FAQs

How did VW violate the Clean Air Act?
What vehicles are affected?
What if I have a vehicle equipped with a defeat device?
What does the settlement require VW to do?
How is Tennessee’s environmental mitigation trust fund allocation determined?
Who in Tennessee is responsible for administering Tennessee’s environmental mitigation trust fund allocation?
What role do states have in implementation of the settlement?
What is the timeline associated with distribution of funds to states?
What types of projects can be funded by Tennessee's environmental mitigation trust allocation?
How can I participate in determining how Tennessee’s environmental mitigation trust fund allocation is used?
How will TDEC ensure that vulnerable communities are considered during administration of Tennessee's trust allocation?
Where can I learn more about the VW settlement?

How did VW violate the Clean Air Act?

In September 2015, the U.S. Environmental Protection Agency (EPA) issued a Notice of Violation of the CAA to VW alleging that model year 2009 to 2015 VW and Audi diesel cars equipped with 2.0 liter engines included software that evades EPA emissions standards for nitrogen oxides (NOx), also known as a defeat device. Shortly thereafter, in November, EPA issued a second Notice of Violation to VW1 alleging that VW developed and installed a defeat device in certain light duty diesel vehicles equipped with 3.0 liter engines for model years 2014 to 2016 that increases emissions of NOx up to nine times EPA’s standard. Later that month, VW informed EPA that the defeat device has existed in all its U.S. 3.0 liter diesel models since 2009.2

What vehicles are affected?

Affected 2.0 liter diesel vehicle models and model years include:

Jetta (2009 – 2015)
Jetta Sportwagen (2009-2014)
Beetle (2012 – 2015)
Beetle Convertible (2012-2015)
Audi A3 (2010 – 2015)
Golf (2010 – 2015)
Golf Sportwagen (2015)
Passat (2012-2015)

Affected 3.0 liter diesel vehicle models and model years include:

Volkswagen Touareg (2009-2016)
Porsche Cayenne (2013-2016)
Audi A6 Quattro (2014-2016)
Audi A7 Quattro (2014-2016)
Audi A8 (2014-2016)
Audi A8L (2014-2016)
Audi Q5 (2014-2016)
Audi Q7 (2009-2016)3

What if I have a vehicle equipped with a defeat device?

The CAA partial settlements requires VW to remove from commerce or perform an approved emissions modification on at least 85% of the affected 2.0 liter vehicles by June 2019. VW must also meet the 85% recall rate for the generation 1 affected 3.0 liter vehicles by November 30, 2019, and the generation 2 affected 3.0 liter vehicles by May 31, 2020. To achieve this rate, VW must offer owners and lessees of affected vehicles the opportunity to have their vehicles bought back by VW at a fair replacement value of the vehicle as of September 17, 2015, or to have their leases terminated at no cost. The buyback or lease termination option will be available for 2 years. Some consumers may also be entitled to additional compensation through related Federal Trade Commission orders and class action settlements. Information regarding the consumer actions for vehicles included in the settlement is available on the Volkswagen/Audi Diesel Emissions Settlement Program website.4

What does the settlement require VW to do?

In October 2016, the court approved a settlement between the United States and VW, which partially resolved allegations that Volkswagen violated the CAA by the sale of 500,000 model year 2009 to 2015 motor vehicles containing 2.0 liter diesel engines equipped with defeat devices.5 In May 2017, the court approved the partial settlement for the remaining 83,000 affected 3.0 liter vehicles.

Vehicle Recall. The 2.0 and 3.0 liter partial settlements require VW to remove from commerce in the United States or perform an emissions modification on at least 85% of the affected 2.0 and 3.0 liter vehicles. To achieve this recall, 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 EPA and the California Air Resources Board approve it, VW must offer owners and lessees the option of an emissions modification. Should EPA not achieve the 85% recall rate, it must pay additional money into the environmental mitigation trust.

Mitigation. Under the 2.0 and 3.0 liter partial settlements, VW will pay $2.9 billion to remediate the excess NOx emissions from affected vehicles. This money will be used to establish an environmental mitigation trust that will be administrated through a mitigation trustee, with allocations to specific state, territorial, and tribal government beneficiaries to use for specific NOx reducing actions.

Zero Emissions Vehicle Investment. The 2.0 liter partial settlement requires VW to invest $2 billion to promote the use of zero emission vehicles (ZEVs) and ZEV technology. VW will submit a series of ZEV national investment plans to EPA for review and approval based on objective criteria, for ZEV investments across the country. VW is also required to provide notice and opportunities for certain government agencies to provide suggestions, observations, and offers of assistance or support for potential ZEV investments that VW may make under its national plans. While TDEC will take an active role in reviewing the proposed ZEV national investment plan and submitting comments, the ZEV national investment plan is not an item that states are actively involved in implementing.

How is Tennessee’s environmental mitigation trust fund allocation determined?

The partial settlements require VW to establish a $2.9 billion environmental mitigation trust fund to be distributed among states for defined eligible projects that reduce NOx. Each state or jurisdiction’s allocation is based on the number of registered illegal VW vehicles within its boundaries.6  Using this allocation methodology, Tennessee is expected to be eligible to receive approximately $45.7 million.7

Who in Tennessee is responsible for administering Tennessee’s environmental mitigation trust fund allocation?

Governor Haslam has identified TDEC as the lead agency for purposes of administering the state’s trust allocation.  This webpage will be updated once the Certification of Beneficiary Status form has been submitted and the successive designation of a Beneficiary by the Trustee has occurred. 

What role do states have in implementation of the settlement?

Under the partial settlements, VW will pay $2.9 billion into an environmental mitigation trust to remediate the excess NOx emissions from affected vehicles. The environmental mitigation trust will be administered through a trustee to state, territorial, and tribal governments who elect to become beneficiaries for pre-defined NOx reducing actions. Each beneficiary will receive an allocation of funds based on the number of registered illegal VW vehicles within its boundaries. 

Beneficiary Mitigation Plan

States electing to become beneficiaries must submit a beneficiary mitigation plan no later than 30 days prior to submitting the first funding request. Specific elements which must be included in the mitigation plan are:

  • The beneficiary’s overall goal for the use of the funds;
  • 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;
  • 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;
  • 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; and
  • An explanation of the process by which the beneficiary shall seek and consider public input on its beneficiary mitigation plan.

Beneficiaries have the opportunity to adjust goals and spending plans at their discretion provided that updated beneficiary mitigation plans are provided to the trustee.8  Development of this beneficiary mitigation plan will require TDEC to work collaboratively with stakeholders to determine how the state can best use its environmental mitigation trust funds to reduce NOx emissions in Tennessee.

Funding Requests 

In addition to preparing the beneficiary mitigation plan, beneficiaries (states) are responsible for submitting requests for eligible mitigation action funding associated with specific mitigation projects by filing with the Trustee a Beneficiary Eligible Mitigation Action Certification form. These requests must include:

  • An explanation of how the funding request fits into the beneficiary’s mitigation plan;
  • A detailed description of the proposed eligible mitigation action, including its community and emissions benefits;
  • An estimate of the NOx reductions anticipated as a result of the proposed eligible mitigation action;
  • A project management plan for the proposed eligible mitigation action, including a detailed budget and an implementation and expenditure timeline;
  • A certification that all vendors were or will be selected in accordance with applicable state public contracting laws;
  • For each proposed expenditure exceeding $25,000, detailed cost estimates from selected or potential vendors;
  • A detailed description of how the beneficiary will oversee the proposed eligible mitigation action;
  • A description of any cost share requirement to be placed upon the owner of each NOx source proposed to be mitigated;
  • A description of how the beneficiary complied with notice of availability of mitigation action funds requirements;
  • A description of how the eligible mitigation action mitigates the impacts of NOx emissions on communities that have historically borne a disproportionate share of the adverse impacts of such emissions; and
  • A detailed plan for reporting on eligible mitigation action implementation.9  

While Tennessee has yet to determine details associated with selection of projects for funding, it is anticipated that TDEC will solicit proposals for specific categories of eligible mitigation actions included in its beneficiary mitigation plan from the public. TDEC will review these proposals and determine which projects will receive funding after consideration of factors including but not limited to projected emissions reduction benefits of the project, geographic location of the project, availability of other funding sources for the project, other co-benefits of the project, etc.

Lastly, beneficiaries are responsible for reporting semiannually on progress implementing each eligible mitigation action.10

What is the timeline associated with distribution of funds to states?

The Trust Effective Date is October 2, 2017. Within 60 days of the trust effective date, potential beneficiaries must file for certification of beneficiary status. The trustee has 120 days from the trust effective date to file a list of designated beneficiaries. The trustee is expected to batch its determinations on Beneficiary status in order to simplify and streamline the process.  After receiving official designation as a beneficiary, each beneficiary must first submit a beneficiary mitigation plan. After a plan has been submitted, each beneficiary may then submit funding requests to the trustee for eligible mitigation actions. The trustee must act upon funding requests within 60 days of receipt. EPA has indicated that beneficiaries should expect to have access to trust funds beginning approximately 6 months following the trust effective date. 

A Beneficiary cannot request payout of more than (i) one-third of its allocation during the first year following the initial Trust deposit or (ii) two-thirds of its allocation during the first two years following the initial Trust deposit.

Beneficiaries are provided with the ability to select and implement appropriate eligible mitigation actions and have 10 years from the trust effective date (TED) to request their allocation and implement mitigation actions. If Beneficiaries obligate at least 80% of their allocation by the 10th anniversary of the TED, they may be eligible to receive a supplemental weighted share of the remaining balance in unused funds. Beneficiaries that are eligible to receive such supplemental funding will be granted five years of additional time to select and implement appropriate eligible mitigation actions.11

What types of projects can be funded by Tennessee's environmental mitigation trust fund allocation?

