Environmental Mitigation Trust (Appendix D):
On October 2, 2017, the final, executed trust agreements were filed with the Court, establishing the Trust Effective Date (TED) for the Environmental Mitigation Trust.
- States now have 60 days to submit their Certification for Beneficiary Status form, which will allow them to become Beneficiaries of the Trust. Certification for Beneficiary Status forms shall be due no later than December 1, 2017.
- No later than 120 days after the TED, the Trustee will approve or deny Beneficiary status for all Beneficiaries. The Trustee is expected to batch its determinations on Beneficiary status in order to simplify and streamline the process.
- Beneficiaries must submit a Beneficiary Mitigation Plan at least 30 days prior to submitting the first Funding Request. The Beneficiary Mitigation Plan summarizes how a beneficiary intends to use allotted funds. Please reference TDEC’s FAQs page for a description of specific elements that must be included in the Beneficiary Mitigation Plan. TDEC is currently seeking input from the public to shape the Plan. TDEC has developed a web-based public comment form to allow interested stakeholders to submit comments regarding the State’s utilization of its Environmental Mitigation Trust allocation. All comments are received by TDEC’s Office of Energy Programs (OEP) for review.
- Proposals for mitigation projects are not currently being solicited by TDEC, as the Beneficiary Mitigation Plan not been finalized.
- In order to be apprised of any announcements related to public outreach, you may sign up for the TDEC VW Environmental Mitigation Trust email list here: https://signup.e2ma.net/signup/1843437/1737620/.
On September 19, 2017, the U.S District Court of Northern California approved the proposed revised Environmental Mitigation Trust (EMT) agreement under the Volkswagen Partial Settlements for 2.0 and 3.0 liter vehicles. The parties must execute the EMT agreement within two weeks from September 19th and file it with the Court. Once the executed EMT agreement is filed, the Trust Effective Date (TED) will be set. States must submit their Certification for Beneficiary Status form within 60 days of the TED.
Under the approved revised EMT agreement, no substantive changes were made to the Beneficiary Allocations or Eligible Mitigation Actions; however, several important procedural changes were made. Below is a summary of relevant changes.
- Two Trust Agreements: the original Partial Consent Decree contemplated the formation of one trust to provide funds to Beneficiaries, which include the 50 States, Puerto Rico, the District of Columbia, and the federally-recognized Indian Tribes. The proposed agreement will create two separate trusts: (1) a State Mitigation Trust to serve the States, Puerto Rico, and the District of Columbia, and (2) an Indian Tribe Mitigation Trust to serve the Indian Tribe Beneficiaries.
- Certification for Beneficiary Status Under Environmental Mitigation Trust Agreement: The proposed agreement includes several revisions to the Certification for Beneficiary Status. In addition, at the time of filing the Beneficiary Certification Form with the Court, the revised agreement requires Beneficiaries to provide a copy of the Certification Form to the Trustee in electronic format and by mail.
- Beneficiary Mitigation Plan Timeline: The original Partial Consent Decree required Beneficiaries to submit a Beneficiary Mitigation Plan with the Trustee no later than 90 days after being deemed a Beneficiary. The proposed agreement requires Beneficiaries to submit a Beneficiary Mitigation Plan to the Trustee no later than 30 days prior to submitting its first funding request. Although the Beneficiaries must provide the Trustee with any updates to their Beneficiary Mitigation Plan, the Trustee has no duty to monitor or supervise any Beneficiary's compliance with its Beneficiary Mitigation Plan.
- Beneficiary Eligible Mitigation Action Certification Form: The proposed agreement includes a Beneficiary Eligible Mitigation Action Certification form, which Beneficiaries must submit when requesting funding for an Eligible Mitigation Action. Each Beneficiary must prepare a detailed budget, certify that all vendors are selected in accordance with law, identify the governmental entity responsible to audit expenditures, and commit to making all supporting documentation publicly available.
- Discretionary Trust vs. Directed Trust: The original Partial Consent Decree provided for the establishment of a discretionary trust in which a trustee would hire outside experts to review the Beneficiaries' funding requests and to evaluate whether the requests constituted an approvable Environmental Mitigation Action. The proposed agreement will structure the State Mitigation Trust and Indian Tribe Mitigation Trust as a directed trust in which each Beneficiary submits a funding request certifying that its request meets the requirements regarding Eligible Mitigation Actions. The Trustee is permitted to rely on a Beneficiary's certification with no further duty of inquiry.
