Comparative Analysis on the Allocation of Environmental Mitigation Trust Funds at EPA Region 4

Abstract

A notice of violation of the Clean Air was issued to Volkswagen Group by the U.S. Environmental Protection Agency (EPA) in 2015. Volkswagen was revealed to have intentionally programmed a “defeat device” in approximately 11 million of its 2.0-liter diesel vehicles. On-road NOx emission tests of Volkswagen models conducted during 2014 revealed that average emissions actually exceeded NOx emission levels by nearly 40 times the U.S. federal limit. As part of a settlement agreement, Volkswagen accepted the $14.9 billion penalty after acknowledging that it installed devices on diesel motors to make them appear to meet strict emissions standards when in reality they did not. Following a guideline of eligible mitigation actions set by the U.S. Environmental Protection Agency, each state must submit their own beneficiary mitigation plan which will include projects aimed at reducing NOx and other pollutant emissions in the transportation sector. States can fund projects and develop programs that align their interests, within the boundaries set through the settlement. Those boundaries involve replacing older diesel equipment or vehicles with new models that emit less pollution. The replacement vehicles can use a variety of fuels including diesel, electricity, natural gas and propane. A portion of the settlement would set aside $2.9 billion for an environmental mitigation trust where states can receive an allocation as beneficiaries. The size of these allocations is based on the number of violating vehicles registered within their jurisdiction. Although considerable research has been devoted to the allocation fund of California (about 423 million) in EPA Region 9, less attention has been paid to EPA Region 4, which ranks second in funding allocations and includes 7 states. These states are North Carolina, Kentucky, Georgia, South Carolina, Florida, Alabama, Tennessee and Mississippi. Through model building examining cost effectiveness and semi-structured interviews with government planning officials, this study addresses this research gap by quantifying and comparing the environmental benefits generated by investing the Volkswagen Mitigation Trust Fund in different programs included in the Proposed Beneficiary Mitigation Plans submitted to date within EPA Region 4. Results show the differences in pollutant reduction cost effectiveness for different fuels (Electricity, Diesel, or Compressed Natural Gas) and vehicle uses (Transit or School).