1. Why is New Jersey eligible to receive funding related to the Volkswagen settlement?
In 2015 and 2016, the United States Environmental Protection Agency (USEPA) and the United States Department of Justice alleged that Volkswagen, Audi and Porsche had violated the Clean Air Act by selling approximately 590,000 model year 2009 to 2016 diesel motor vehicles equipped with software designed to cheat on federal emissions tests which resulted in higher levels of Oxides of Nitrogen (NOx) than allowed. NOx is a precursor to ozone, which is a significant health concern in many parts of the country including New Jersey.
Volkswagen subsequently entered into a multi-billion dollar settlement with USEPA to resolve violations of federal law arising from this conduct. Under the terms of the federal settlement, Volkswagen will fund a mitigation trust fund, administered by a trustee, that must be used for defined eligible projects that reduce NOx. All 50 states, Puerto Rico, the District of Columbia and Indian tribes are eligible to become beneficiaries of the mitigation trust fund.
This federal settlement did not resolve New Jersey’s claims against Volkswagen, Audi and Porsche for violations of New Jersey state law.
2. When will New Jersey receive mitigation funds under the federal consent decree between the United States and Volkswagen?
Deadlines for States to act to obtain mitigation funds run from the effective date of the final Mitigation Trust Agreement between Volkswagen, the United States, and the Wilmington Trust, N.A. (as trustee). The Trust Effective Date is October 2, 2017, which is the date the agreement was ratified by the federal court overseeing the Volkswagen multidistrict litigation. States had until December 1, 2017 to submit a “beneficiary” form indicating that they want to participate in the mitigation trust and designating a lead agency to oversee mitigation projects in the state. On November 21, 2017, New Jersey filed its beneficiary form with the Trustee designating NJDEP as the lead agency to oversee mitigation projects in the state. The Trustee reviewed the States’ submissions for completeness and published a notice of beneficiary designations on January 29, 2018.
States must submit a “Beneficiary Mitigation Plan” (BMP) to the Trustee 30 days prior to requesting funding for a particular project; there is no hard deadline for the plan submission, but it must be submitted before any funds will be released. The Beneficiary Mitigation Plan is a high level vision for spending the money and must include: overall goal for use of the funds; categories of projects anticipated to be funded; description of how areas that bear of disproportionate share of air pollution will be considered; and an estimate of the expected range of emission benefits. The Mitigation Plan is not used to request funding for specific projects; a separate “funding request form” is used to request disbursements from the Trustee for specific projects.
3. What is the timeline for New Jersey to spend the mitigation funds?
New Jersey must spend the mitigation funds ten years from the Trust Effective Date. The Effective Date was in 2017, which allows for the funds to be spent until 2027. DEP anticipates spending the VW settlement funds in three, $24 million phases over three years.
4. How much mitigation funding is New Jersey eligible to receive and how was that amount calculated?
Under the federal settlement, approximately $3 billion in NOx mitigation funds are to be allocated roughly in proportion to the number of affected vehicles registered in each jurisdiction. New Jersey’s allocation under the federal settlement is $72.2 million.
5. What kinds of projects are eligible for mitigation funding?
The settlement agreement identifies nine source categories that are eligible for mitigation projects that reduce NOx emissions. These source categories are:
- Class 8 Local Freight Trucks and Port Drayage Trucks
- Class 4-8 School Bus, Shuttle Bus or Transit Bus
- Freight Switchers
- Ferries or Tugs
- Ocean Going Vessels
- Class 4-7 Local Freight Trucks
- Airport Ground Support Equipment
- Forklifts and Port Cargo Handling Equipment
- Acquisition, installation, operation and maintenance of light duty electric vehicle supply equipment (also known as electric vehicle charging stations) and light duty hydrogen fuel cell vehicle supply equipment.
All source categories have their own specific eligibility requirements and allowable reimbursement amounts depending on the type of project. Government agencies are eligible for up to 100% reimbursement for all projects.
In addition, there is a Diesel Emission Reduction Act (DERA) option. Under DERA, the U.S. Environmental Protection Agency (USEPA) provides money to the states for diesel emissions reduction projects. This is also known as the DERA Clean Diesel State Grant. New Jersey may use its Mitigation Trust funds to provide or exceed the required non-federal cost share requirement for the DERA Clean Diesel State Grant. The benefit of using the DERA option is that some emissions reduction strategies not eligible under the Consent Decree are eligible under DERA, including retrofits and idle reduction technology. DERA also allows states to fund projects on engines manufactured in earlier model years than those specified in the Consent Decree. In addition, the maximum funding levels allowed for DERA projects also differ from some of those established in the Consent Decree. Information on the DERA Option, including a comparison of the eligible project categories under the VW Mitigation Trust and DERA can be found at https://www.epa.gov/cleandiesel/vw-settlement-dera-option-supporting-documents.
A summary table of the eligible project categories, and reimbursement amounts can be found here. The full description of eligible projects, eligibility requirements, and reimbursement amounts can be found in Appendix D-2 of the Volkswagen Partial Consent Decree. We strongly encourage anyone who is considering submitting a project idea to read the full description in Appendix D-2.
6. Will DEP accept proposals for all nine source categories and all the mitigation strategies that are identified in the Consent Decree? Are alternative fuels other than electricity eligible for New Jersey’s VW funds?
Yes. DEP will consider proposals in all of the eligible project categories and mitigation strategies. While the Beneficiary Mitigation Plan prioritizes electrification projects, NJDEP will consider all projects using the selection criteria described in the Beneficiary Mitigation Plan.
7. Are pickup trucks, such as those used by public water agencies, public sewer agencies and public works agencies, eligible for VW funding?
