VW Mitigation Program

Volkswagen Group of America and certain related entities (collectively Volkswagen or VW) admitted to violating the federal Clean Air Act from 2009 to 2016 by selling nearly 590,000 2.0-liter and 3.0-liter diesel engine vehicles that utilized software designed to cheat on federal emissions tests by concealing excess nitrogen oxide (NOx) emissions.

Volkswagen entered various judicial consent decrees to partially settle its civil liability for the Clean Air Act violations. Specifically, judicial settlements approved on October 25, 2016 (2.0-liter) and May 17, 2017 (3.0-liter) require Volkswagen to pay more than $2.9 billion into an Environmental Mitigation Trust Fund (Trust). Wisconsin, as a certified Trust Beneficiary, may receive funds over a period of ten years to offset the excess NOx pollution emitted by affected Volkswagen vehicles.

The October 2016 partial consent decree established three forms of injunctive relief:

• Buyback, lease termination, and vehicle modification recall program. Volkswagen must remove from commerce or modify at least 85% of the subject vehicles registered as of September 17, 2015, by June 30, 2019. To meet this requirement, Volkswagen must offer every owner or lessee of a subject vehicle a buyback, lease termination, or an EPA and CARB approved emissions modification. If Volkswagen fails to meet its obligation, it must pay an additional $85 million for each one percent below the mandated 85% requirement into the Trust.
  
• ZEV Investments. Volkswagen is required to make $2 billion of investments over a period of up to 10 years into actions that will support the increased use of zero emission vehicle (ZEV) technology. Of the $2 billion, $1.2 billion must be directed toward national ZEV investments and $0.8 billion must be directed toward ZEV investments in California.
• Establishment of the Environm​ental Mitigation Trust​. Volkswagen is required to pay $2.7 billion into the Trust to reduce NOx emissions of certain vehicles. The Trust funds are divided between administration costs, tribes, the 50 states, the District of Columbia, and Puerto Rico. Wisconsin's initial share from this decree total $63,554,019, or 2.35% of the total amount in the Trust. There are different Beneficiary Trust Agreements for the States and the Tribes. A Notice of Filing of Minor Modifications to the State Trust was filed on March 13, 2019 and Minor Modifications to the State Trust took effect April 12, 2019.

This decree also requires a third-party trustee to administer the Trust. Wilmington Trust, N.A. is the selected Trustee and has established a website dedicated to the Trust.

The May 2017 decree provides additional injunctive relief. Volkswagen must deposit an additional $225 million into the Trust established under the October 2016 decree. Wisconsin's share is $3,523,438, or 1.57% of the total deposit. Wisconsin's total initial funding under the Trust is $67,077,458.

The partial consent decrees authorize Trust Beneficiaries (such as Wisconsin) to request up to one-third of the state’s allocation during the first year, and two-thirds of the state’s allocation during the first two years after Volkswagen makes the initial Trust deposit. Consistent with these terms, 2017 Wisconsin Act 59, appropriates $42 million of Wisconsin's share of the trust funds during the 2017-19 biennium.

Additionally, Trust Beneficiaries must expend (or obligate for approved expenditures) at least 80% of their Trust allocation within ten years of the trust effective date (TED), October 2, 2017. On the tenth anniversary of the TED, the total unspent Trust amount, less the estimated funding needed to cover remaining Trust administration costs, becomes the Trust's "remainder balance." The remainder Trust balance must be divided among the Beneficiaries that have reached the 80% expenditure threshold either 180 days after the 10th anniversary of the TED or as of the resolution of any Trustee accounting disputes, whichever is later. Beneficiaries that receive a portion of the remainder balance will have an additional five years to spend their share of that balance.

