Committee hears who may receive $47 million from VW settlement

Minnesota is scheduled to soon begin receiving an estimated $47 million from Volkswagen that local governments and private companies, among others, can use to replace or repower certain diesel vehicles such as busses, trucks and boats.

The German automaker agreed to pay $14.9 billion over the next 10 years to settle allegations it violated the law by engineering certain vehicles to cheat federal emissions standards. Most of that money will be used to get those cars off the road, but $2.9 billion will be divided among states based on how many of the substandard vehicles are registered in each.

David Thornton, assistant commissioner of the Pollution Control Agency, told the House Environment and Natural Resources Policy and Finance Committee Thursday there are about 9,300 such vehicles registered in the state.

“This is money to make up for the air pollution coming from the vehicles Volkswagen sold,” Thornton said. “There are a lot of benefits we’re going to see from this.”

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However, the money – which may be available as soon as this fall –comes with strings attached.

Most of the funds must be used for repowering or replacing diesel-powered vehicles with new diesel or alternative-fuel vehicles or engines. The 10 “project type” vehicles eligible include:

• Class 8 local freight trucks and port drayage trucks;
• Class 4-8 school buses, shuttle buses or transit buses;
• Pre-Tier 4 diesel switcher locomotives;
• Ferries and tugs;
• Oceangoing vessels;
• Class 4-7 local freight trucks;
• Airport ground support equipment;
• Forklifts and port cargo handling equipment;
• Light-duty zero-emission vehicle supply equipment; and 
• Matching funds for projects eligible under the federal Diesel Emission Reduction Act.

Thornton said there has already been “a lot of interest” from people who want to do more to build up Minnesota’s network of electric vehicle charging stations. Up to 15 percent of the money can be used for that purpose.

The money will largely be distributed as grants using an RFP process. But before that can occur, the courts are working to appoint a trustee to oversee how the money is spent. Until that’s done, Thornton said the PCA, which has been designated to act as the state’s allocation authority, is “operating in sort of a fog.”