- Secure Method of Internet-Based Communication: In addition to establishing a public-facing website, the revised agreement requires the Trustee to establish and maintain a secure method of internet-based communications for the use of the Trustee and the Beneficiaries that will: enable each Beneficiary to deliver the required documentation under the State Trust Agreement in an electronic format; enable secure communications between the Trustee and each Beneficiary; and provide each Beneficiary with access to its own document base.
On February 23, 2017, the U.S. Department of Justice filed a motion to request the appointment of Wilmington Trust as the trustee of the Environmental Mitigation Trust under the Volkswagen Settlement. On March 15, 2017, the U.S. District Court approved the appointment of Wilmington Trust as the trustee. The trustee will be responsible for administering the trust and approving projects proposed by beneficiaries. The trustee will have the opportunity to request changes to the form of the trust agreement (Appendix D of the Consent Decree) and will confer with the U.S. Department of Justice, the State Recommending Parties (those that nominated candidates for the position of trustee), and the Settling Defendants to finalize the trust agreement and establish the Trust Effective Date. Once the Trust Effective Date has been established, states will have 60 days to file a Certification Form to become beneficiaries of the trust.
On December 20, 2016, the United States Environmental Protection Agency, Department of Justice, and the State of California announced a second partial settlement with VW for allegations pertaining to VW's 3.0 liter diesel vehicles. Under the partial settlement, VW has agreed to recall 83,000 model year 2009 through 2016 3.0 liter diesel vehicles sold or leased in the U.S. that are alleged to be equipped with "defeat devices" to cheat emissions tests. The settlement also requires VW to pay $225 million to fund projects across the country that will reduce emissions of NOx where the affected vehicles were, are, or will be operated. These funds will be placed in the same Environmental Mitigation Trust (Trust) to be established under the settlement for the 2.0 liter vehicles, and is in addition to the $2.7 billion that VW is required to pay into that Trust under the prior settlement. The second partial settlement does not alter the structure of the Trust. On February 14, 2017, a federal judge preliminarily approved a deal worth $1.2 billion that would compensate the owners of roughly 78,000 affected vehicles with 3.0 liter engines. Owners of the 3.0 liter models will be offered buybacks, trade-ins or may have the vehicles modified. The judge's preliminary approval allows consumers to weigh in with comments and learn how much compensation to expect. On May 17, 2017, the court approved the 3.0 liter partial settlement.
Zero Emission Vehicle Investment (Appendix C):
On December 9, 2016, Volkswagen Group of America (VW) launched www.electrifyamerica.com, which provides information on VW's Zero Emission Vehicle (ZEV) infrastructure and awareness campaign, as well as details on how states, municipalities, and others can submit proposals to help inform VW's ZEV investment plans over the next ten years. The period to submit proposals for recommendations for the first 30-month investment cycle will end on January 16th, and additional proposals will be considered after the 16th on a rolling basis. The website also notes that all submissions will become the property of Volkswagen Group of America and should not include proprietary information as submissions could be shared publicly. For more information, visit www.electrifyamerica.com.
On March 8, 2017, Electrify America published the first ZEV Investment Plan for the State of California. The plan presents the first of four required 30-month, $200 million investments in California to support increased use of Zero Emissions Vehicle technology. Electrify America will initiate its plan for investment in ZEV charging infrastructure, ZEV education, and its “Green City” initiative upon approval of the Investment Plan by the California Air Resources Board, which has posted additional information here (arb.ca.gov). On April 9, 2017, Electrify America published the National ZEV Investment Plan: Cycle 1. The plan, which was approved by the U.S. EPA in early April, presents the first of four required 30-month, $300 million investments to support increased use of Zero Emissions Vehicle technology in the United States.
Vehicle Recall and Emissions Modification Program (Appendix B):
On July 27, 2017, the U.S. EPA and CARB announced that they had approved technical fixes for most of the affected 2.0-liter engine vehicles, including Jetta, Golf, Beetle and Audi A3 models. Within 10 days, Volkswagen is to notify vehicle owners and lessees that they can bring in their vehicles for modification. Further information on the details of the approved emissions modifications, as well as information about consumer options related to affected vehicles can be found at www.VWCourtSettlement.com.