North Carolina’s Participation in the Volkswagen Settlement

By Brian Phillips and Phyllis D. Jones

On September 18, 2015, the U.S. Environmental Protection Agency (EPA) cited the Volkswagen Group of America, Inc. (VW) with a Notice of Violation (NOV) for noncompliance of Section 203(a)(3)(B) of the Clean Air Act (CAA), 42 U.S.C. § 75229(a)(3)(B). This NOV was issued because Volkswagen manufactured and installed defeat devices in certain model year 2009 – 2015 2.0-liter diesel engine light-duty vehicles that circumvented EPA’s nitrogen oxide (NOx) emissions standard. The complaint filed by EPA alleges the defeat devices cause the vehicle’s emissions to exceed EPA’s standards during normal driving conditions. During normal driving conditions, the software renders certain emission control systems inoperative resulting in increased emissions.

As a result of the NOV, VW agreed to spend up to $14.9 billion to settle allegations of cheating emissions. Volkswagen settlement funds will be used to buy-back and/or modify affected vehicles, and to support national- and state-level projects to reduce NOx emissions. $10 billion has been allocated for consumer buy-back/vehicle modification, $2 billion has been allocated for zero emission vehicle investments nationwide and in California and $2.9 billion will be placed into an environmental mitigation trust that is to be distributed among the states, tribes and Puerto Rico.

North Carolina expects to receive approximately $92 million from the environmental mitigation trust for use towards offsetting the excess NOx emissions caused by VW’s actions through eligible mitigation actions to reduce NOx from a wide array of mobile sources. The $92 million apportioned to North Carolina is based upon the number of affected 2.0- and 3.0-liter diesel engine vehicles registered in North Carolina. Governor Roy Cooper has designated the N.C. Department of Environmental Quality to manage North Carolina’s portion of the VW Settlement.

Eligible mitigation actions under the VW Settlement include replacing or repowering eligible large trucks, buses, freight switchers, ferries/tugs, airport ground support equipment, medium trucks and other vehicles with new diesel or alternative fuel engines, or all-electric engines. Beneficiaries of the trust may use up to 15 percent of their allocation on acquiring, installing, operating and maintaining new light duty zero emission vehicle supply equipment. Additionally, beneficiaries may also use up to 15 percent of their allocation for administrative expenditures associated with implementing the mitigation plan.

The Division of Air Quality (DAQ) held a series of public meetings in March and April to discuss the VW mitigation settlement and to answer questions citizens may have regarding settlement details. DAQis also seeking public input on how North Carolina should utilize these funds, input regarding projects that could yield the greatest air quality benefit in terms of NOx reductions per funds expended, and specific recommendations and information on possible subject areas where mitigation projects would yield additional economic, environmental and energy benefits in North Carolina. All comments will be reviewed and used to help formulate North Carolina’s Beneficiary Mitigation Plan. The deadline for submitting comments to DAQ is May 3, 2018.

For further information, DAQ has established a Volkswagen Settlement webpage at

Brian Phillips is the Technical Services Section, Mobile Sources Compliance Branch Supervisor for the North Carolina Division of Air Quality. The Mobile Sources Compliance Branch is responsible for creating, maintaining and ensuring the programs required in this state regarding vehicle emissions are complying with state and federal rules and regulations. Before his work as the Mobile Sources Compliance Branch Supervisor, Brian worked as the lead Engineer for the Vapor Recovery Program. Brian has devoted 22 years of public service to the Division of Air Quality. Brian has a Bachelor of Science in Chemical Engineering from North Carolina State University, Engineer in Training Certification and is a North Carolina Certified Public Manager. Brian also a member of the Business Advisory Board for the Wake STEM Early College High School which serves as a strategic community support arm of the school.

Phyllis D. Jones is the Transportation Conformity Engineer and Diesel Emissions Reductions Grant Administrator in the Mobile Sources Branch of the North Carolina Division of Air Quality.  Phyllis has been employed with the North Carolina Division of Air Quality for over 15 years.  During this time, Phyllis has developed emissions inventories for on-road mobile sources and non-point sources for the state of North Carolina, reviewed transportation plans to ensure they do not exacerbate air quality, served as a committee oversight member for several organizations and administered the diesel emission reduction grant program for the state.  Prior to working with the state, Phyllis worked in private industry with Corning, Inc. and Lockheed Martin Aeronautics Corp. Phyllis has a Bachelor of Science in Mechanical Engineering from Howard University in Washington, DC and is certified as an Engineer in Training.  She is currently enrolled at Wake Technical Community College working on her Business Analytics Certificate.  Phyllis is a strong community service advocate and currently serves on the Board of Directors for Passage Home, Inc.