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AGC Comments on VW Settlement, Multi-Billion Dollar Trust for Diesel Clean Up

Funds May Help States Struggling to Meet Federal Ozone Standard

AGC and its Diesel Emissions Reduction Act (DERA) Coalition partners recently submitted a letter to the Department of Justice and the U.S. Environmental Protection Agency (EPA) offering recommendations on how to spend the $2.7 billion Environmental Mitigation Trust, which is part of Volkswagen’s multi-billion dollar “partial” settlement agreement for allegedly violating the Clean Air Act by cheating on vehicle emissions tests.  The trust will fund projects nationwide that reduce nitrogen dioxide (NOx) emissions.  These projects may be a bonus for states that are struggling to meet EPA’s National Ambient Air Quality Standards (NAAQS) for ozone; NOx is an ozone precursor.

The $2.7 billion placed in the Environmental Mitigation Trust (EMT) will be allocated to states, tribes and certain territories (based on the number of impacted VW vehicles in their jurisdictions) to support projects that reduce diesel emissions from large mobile sources of NOx pollution – including heavy-duty trucks, forklifts and other equipment eligible for funding under DERA (see Appendix D-2 of the consent decree).  The DERA Coalition’s letter took a firm position that the EMT must not be viewed as a replacement of the DERA grant program, which AGC members have pursued to help offset the high cost of retrofitting older off-road construction equipment. (As the Diesel Technology Forum frequently points out, the grant program has perpetually been oversubscribed with applications exceeding available funding by a 35-to-1 ratio.)  Further, the Coalition offered its support for states using the DERA program to distribute the EMT funds.

The specific terms of the settlement are being reviewed by a federal judge who is expected to formally sign off on the agreement in late summer or early fall; the public comment period closed Aug. 6.  AGC and its Coalition partners will continue to advocate for the most efficient use of the $2.7 billion, while preserving and strengthening the very successful DERA program.

Potential Tie-in to Ozone Attainment

The EMT funds could help states achieve the new ozone NAAQS – as further discussed in recent InsideEPA.com article “States Eye Potential Cash Bonanza For NOx Reduction Under VW Deal” (Aug. 3, 2016).

With the recent release of EPA’s final rule tightening that legal limit to 70 parts per billion (ppb), AGC promptly published a comprehensive “AGC Ozone Fact Sheet”  that explains EPA’s air quality management process, the 2015 revisions, and the possible impacts on our nation’s power, transportation and infrastructure projects.  AGC also has solicited stakeholder input and furthered EPA’s outreach on planned modifications to “Exceptional Events Rule” (EER) that allows the agency to exclude certain air-quality monitoring data – associated with uncontrollable or unpreventable emissions – when determining whether or not an area violates a NAAQS. AGC Chapters in the West are concerned that it will be hard to meet the 2015 ozone standard in rural intermountain areas due to high levels of “background” ozone.  Emissions modeling also indicate that many areas in the Northeast may struggle to attain the tougher standards.

On July 15, 12 U.S. Senators sent Senate Environment & Public Works Committee Chair Jim Inhofe (R-Okla.) a letter asking for the committee to consider the Ozone Standards Implementation Act of 2016.  The bill would adjust the schedule for implementation of the administration’s 2015 ozone standard.  AGC supports the legislation and was a part of a group of stakeholders asking Senators to sign onto the letter.

This is not the first time AGC has been active in pushing back on the tightening of air quality standards.  AGC provided EPA with lengthy comments on its prior notices to revise the ozone NAAQS (view those comments here and here).  Similarly, AGC has weighed in on the particulate matter (PM) NAAQS reviews (view those comments here), as well as the latest nitrogen dioxide standards wherein the Association raised serious concerns with first-time requirements calling on states to monitor and measure NO2 levels near major roads.  Recently, EPA proposed rules to scale-back previously promulgated measures.

For more information, please contact Leah Pilconis at pilconisl@agc.org or Sean O’Neill at oneills@agc.org.

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