An Update on the Volkswagen Settlement

Timothy H. White

The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.

On January 4, 2016, the United States and the State of California filed a complaint against several Volkswagen (VW) companies alleging violations of the Clean Air Act with regard to approximately 580,000 model years 2009 to 2015 2.0 and 3.0-liter diesel engines. The complaint alleged that the vehicles contained “defeat devices” in the form of computer software, designed to cheat on federal emissions tests, enabling the vehicles to emit levels of oxides of nitrogen (NOx) as high as forty times the federal standard. On October 2, 2017, the Department of Justice and VW signed a $15 billion settlement, a portion of which – $2.9 billion – will be held by an Environmental Mitigation Trust and shared among the U.S. states and tribes, based on the number of violating vehicles registered in each. New Hampshire’s share is approximately $31 million.

Governor Sununu designated the Office of Strategic Initiatives (OSI) as the Lead Agency to manage the Mitigation Trust for New Hampshire in January, 2018. A Beneficiary Mitigation Plan describing how New Hampshire plans to use the funding allocated to the State was submitted to the Trustee in September, 2018. The Plan was developed using input received during public informational sessions held

throughout the state. With the submittal of the Plan, funds are now available to support eligible mitigation projects such as vehicle replacements and engine repowers, idle reduction projects (including marine shore power), equipment electrification, and installation of electric vehicle supply equipment (EVSE) such as EV charging stations.

New Hampshire’s Mitigation Plan describes how it will alleviate excess NOx emissions caused by the VW violations through implementation of cost-effective projects in all regions of the state. To best serve the state’s economic and social well-being New Hampshire will focus on those projects that will result in broad public benefits, serve the state’s economically challenged communities, and make the state a welcoming environment for all ages, abilities and backgrounds to live, work and play.

The first VW funded project began with the 2018 version of the State Clean Diesel Program utilizing Environmental Protection Agency funding under the Diesel Emission Reduction Act (DERA). The State Clean Diesel Program is administered by New Hampshire Department of Environmental Services (NHDES). States are eligible to utilize VW funding as non-federal match for federal DERA dollars, thus qualifying the state for an additional 50 percent in federal funds. NHDES is currently pursuing DERA projects involving thirteen vehicles to reduce NOx and other diesel engine pollutant emissions. The projects will become effective upon approval by Governor and Council. Additionally, in response to support for replacement of the state’s fleet of aging school buses expressed during the Mitigation Plan public informational sessions, a School Bus Replacement Program is planned for early 2019.

The VW Environmental Mitigation Trust allows beneficiaries to use up to fifteen percent of their allocation for projects involving acquisition, installation, operation and maintenance of new light duty EVSE such as EV charging stations. New Hampshire, which is committed to using the full fifteen percent (approximately $4.6 million) available for this purpose, is currently in the process of evaluating priority EV corridors and working with other New England states to develop criteria for use of this funding. OSI and NHDES are also seeking input from the Electric Vehicle Charging Stations Infrastructure Commission (Senate Bill 517) established by the New Hampshire Legislature in 2018. Some of the issues to be investigated by the Commission include requirements for EVSE payment options, the role that electric utilities will play in the development of EVSE, required changes to building codes and identification of all available funding sources. The Commission will issue an interim report in November 2019 and a final report in November 2020. New Hampshire is also collaborating with other Northeast states to ensure access to EV charging across the region and is coordinating with investments in charging infrastructure being made by Electrify America (a VW subsidiary) as part of the Settlement Agreement.

Timothy H. White, AICP, is Supervisor of the Mobile Sources Section, Air Resources Division, at the New Hampshire Department of Environmental Services. Tim can be reached by phone at (603) 271-5552 or by email at