The consent decree establishes eligible mitigation actions and mitigation action expenditures that Beneficiaries may make from the Trust. In summary, Wisconsin could utilize Trust funding to scrap, and then repower or replace certain eligible vehicles and equipment, including:

• Class 8 Local Freight Trucks and Port Drayage Trucks (Eligible Large Trucks)
• Class 4-8 School Bus, Shuttle Bus, or Transit Bus (Eligible Buses)
• Railroad Freight Switchers
• Ferries/Tugs
• Ocean Going Vessels (OGV) Shorepower
• Class 4-7 Local Freight Trucks (Eligible Medium Trucks)
• Airport Ground Support Equipment
• Forklifts and Port Cargo Handling Equipment
• Light Duty Zero Emission Vehicle Supply Equipment
• Diesel Emission Reduction Act (DERA) Option

Wisconsin’s VW Beneficiary Mitigation Plan was submitted to the Trustee on May 1, 2018. The plan contains information including Wisconsin’s goals for the use of funds, eligible mitigation actions and public comment.

Wisconsin Beneficiary Mitigation Plan Final Documentation

Governor Scott Walker named the Wisconsin Depart​ment of Administration (DOA) as the lead agency to develop and implement a Beneficiary Mitigation Plan (Plan) to utilize the Environmental Mitigation Trust (Trust) funds for projects that reduce NOx emissions in Wisconsin. To qualify for Trust funding, Wisconsin was first required to submit a Beneficiary Certification Form to the Court by December 1, 2017. The form was successfully submitted on November 20, 2017 and Wisconsin was designated a Trust Beneficiary on January 29, 2018.

As a designated Trust Beneficiary, Wisconsin must provide its Plan to the Trustee at least 30 days prior to submitting its first funding request. The Plan must include the following information:

1. The goal for use of the funds allocated under the trust;
2. Eligible mitigation actions selected and the percentage of funds to be used for each action;
3. A description of how the beneficiary will consider the beneficial impact of the actions in areas that bear a disproportionate share of air pollution; and
4. A general description of emission benefits.

The Plan is not binding on the State and the State may adjust its goals and specific spending plans at its discretion, if it provides the Trustee with an updated Plan. 

Wisconsin's total initial funding under the Trust is $67,077,458 ($63,554,019 from the October 2016 decree and $3,523,438 from the May 2017 consent decree). After Volkswagen makes the initial Trust deposit and the Plan is approved, Wisconsin may request up to one-third of the state’s allocation during the first year, and up to two-thirds of the state’s allocation during the first two years. Consistent with these terms, 2017 Wisconsin Act 59, appropriates $42 million of Wisconsin's share of the trust funds during the 2017-19 biennium. Additionally, Act 59 established law under which the Environmental Mitigation Trust funds must be used in Wisconsin.

• Replacement of State Vehicles. DOA may use settlement funds for all costs incurred in accordance with the settlement guidelines to replace eligible state fleet vehicles.
• Transit Capital Assistance Grants. DOA shall establish a program to award up to $32 million in grant funds to eligible applicants for the replacement of public transit vehicles. DOA shall award grants on a competitive basis and give preference to replacing public transit vehicles in communities or on routes that the DOA determines are critical for connecting employees with employers.

When requesting Trust funds from the Trustee, the Beneficiary must include information indicating how the funding request fits into the State's Plan, the extent to which the use of such funds will benefit the community and air quality as well as reduce NOx emissions, and a detailed budget for the use of released funds. These funding requests will be made public by the Trustee at the VW Environmental Mitigation Trust website. Wisconsin will also make these requests public on this website (see below). The Trustee is required to approve any funding requests that meet the requirements of the State Trust Agreement. Within 60 days after the receipt of a funding request, the Trustee must inform the Beneficiary and make public its decision to either approve, deny, request modifications or request additional information to the request. The Trustee shall begin disbursing funds within fifteen days of approval of an Eligible Mitigation Action funding request according to the written instructions and schedule provided by the Beneficiary.

Wisconsin VW Funding Request covering EMA#2 costs during SFY18, 19, 20 (submitted August 5, 2021; paid October 21, 2021)​

The State Trust Agreement requires that Beneficiaries submit a semiannual report to the Trustee for each Eligible Mitigation Action describing the process of implementing that Eligible Mitigation Action during the six months prior to the reporting date, including a summary of all costs expended on the Eligible Mitigation Action through the reporting date. Beneficiaries must submit the first report no later than six months after receiving its first disbursement of Trust funds. These reports must include a complete description of the status (including actual or projected termination date), development, implementation and any modification of each approved Eligible Mitigation Action. These reports will be made available on the Trustee’s public fac​ing website as well as this website.