Volkswagen Settlement May Benefit Iowa Carriers


In January 2016, the United States filed a complaint against the companies of Volkswagen, claiming that they violated the Federal Clean Air Act. It was alleged that VW installed software in approximately 580,000 diesel vehicles between 2009 and 2016, which allowed the emissions control system to perform differently during emissions testing than during normal vehicle operation. Although the vehicles appeared to be compliant during testing, they were emitting up to 40 times the allowable amount of nitrogen oxides (NOx) during normal driving operations.

Volkswagen eventually agreed to a settlement. The settlement requires that VW spend approximately $15 billion to establish three separate programs, to help mitigate the air quality impacts from the harmful excess NOx emissions.

Under the terms of the State Trust Agreement, Iowa must submit a mitigation plan on how the Trust funds will be used in Iowa.  The plan is not a request for project proposals, it is meant to provide the public with a high-level view of how Iowa intends to use the mitigation funds they will receive. The plan is not finding, and the Iowa DOT may adjust the plan at any time, at its discretion.

The Trust is very specific regarding the types of projects that can use the settlement funds. The project actions and expenditures that are allowed under the settlement include repowering or replacing the following diesel vehicles and/or equipment types:

  • Class 8 local freight or port drayage trucks (large trucks)
  • Class 4-7 local freight trucks (medium duty trucks)
  • Class 4-8 school, shuttle, or transit buses
  • Freight switchers (pre-Tier 4 locomotives that operate 1,000 or more hours per year)
  • Ferries/Tugs (unregulated, Tier 1 or Tier 2 marine engines)
  • Ocean going vessel shore power (Category 3 river or fresh water lake vessels)
  • Airport ground support equipment
  • Forklifts and port cargo handling equipment (greater than 8,000 pound capacity)

Trust funds may also be used to invest in the following:

  • Light-duty zero-emission vehicle supply equipment
  • Diesel Emission Reduction Act (DERA) grant program

Freight trucks and Port Drayage trucks are allocated to receive 15 percent of the VW funds. Eligible trucks from the list above would be those with 1992-2009 model year diesel engines. The monies will be allocated to repower (replace the engine with a newer technology engine OR replace eligible trucks with a new diesel, alternate fueled, or all-electric engine). Replaced trucks and engines must be scrapped in accordance with the program.

The Iowa DOT anticipates having at least three application cycles, each of which will be advertised on Iowa’s Volkswagen Settlement website once the information becomes available. The Iowa DOT anticipates awarding approximately $6 million in each of the three application cycles.

For more information about the VW settlement, and to sign up for updates, visit the Iowa DOT VW Settlement website.