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Minnesota's Volkswagen settlement state plan Executive summary The settlement In 2016 Volkswagen Corporation was caught violating air pollution standards for nitrogen oxides (NOx) in its diesel cars and SUVs.Their vehicles were producing 30-40 times more pollution than allowed by law.The federal government took VW to court and on October 2, 2017,the Department of Justice and VW signed a$15 billion settlement.A portion of the settlement—$2.9 billion—will be shared among the U.S. states and tribes, based on the number of violating vehicles registered in each jurisdiction. Minnesota's share is$47 million. Governor Dayton designated the Minnesota Pollution Control Agency(MPCA)to manage the settlement funds,which will be spent over 10 years on projects to offset the excess pollution from the violating vehicles. States can develop programs and fund projects that make the most sense for them,within the boundaries set by the settlement. Because VW's violations involved diesel models,the settlement will fund pollution reductions from diesel vehicles. States and tribes can only use the funds on activities outlined in the settlement, most of which involve replacing older diesel vehicles or equipment with new ones that produce far less pollution.The replacements can use any fuel, including diesel, propane, natural gas,and electricity. Replacements allowed under the settlement are: • Heavy-duty and medium-duty trucks • School,transit,and shuttle buses • Switcher locomotives • Ferry,tug, and tow boats • Shore power for ocean-going vessels • Airport ground support equipment • Forklifts and port cargo-handling equipment • Construction equipment(by supplementing the existing Diesel Emission Reduction Act) Additionally, up to 15%of each state's funds may be used for electric vehicle charging infrastructure. All funds must be spent or committed to approved projects by October 2, 2027. Minnesota's plan States must develop plans for using their settlement funds and submit them for approval to the Trustee managing the funds nationally. Minnesota's plan involves three phases of funding for five grant programs, over 10 years.Once it's approved,the MPCA can begin requesting proposals for projects and issuing grants. Goals The MPCA will use the state's settlement funds to support a healthy environment for all Minnesotans and achieve significant emissions reductions across the state, especially in those communities most impacted by vehicle pollution. Because 60%of the violating vehicles were registered in the Twin Cities metropolitan area and 40%were registered in Greater Minnesota,the funds will be targeted using the same 60%-40% ratio. We will invest in communities disproportionately impacted by air pollution, both in the Twin Cities area and in Greater Minnesota. In developing the grant programs and selecting projects for funding,we will balance project costs with emissions reductions and other benefits. Executive summary:Volkswagen Settlement Beneficiary Mitigation Plan • April 2018 Minnesota Pollution Control Agency aq-mvp2-32d 105