Funding for change: An inside look into North Carolina’s VW Mitigation Plan

Written by: Florencia Loncán, Triangle Clean Cities Outreach & Communications intern

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Left to Right: EPA Secretary Michael Regan, North Carolina Governor Roy Cooper, Eastern Band Councilwoman, Miss Cherokee, Teen Miss Cherokee, and Little Miss Cherokee. Source: SACE Staff

Since 2015, Volkswagen’s emissions cheating scandal has held its place as a topic of conversation among individuals, environmentalists, governments and the transportation industry. Triangle Clean Cities Coalition intern Florencia Loncan had the privilege to sit down with the North Carolina Department of Environmental Quality (NC DEQ) staff who are working directly on the Volkswagen Settlement Mitigation Plan in North Carolina to discuss various facets of the grant funding process.

Project Manager of the VW Settlement Program Brian Phillips, VW Outreach Coordinator Robin Barrows and Public Information Officer for the Division of Air Quality Shawn Taylor within NC DEQ met with Loncan to explain some background on the NC VW Mitigation Plan, discuss the open Request for Proposals (RFPs) and share how interested parties can make their applications stand out.

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Between 2009 and 2015, Volkswagen sold approximately 590,000 diesel motor vehicles in the U.S. that contained defective devices which allowed them to pass annual emission inspections. However, once these vehicles were experiencing normal daily use by customers, the vehicles were emitting about 40% more emissions than allowed by law.

In 2015, the Environmental Protection Agency and the U.S. Justice Department sued Volkswagen for violating the Clean Air Act. From this came the Volkswagen Clean Air Act Civil Settlement encompassing a $2.7 billion mitigation trust fund. This settlement aimed to mitigate the emissions from those vehicles with the defective devices installed, and Volkswagen was also required to buy back all the faulty vehicles or fix them.  

Additionally, Volkswagen put $2 billion towards electric vehicle charging infrastructure through a company they created called Electrify America. This fell under the Zero Emission Vehicle (ZEV) Investment required under the settlement which aimed to support the promotion and infrastructure of ZEVs.

About $2.9 billion was distributed to U.S. States and Territories to mitigate the nitrogen oxide emissions from diesel engines of these vehicles. These funds were distributed based on the number of VW vehicles with the defect system registered in each state. North Carolina received $92 million, the ninth-largest amount of funds nationally.

NC DEQ was tasked by Governor Roy Cooper as the lead agency to administer funds from the VW Settlement.  

“We designed the program. We administer the program. We evaluate the applications. We select projects or funding via program selection committees. We request funds from the trustee and report to the trustee how we’re spending our funds,” Phillips said.

This grant funding aims to support either the replacement of an older, higher-emitting diesel vehicle with a newer cleaner one or the implementation of EV infrastructure.  

“We’re talking about older medium- and heavy-duty diesel vehicles that have large emissions based on their age and their size that we’re trying to get out of use, off the streets, off the waters and replace with something newer and cleaner,” Taylor said.

These vehicles must be the model year 2009 or older and can range from a Class 4-8 vehicle. They can be replaced by another diesel-fueled engine, an electric vehicle or any other cleaner fuel, including biofuel, propane and compressed natural gas (CNG).

Examples of vehicles in each class size. Source:
Office of Energy Efficiency & Renewable Energy

Once a vehicle is replaced, the original will be destroyed by drilling a hole in the engine and cutting the load-bearing part of the frame (the chassis) in half.

“We don’t want that vehicle ever driven again on the road,” Phillips emphasized.

North Carolina’s beneficiary mitigation plan is structured in two phases. Looking at states who had done the program before, NC DEQ appreciated how a multi-tiered approach would allow for adjustments to be made throughout the process.

In the creation of the mitigation plan, NC DEQ sought input from community members and stakeholders to incorporate NC public interests. Through town hall-style stakeholder meetings, they were able to hear real-time comments from interested individuals on different Requests for Proposals (RFPs).

Additionally, NC DEQ worked alongside the NC Clean Cities Coalitions – Triangle Clean Cities, Land of Sky Clean Vehicles Coalition and Centralina Clean Fuels Coalition– to gather feedback throughout the process.

Concrete changes to the mitigation plan emerged from seeking community input.

“Initially our plan was to only fund government projects, and after receiving feedback, we did change that to allow public and private nonprofits to apply and also public, private partnerships to apply for funds,” Phillips said. “In addition, we also made Zero-Emission Vehicles infrastructure programs open to everyone.”  

Phase One of the VW mitigation plan took place from 2018-2020 and allocated $26 million, which funded transit bus replacements, school bus replacements, heavy-duty truck replacements and EV charging infrastructure.

Phase 1 By The Numbers 

  • $12.2 million for school bus replacements 
    • Funded over 100 school bus replacements (6 of which were fully electric) 
  • $6.1 million for transit bus replacements 
  • $4.2 million for on-road heavy-duty equipment (including refuse haulers, dump trucks & debris  trucks) 
  • $3.4 million for ZEV Fast Charging Stations 
    • Funded 27 current fast-charging stations 
  • $1.1 million for ZEV Level 2 Charging Stations 
    • Funded 78 level 2 charging stations 

When asked about a particular success story from phase one, one immediately came to mind for Phillips.  

The Eastern Band of Cherokee Indians received funding to replace an old diesel school bus with one that was fully electric. This was the first-ever electric school bus in North Carolina. This replacement encompasses a 100% emissions reduction that will help the environment and leave a direct positive impact on children traveling daily to school by bus.

The electric school bus was unveiled on March 15, 2022, highlighting the groundbreaking event that took place because of the VW mitigation settlement.

What’s Next: VW Phase 2

Phase Two of the VW Mitigation Plan began in February 2022 and will run until 2024. Over $67.9 million in funds will be distributed during this period across five programs: 

  • 40% is allocated toward the School Bus Replacement Program (RFP is live! Applications are accepted  until June 6, 2022)  
  • 20% is allocated toward the Transit and Shuttle Bus Replacement Program (RFP is live! Applications are accepted until May 2, 2022) 
  • 20% is allocated toward the Clean Heavy-Duty Equipment and Vehicle Replacement Program
    • Diesel Emission Reduction Act Program 
  • 15% is allocated toward the Zero Emission Vehicle Infrastructure Programs 
    • DC Fast Infrastructure Program 
      • Public Access Priority Corridors Program (RFP is live! Applications are accepted until  May 16, 2022) 
      • Public Access Existing Site Upgrades (RFP is live! Applications are accepted until July 11, 2022) 
    • Level 2 Infrastructure Program
      • State Agency Program (RFP is live! Applications are accepted until May 31, 2022)
      • Public Access Program (RFP is live! Applications are accepted beginning May 2, 2022) 
      • Multi-Unit Dwelling Program 
      • Workplace Program 

The remaining 5% of funds will be used for NC DEQ administrative costs.


Grant Application Process

Once an RFP is released, the application is open for 90 days. This does not include Level 2 public access, multi-unit dwelling or the workplace program where RFPs will be on a first come first serve basis. During that time, NC DEQ will host two webinars. The first covers the grant management system, the platform where applications will be submitted, and the second covers the specific program’s requirements and allows for interested participants to ask questions about a particular program.

Once an RFP closes, NC DEQ staff will evaluate the applications and create a selection committee to choose which projects to fund. Once decided, those projects will be sent to the Secretary to sign award or decline letters which will be sent out to the awardees.

Applicants can expect to hear if they have been awarded funds around two and a half months after the closing of the RFP. All programs managed by NC DEQ are reimbursement-based, meaning applicants need to have the funds upfront to buy the new vehicle or the charging equipment and NC DEQ will pay that money back later.

Open RFPs are linked below:

ProgramFunding AvailableApplication DeadlinePoint of Contact
Transit & Shuttle Bus Program$13.5 millionMay 2, 2022Melanie Henderson
melanie.henderson@ncdenr.gov
Level 2 Public Access$1 millionOpens: May 2, 2022
(First Come Basis)
Steven Rice
steven.rice@ncdenr.gov
DC Fast Priority Corridors$4.9 millionMay 16, 2022Dave Willis
dave.willis@ncdenr.gov
Level 2 State Agency$1 millionMay 31, 2022Steven Rice
steven.rice@ncdenr.gov
School Bus Program$27.2 millionJune 6, 2022Sheila Blanchard
sheila.blanchard@ncdenr.gov
DC Fast Existing Sites$2.1 millionJuly 11, 2022Dave Willis
dave.willis@ncdenr.gov

Beyond submitting all the required documentation, what was the most important thing an applicant could include in their proposal?

A story.

Both Phillips and Barrows emphasized the impact of having a proposal that contained the personal touch of a narrative. Highlighting the direct impacts funding would have on community members individually and as a whole can play a huge part in receiving from the VW settlement.

As an example, they referred back to the Eastern Band of Cherokee Indians and their application. 

“They talked about how they are an underrepresented community and how this really will affect the health and well-being of those students riding that bus,” Phillips said. “They actually provided a lot of metrics on how this will impact the local air quality in the area too.” 

He continued to speak on how the narrative storytelling, data-backed information and community-supported application made it very easy to award the community the funding to support the school-bus replacement from a diesel to an electric vehicle.  

Phillips added that support from the local government and the local utility company, as well as funding from other sources, does help projects score better in the review of applications.


Historically Under-Resourced County Outreach Program

As a part of Phase 2, NC DEQ created the Historically Under-Resourced County Outreach Program, which aims to increase participation in counties that were unfunded by Phase 1 of the VW grant program.  Thirty-seven counties were recognized by the NC DEQ Environmental Justice team that met certain racial and poverty criteria.

Our goal was to help those people to submit quality applications. These were a lot of countries that we’ve never received a grant application form, and we want to spread this money as far across the state as we can,” Barrows said.  

Specialized outreach has been conducted in those counties to keep them informed of Phase 2 programs. NC DEQ has hosted meetings in the counties themselves to hear directly from local governments, regional planning organizations and individuals interested in submitting a proposal. As more RFPs continue to be released, the second round of meetings will be held across these counties. 

Applications from these 37 counties will receive 10 bonus points on their proposals increasing their chances of being selected for funding.  

Additionally, there are resources for interested applicants both inside and out of these regions to help support them throughout the application process. The NC VW Eligibility Tool allows interested applicants to see which programs they are eligible to apply for. Clean Cities Coalitions across the state are also available to assist applicants with their proposals.

“We’re excited to continue supporting our communities in accessing these funds through collaboration with NC DEQ and stakeholders across the region,” Triangle Clean Cities Co-Coordinator Ryan Eldridge said.

Phillips had one last piece of advice for all who are interested in applying. Do not submit your application last minute. Start looking at resources now, and set up your Grant Management System access well ahead of time. If your application has an error, it can be sent back for corrections if it is submitted with enough time in advance.

“It is exciting that we have this pool of money available here in North Carolina to really accomplish some important goals. We are trying to reduce emissions, particularly nitrogen oxides, our big target to reduce with this funding,” Taylor said. “To reduce range anxiety when we’re talking about charging stations and making sure there are enough charging stations around the state so that people with electric vehicles can get where they need to go. There are a lot of opportunities that we can use this funding for and there’s more to do. But, this is a great start.” 

For more information on Phase 2 of the NC VW Mitigation Program, visit the NC DEQ Phase 2 website.

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