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Kentucky Energy and Environment Cabinet

​What is the VW Settlement?

In 2016, the U.S. Environmental Protection Agency (EPA) filed a lawsuit against Volkswagen for alleged violations of the Clean Air Act. Emissions testing demonstrated that Volkswagen's vehicles were emitting levels of nitrogen oxides (NOx) in excess of EPA's compliance limits. Volkswagen was found guilty and agreed to spend up to $14.73 billion to settle allegations of cheating emissions tests and deceiving customers.  

How Will the Funding Be Spent?


Consumers – Buyback or modification of vehicles

Under the Settlement, Volkswagen was required to spend $10.03 billion to compensate consumers who purchased affected 2.0 and 3.0 liter diesel vehicles, either through buy-back or modification of affected vehicles. Volkswagen worked directly with the owners of affected vehicles on buybacks, lease terminations, and repairs to engines.  For more information on the Settlement; visit www.vwcourtsettlement.com/en/ for details.
 

National Zero Emission Vehicle (ZEV) infrastructure

The Settlement required that VW 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 invest these funds over four 30 month cycles, $300 million in each cycle.  For more information; see Appendix C of the Settlement; visit www.electrifyamerica.com/our-plan.

States: $2.7 billion Environmental Mitigation Trust Fund

VW will also 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, (Wilmington Trust) 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 affected Volkswagen vehicles registered in each jurisdiction. 


States/Territories/Tribes named as beneficiaries under the Trust must develop and submit plans to the National Trustee on how the funds will be used in their respective jurisdictions to reduce NOx emissions.  On December 2, 2016, Governor Matt Bevin named the Kentucky Energy and Environment Cabinet as the Lead Agency in Kentucky to administer these funds for the Commonwealth. Kentucky was named a beneficiary under the Trust on January 30, 2017.  

How Much Will Kentucky Receive?

Kentucky’s allocation under this program is $20.3 million over the next 10 years. 

As a beneficiary, Kentucky must develop a Beneficiary Mitigation Plan that provides information on how the Commonwealth plans to spend the funds.  When finalized, this plan will be submitted to the Wilmington Trust in order to have access to the funds for projects in the state.  Eligible mitigation actions under the Trust can be found in Appendix D2 of the Settlement.  Links to Kentucky’s Draft Mitigation Plan and other resources can be found on the right side of this page.

Since being named as beneficiary in late 2016, the Cabinet has been conducting public outreach about the Settlement and receiving comments from interested parties on how the mitigation funds should be spent in Kentucky.  Kentucky's Draft Mitigation Plan was released for public comment in August 2018, and the Cabinet held a public meeting on September 5, 2018 to receive public comments on the plan.

Comments and questions about Kentucky's plan may be emailed directly to the agency at    Ky.vwsettlement@ky.gov .

What's Next?

Funding for state projects will be available once:

  • Kentucky's draft Beneficiary Mitigation Plan has been finalized
  • Kentucky's plan is approved by the National Trustee
  • Kentucky legislature approves funding appropriations
Stay posted for future updates on this page.