No. Pickup trucks are not eligible for VW funding because they are not considered Class 4-8 trucks. The full description of eligible projects can be found in Appendix D-2 of the Volkswagen Partial Consent Decree. See especially the “Definitions/Glossary of Terms” on page 11.
8. Do Class 8 trucks have to operate at a port or railyard in order to be eligible for VW funding?
No. However, since one of New Jersey’s primary goals for the VW settlement is to benefit disproportionately affected communities, proposals for Class 8 trucks that do not operate at ports or railyards may not rank high compared to similar proposals at ports or railyards. Descriptions of eligible Class 8 projects can be found in Appendix D-2 of the Volkswagen Partial Consent Decree on page 2 and page 12. New Jersey’s selection criteria for projects can be found in the Beneficiary Mitigation Plan.
9. The definition of Port Cargo Handling Equipment includes terminal tractors, but many terminal tractors do not operate at ports. Does a terminal tractor have to operate at a port in order to be eligible for VW funding?
Not necessarily. However, since one of New Jersey’s primary goals for the VW settlement is to benefit disproportionately affected communities, proposals for Port Cargo Handling Equipment that do not operate at ports may not rank high compared to similar proposals at ports. Descriptions of eligible Port Cargo Handling Equipment can be found in Appendix D-2 of the Volkswagen Partial Consent Decree on page 8 and page 13. New Jersey’s selection criteria for projects can be found in the Beneficiary Mitigation Plan.
10. Are independent owner/operators of vehicles, vessels or equipment eligible for VW funding?
Yes. Independent owner/operators are eligible. Corporate owners of vehicles, vessels or equipment are also eligible, as are state or local government agencies (including a school district, municipality, city, county, special district, transit district, joint powers authority, or port authority, owning fleets purchased with government funds), and a tribal government or native village.
11. Are truck/bus voucher programs eligible for reimbursement?
Yes, if the trucks/buses being replaced qualify under Appendix D-2 of the Volkswagen Consent Decree. A voucher program incentivizes the purchase of a new vehicle or piece of equipment by providing money directly to a vendor or as a reimbursement to the purchaser. Thus, a voucher program is just one of several mechanisms to provide funding to vehicle owners for vehicle replacements.
12. Are privately-owned school buses that are under contract with a public school district eligible to be funded at the government rate (100%) or the non-government rate (25-75%)?
The government rate (100%).
13. Are privately-owned garbage trucks that are under contract with a public agency eligible to be funded at the government rate (100%) or the non-government rate (25-75%)?
The non-government rate (25%-75%).
14. Can VW funding be used for outreach and education?
Yes, with some limitations. Under the Consent Decree, VW funds can be used for administrative expenditures, including outreach and education, associated with implementing Eligible Mitigation Actions. For example, the Consent Decree includes educational publications, printing and publication, and professional services as eligible administrative expenditures. It is important to note that administrative expenditures cannot exceed 15% of the total cost of an Eligible Mitigation Action. If you would like to propose an outreach and education component to your project, we urge you to read Appendix D-2 of the Volkswagen Partial Consent Decree, page 11, “Eligible Mitigation Action Administrative Expenditures”.
15. Can VW funding be used for charging stations for electrification projects in categories 1-8 (for example, charging infrastructure for electric drayage trucks, electric buses, electric forklifts, etc.?)
Yes. Charging infrastructure associated with electrification projects in categories 1-8 is an eligible expense.
16. Would a charging station for electric bicycles be eligible for VW funding?
Yes, a charging station that is configured to charge electric bikes would be eligible for VW funding, as long as the primary purpose of the charging station is to charge electric cars or trucks.
17. How will VW funds be used to incentivize light duty electric vehicle charging stations?
With the first round of funding, DEP will incentivize Level 1 and Level 2 charging stations in workplaces, public places, and multi-family housing through It Pay$ to Plug In – New Jersey’s Electric Vehicle Charging Grants Program. Projects will be funded on a first-come, first-served basis. DEP will also fund state-sponsored projects to install DC Fast Chargers in the first phase.
18. How can I submit a project idea?
To submit a project idea for consideration, complete the Project Solicitation Form and send to firstname.lastname@example.org.
Please use a separate Project Solicitation Form for each proposed project.
19. Is DEP still accepting project proposals? What is the deadline?
Yes, DEP is still accepting project proposals. The soft deadline for proposals to be considered for the first phase of funding is December 31, 2018 at 5:00 pm. Proposals submitted after that will be considered, but most likely for the second or third phase of funding rather than the first phase.
20. Can I revise and resubmit my project proposal?
Yes, but please note that you are submitting a revision as opposed to a brand new proposal.
21. Is there a limit to the number of proposals submitted by an applicant?
No. Multiple proposals should provide priority rankings.
22. What happens after DEP evaluates the proposals that have been submitted?
DEP will evaluate the proposals against the selection criteria outlined in the Beneficiary Mitigation Plan and will select projects for the first phase of funding. DEP will then notify the project partners, request additional information needed for DEP to request funding from the Trustee, and begin executing grant agreements with the project partners. Once DEP submits a request to the Trustee, the Trustee has up to sixty days to review the requests and then another 15 days to disburse funding into New Jersey’s account. When the Trustee has disbursed the funding to DEP, and the grant agreement has been executed, DEP will notify the project partner that the project can begin.
23. When will projects to be able to start?
We anticipate that the first projects will be able to launch in Spring 2019.
24. How can I be notified about developments in New Jersey’s plans to spend the mitigation funding?
Click here to join our e-mail list to get periodic updates.
25. Which Volkswagen vehicles are affected?
The following vehicles are affected by the settlement: