The EPA, California, and VW have resolved this case through three partial settlements (Amended 2.0 Liter Partial Consent Decree, 3.0 Liter Second Partial Consent Decree, Third Partial Consent Decree). As part of the settlement agreements, VW must pay approximately $2.9 billion into the Trust referenced above. The 50 states, the District of Columbia, and Puerto Rico may elect to become a beneficiary to receive an allocation from the Trust. An Indian Tribe Mitigation Trust has been established separate from the state mitigation trust.

The EPA, California, and VW have resolved this case through three partial settlements (Amended 2.0 Liter Partial Consent Decree, 3.0 Liter Second Partial Consent Decree, Third Partial Consent Decree). As part of the settlement agreements, VW must pay approximately $2.9 billion into the Trust referenced above. The 50 states, the District of Columbia, and Puerto Rico may elect to become a beneficiary to receive an allocation from the Trust. An Indian Tribe Mitigation Trust has been established separate from the state mitigation trust.

On March 15, 2017, the Court appointed Wilmington Trust, N.A. to serve as the Trustee for the Trust. The final Trust Agreement was filed and became effective on October 2, 2017. The Trustee filed the designation of beneficiaries with the court on January 29, 2018. Texas is among the designated beneficiaries.

The EPA has identified ozone as criteria pollutant under the National Ambient Air Quality Standards (NAAQS). The Texas Commission on Environmental Quality (TCEQ, agency, or commission) monitors areas of the state for compliance with the NAAQS. For areas not meeting those standards, the TCEQ is responsible for developing a state implementation plan (SIP) to outline strategies that will be implemented to bring those areas into attainment of the NAAQS.

In terms of compliance with the NAAQS, the pollutant that has been most challenging to show attainment in Texas is ground-level ozone.

Ozone is a gas formed in the atmosphere when three atoms of oxygen combine. Stratospheric ozone is found naturally in the Earth's upper atmosphere and forms a protective layer that shields us from the sun's ultraviolet rays. However, ground- level ozone is a respiratory toxic agent that can cause acute respiratory health effects when people breathe high concentrations of it over several hours. These effects include decreased lung function and pain with deep breaths, and aggravated asthma symptoms.

Ozone is not emitted directly into the air, but created by chemical reactions between NO_X and volatile organic compounds (VOCs) in the presence of sunlight. Ozone forms in the highest concentrations on warm, sunny days with light wind speeds, which allows more of the pollutant to form and accumulate. In Texas, much of the NO_X emissions are from motor vehicle and off-road equipment exhaust. Reducing those emissions by replacing or upgrading older vehicles and equipment to newer models with less emissions is an important tool in addressing the state’s air quality goals related to ground-level ozone.

Governor Greg Abbott selected the TCEQ as the lead agency responsible for the administration of funds received from the Trust. The governor submitted the necessary certification documents for Texas to be designated a beneficiary state under the Trust, and the Trustee filed the beneficiary notifications with the court on January 29, 2018. At that time, Texas became a designated beneficiary of the allocated funds.

The funds in the Trust are allocated based on the number of affected vehicles registered within the boundaries of each beneficiary. A minimum of $209,319,163 is available to Texas for projects that reduce NO_X in the environment.

At least 30 days before submitting the first request for funds, the TCEQ must submit a Beneficiary Mitigation Plan (Plan) to the Trustee that summarizes how the agency intends to use the funds allocated to Texas. The Plan must address the following four elements:

1. The state's overall goals for use of the funds.
2. The categories of eligible mitigation actions the state anticipates will be appropriate to achieve the goals and a preliminary assessment of the percentages of funds anticipated to be used for each type of action.
3. A description of how the state will consider the potential beneficial impact of the selected eligible mitigation actions on air quality in areas that bear a disproportionate share of the air pollution burden within its jurisdiction.
4. A general description of the expected ranges of emissions benefits the state anticipates will be realized by implementation of the eligible mitigation actions identified in the Plan.

The Plan must also explain the process by which the TCEQ has sought and considered public input on the Plan.

A draft Plan is being prepared by the TCEQ and will be made available for public comment on the TCEQ’s VW website at www.tceq.texas.gov/agency/trust. The TCEQ anticipates completing the draft document and making it available to the public in May or June of this year (2018).

The TCEQ will accept public comment on the draft Plan over a specified comment period, after which the Plan is expected to be finalized by early Fall of 2018.

Yes, the public may submit comments and recommendations until the Plan is finalized. Comments may be submitted via email to VWsettle@tceq.texas.gov. Go to the TCEQ's VW website at www.tceq.texas.gov/agency/trust to view comments received to date.

The Trust Agreement uses the term “mitigation action” to refer to each activity to replace or repower an eligible vehicle or piece of equipment.

The Trust Agreement is available from the TCEQ’s VW website at www.tceq.texas.gov/agency/trust, and includes the 10 eligible mitigation actions listed below. The eligible mitigation actions are focused on reducing NO_X.

The Beneficiary Mitigation Plan developed by the TCEQ will list mitigation actions that will be eligible for funding in Texas and the priorities for funding. The TCEQ may choose to fund all or only some of the actions eligible under the Trust Agreement, based on the priorities for funding established for Texas. Interested persons should be sure to review the draft Plan when it is made available to see what is proposed for Texas.

The TCEQ is preparing a draft plan to provide for public comment in the next several months. It is anticipated that the final Plan will be completed and submitted to the Trustee by early Fall 2018.

Based on the priorities established in the final Plan, the TCEQ may begin accepting applications for grants under some of the project categories outlined in the Plan by Fall 2018.

No more than 1/3 of the total funds available to Texas may be requested from the Trustee the first year after the effective date of the Trust Agreement (October 2, 2017), or 2/3 the second year.

Applicants selected for funding will be sent a contract to sign and return to the TCEQ. The TCEQ will execute the contract and return a copy to the grantee. Executed contracts will then be contingent upon the TCEQ sending the grantee a Notice to Proceed (NTP). The TCEQ will submit a funding request to the Trustee for the selected projects and will issue the NTPs upon receipt of the funds. The grantee may then complete the eligible purchase and submit reimbursement requests to the TCEQ for payment.

Applicants selected for funding should expect the contracting process and the TCEQ obtaining the funds from the Trustee to take several months before the grantee would receive a NTP and be able to request reimbursement. For example, the Trustee has up to 75 days to review and approve a funding request.

Beneficiaries have between three and 10 years to spend their allocated funds on specific types of projects as outlined in the Trust Agreement. After that, unused trust funds will be redistributed as supplemental funding among beneficiaries that have used at least 80% of their allocated trust funds. Those beneficiaries will be given five additional years to use the supplemental funds.

The TCEQ intends to award the funds allocated to Texas much sooner than the authorized 10-year period over which the funds are available.

Actual administrative costs may be reimbursed from the funds allocated to Texas, not to exceed 15% of the total cost of the Eligible Mitigation Actions funded under the program. The TCEQ expects to request far less than the authorized amount for administrative expenses, in order to make as much of the funds as possible available to award to projects.