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VW Settlement Shaping Up for a Yellow Bus Feast

Volkswagen is learning a $20 billion lesson: Don’t cheat.

The much-publicized case of falsifying emissions tests in its 2.0- and 3.0-liter diesel passenger cars is a cautionary tale: With the increasing environmental rules for vehicles, everything better be on the up and up. Try to skirt the rules—or worse—and be prepared to pay hefty fines and be hit with civil and criminal penalties. Scrutiny and allegations are spreading. Fiat-Chrysler is the latest to come under the microscope.

But amid these developments, student transporters in all 50 states, plus the District of Columbia, Puerto Rico and tribal governments, have suddenly tapped into a funding well. A major component of the fines levied against VW, and the requirement that the German automaker buyback affected vehicles or perform necessary engine modifications, is to reduce NOx emissions via a Mitigation Trust Fund of more than $2.7 billion.

That’s with a “B,” folks.

As school bus contractors heard at the NSTA Mid-Winter Meeting last month, the figure dwarfs the money made available to date by the Diesel Emissions Reduction Act over the entire life of the federal replacement and repower program.

The VW trust fund specifically targets 2009 and older diesel vehicles, though local governments with sunset programs are eligible to receive funding for 2010 diesel vehicles. The Mitigation Trust Fund also borrows from DERA-eligible mitigation actions. For the public and private school bus industry, these are namely alternative fuel investments, fuel efficiency and idle reduction equipment, including single-wide tires, fuel-operated heaters and auxiliary power units.

Related: NASDPTS Says to Contact State Directors for Tapping VW Settlement Fund

And, like with DERA, both school districts and private bus contractors must compete with other modes, but any hoops to jump through will be worth it when considering that the VW trust fund will pay for up to 100 percent of the cost of purchasing a new clean diesel or alternative-fuel school bus or repowering the engine, including 100 percent of the cost of a new electric replacement school bus in private fleets operated under contract with school districts. Charging infrastructure funds can also be purchased with VW funds.

“That’s a huge victory for the industry, here,” said Gabe Rozsa, a managing partner of Prime Policy Group, NSTA’s lobbying firm in D.C.

The VW settlement first requires a court-appointed, independent trustee to administer the program and awards. While the trustee is expected to be named by the spring, funds are still expected to be made available later this year. In the meantime, school districts and school bus contractors should do their homework on how to apply. They’ll need to work with their respective states, likely the environmental agency or perhaps the attorney general or department of transportation, which will be charged with writing mitigation plans.

The VW settlement includes another funding program for investment in Zero-Emissions Vehicles to increase usage and ridesharing. The biggest winner is California, which has its own $1.2-billion fund that will be awarded in four, 30-month cycles of $330 million each. The other 49 states, D.C., Puerto Rico and tribal governments will share a pot of $800 million. Still, consider that to date, the total of all DERA funds is about $700 million.

In total, these funds amount to a stimulus package for vehicle replacement and retrofits, and the fact that the school bus industry has received the lion’s share of DERA funds—around 40 percent—is encouraging to say the least. Student transporters should be feeling downright giddy. Everyone feels good about giving money to school kids, after all, especially when big business is caught with its hands in the cookie jar.

If you haven’t already, now’s the time to reach out to your state contacts to find out how your operation can begin the process of applying for funds.

July 2020

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Buyer’s Guide 2020

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