How Texas plans to use the VW settlement

The Texas Commission on Environmental Quality (TCEQ) recently released its draft plan for the state’s $209 million share of the settlement from Volkswagen’s emissions-cheating scheme. The money is meant to help offset the additional air pollution released by Volkswagen (VW) cars after the German automaker admitted that it had used illegal software to cheat on emissions tests. In Texas, VW sold more than 40,000 vehicles that emitted up to 40 times the federal emissions standard for lung-damaging nitrogen oxides (NOx).

This post provides an initial look at TCEQ’s draft plan. Future posts will explore how effective the proposed projects could be for reducing air pollution and protecting human health.

Plan Elements

According to the court documents (available here), the environmental mitigation fund’s purpose “is to be used for environmental mitigation projects that reduce emissions of [NOx] where [the subject VW vehicles] were, are or will be operated.” The states and tribes  designated as a beneficiaries were told to create their own plans that show:

• An overall goal for the use of funds,
• The categories of eligible mitigation actions (projects that can be funded) and percentages of funds expected to be used for each eligible mitigation action,
• How each beneficiary will consider benefits to air quality from the eligible mitigation actions in areas that are disproportionately affected by air pollution, and
• Estimates of emission reduction benefits that might be realized from the proposed actions.

TCEQ’s draft plan stated several overall goals: One, reducing NOx emissions; two reducing public exposure to pollutants; three, preparing for use of zero emission vehicles (ZEVs); and four, complementing other incentive funding programs, such as the Texas Emissions Reduction Plan. The agency has proposed a plan that focuses efforts on several of the eligible mitigation actions (specific requirements are detailed in the proposed plan):

• Light-duty electrical charging infrastructure;
• Trucks performing local delivery, freight, and port drayage;
• Refuse haulers;
• Buses (school, transit, and shuttle);
• Cargo-handling equipment;
• Ground-support equipment used at airports; and
• Shorepower for ocean-going vessels.

There were three eligible mitigation actions that TCEQ explicitly omitted: tugs and ferries, switcher locomotives, and the so-called “DERA Option.” That option would have allowed TCEQ to use VW funding as a way to fund additional categories of emission reduction projects, while also receiving more funds from the EPA for emission reduction projects. These omissions are  surprising, especially because tug and switcher projects are often some of the most cost-effective projects.

EDF recently collaborated on an analysis that looked at these types of projects specifically. Repowering a tug, for example, “costs” an average of $5,000 per ton of NOx reduced, while other types of projects can average $30,000 per ton. In other words, the state can fund more clean air projects with the same pot of money.  The “DERA Option” would have allowed Texas to combine VW funding with Diesel Emission Reduction Act funding, which typically funds replacement, repower, and retrofit projects for diesel vehicles and equipment. Texas, however, has declined to receive these federal funds for the past two years, making it one of only four other states to “opt out,” despite having several counties that do not meet federal air quality standards.

One final observation on the draft plan, TCEQ is proposing the following funding allocations:

• 15% ($31M) statewide: Light-duty electrical charging infrastructure
• 81% ($169M) for priority areas
  • San Antonio (Bexar, Comal, Guadalupe, Wilson Counties) – 35.14% ($74M)
  • Dallas-Fort Worth (11-county region) – 13.91% ($29M)
  • Houston-Galveston-Brazoria (8-county region) – 13.09% ($27M)
  • El Paso (El Paso County) – 12.79% ($27M)
  • Beaumont-Port Arthur (Hardin, Jefferson, Orange) – 6.07% ($13M)
• 4% ($8M) for administrative funding

Of the priority areas, the greater Houston region, Dallas-Fort Worth, and San Antonio are out of compliance with federal health-based standards for ground-level ozone, or smog. Beaumont-Port Arthur is nearly out of compliance, too, while El Paso has some monitors recording unhealthy levels of the pollutant. This approach to earmark funding for non-attainment areas, plus a few extra counties, appears to be markedly different from the VW fund’s purpose of mitigating impacts where non-compliant vehicles were, are, or will operate (see here, for county registration data that show where non-compliant vehicles were registered in the state). TCEQ stated that the agency would not consider available vehicle data for where the non-compliant vehicles were registered or sold (despite a similar approach having been used for the initial statewide allocation for the environmental mitigation trust).  Instead, Texas seems to have taken an alternative allocation approach to deciding where VW mitigation funds should be spent, possibly by putting the Band-Aid on the wrong finger.

TCEQ will accept public comments on its plan through October 8, 2018. It also plans to hold stakeholder meetings throughout the state.

The next post in the series will look at how to maximize the benefits of VW-funded projects for Texas.