become available.
 
Resources
 
The Energy and Environment Cabinet has developed an electronic form to allow Kentuckians an easy way to submit comments regarding the state's utilization of environmental mitigation trust fund monies associated with the VW diesel settlement. All comments are received by the Energy and Environment Cabinet Department for Energy Development and Independence for review. Comments submitted are for the purpose of gathering initial input on how these funds should be used. 
 
 
If you wish to submit comments but do not wish to use this form you can email any comments to:
 
 
Frequently Asked Questions Frequently Asked Questions.docxFrequently Asked Questions.docx
 
Link to Settlement, Settlement FAQs
 
 
 

 

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