States have the option to select a number of different eligible mitigation actions for receipt of environmental mitigation trust fund dollars. Generally, these include repowering with new diesel engines, alternate fueled engines, or all-electric engines, or replacement with any new diesel vehicle, alternate fueled vehicle, or all-electric vehicle for the following diesel sources:

  • Class 8 Local Freight Trucks and Port Drayage Trucks
  • Class 4-8 School Bus, Shuttle Bus, or Transit Bus
  • Freight Switchers
  • Ferries/Tugs
  • Shorepower for Ocean Going Vessels
  • Class 4-7 Local Freight Trucks
  • Airport Ground Support Equipment
  • Forklifts and Port Cargo Handling Equipment

Additionally, beneficiaries may use up to 15% of their allocation on costs necessary for and connected to the acquisition, installation, operation, and maintenance of new light duty zero emission vehicle supply equipment. Actions eligible under the Diesel Emission Reduction Act but not specifically mentioned as eligible mitigation actions in the settlement are also eligible for funding. Please reference Appendix D-2 of the Amended Partial Consent Decree for a full listing of eligible mitigation actions and associated requirements and restrictions.

How can I participate in determining how Tennessee’s environmental mitigation trust fund allocation is used?

TDEC welcomes input from all types of stakeholders on the development of its beneficiary mitigation plan and the shaping of its future granting programs for eligible mitigation actions. For this purpose, TDEC has developed a webpage dedicated to provision of the most current information pertaining to opportunities to engage in these processes. Please visit the Tennessee VW Diesel Settlement Public Participation Page for additional information and the latest updates regarding opportunities to get involved.

TDEC will provide the public an opportunity to provide feedback regarding Tennessee’s plans to utilize environmental mitigation trust funds. In fact, the VW Diesel Settlement requires TDEC (and all beneficiaries) to seek and consider public input on the beneficiary mitigation plan. Interested stakeholders are encouraged to frequently reference the Tennessee VW Diesel Settlement Public Participation Page for the latest information.

How will TDEC ensure that vulnerable communities are considered during administration of Tennessee's trust allocation?

The VW Diesel Settlement requires beneficiaries to engage with stakeholders of all types, including stakeholders within low-income, minority, and disadvantaged communities, and to describe approaches utilized to 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. TDEC will use a combination of approaches and tools for this purpose, including but not limited to leveraging its existing relationships with vulnerable communities and their active community organizations, leveraging existing relationships that other state agencies have with vulnerable communities and their active community organizations, air quality modeling capabilities, EPA’s EJSCREEN and C-FERST applications, and public participation sessions.

TDEC has a Title VI and Environmental Justice Manager who has experience with managing disproportionate community impacts resulting from environmental regulatory actions. TDEC also plans to utilize present partnerships with community organizations which typically work with low-income and other vulnerable communities to identify specific stakeholders.

Where can I learn more about the Volkswagen settlement?

For additional information about the Volkswagen settlement, please visit EPA’s Volkswagen Clean Air Act Partial Settlement webpage, the U.S. Department of Justice’s Volkswagen Settlement webpage, the Volkswagen/Audi Diesel Emissions Settlement Program website, and the National Association of State Energy Officials' Volkswagen Settlement webpage. A presentation by EPA (given on 11/18/2016), which summarizes the first partial settlement, highlights useful resources, outlines the Zero Emission Vehicle investment requirement, and walks through the environmental mitigation trust in detail, may be accessed here.


1  The second Notice of Violation was issued to Volkswagen AG, Audi AG, Volkswagen Group of America, Inc., Porsche AG, and Porsche Cars North America, which are collectively referred to as Volkswagen.
2 “Frequent Questions about Volkswagen Violations.” (Oct. 26, 2016) U.S. EPA. https://www.epa.gov/vw/frequent-questions-about-volkswagen-violations.
3 Id.
4 Id.
5 The original settlement was filed in June 2016 by the United States on behalf of EPA. The settlement is a partial settlement because it only addresses what VW must do to address the 2.0 liter cars on the road and the pollution from these vehicles, and does not address other aspects of the United States’ complaint.
6 “Volkswagen Clean Air Act Civil Settlement.” (October 12, 2017). U.S. EPA. https://www.epa.gov/enforcement/volkswagen-clean-air-act-partial-settlement.
7 “Appendix D-1B to the Executed State Beneficiary Trust Agreement.” ​
8 Section 4.1 “Executed State Beneficiary Trust Agreement.” 
9 Section 5.2 “Executed State Beneficiary Trust Agreement.” 
10 Section 5.3 “Executed State Beneficiary Trust Agreement.

 11 Section 5.4 “Executed State Beneficiary Trust Agreement.”