|T%J\ United Stales
Erivimrtmnnta! Protection
l—l	Agency
Office of Transportation and Air Quality
EPA-420-F-19-042
revised April 2019
The DERA Option: Eligible Mitigation Action #10 under the Volkswagen Settlement,
Appendix D
Factsheet for States, District of Columbia and Puerto Rico
Background
The United States government and Volkswagen (VW) have resolved allegations that VW violated
the Clean Air act by selling approximately 590,000 vehicles equipped with defeat devices. As a part
of this settlement, VW is required to provide $2.7 billion for the 2.0 liter violating engines and $225
million for the 3.0 liter violating engines to an environmental trust to fully remediate the amount of
excess NOx emissions from the affected vehicles. There are two mitigation trust agreements: one
for states, Puerto Rico, and the District of Columbia and one for federally recognized Indian tribes.
The trusts will be administered by Wilmington Trust, an independent trustee. The provisions of the
mitigation trusts are found largely in paragraphs 14-19 of the Consent Decree and Appendix D to
the Consent Decree. The purpose of the mitigation trusts is to fund eligible mitigation actions that
replace diesel emission sources with cleaner technology, thereby offsetting the excess emissions of
nitrogen oxides (NOx) caused by the violating 2.0 and 3.0 liter vehicles. This mitigation work is in
addition to the emission reductions achieved by requiring Volkswagen to buy back or modify the
violating 2.0 and 3.0 liter vehicles.
The settlement is structured to provide the states, Puerto Rico, the District of Columbia, and
federally recognized Indian tribes with the ability to select and implement appropriate mitigation
actions funded by Volkswagen. Appendix D-1B to the Consent Decree provides the allocation of
funds, under which no state receives less than $8,125 million and Indian tribes receive a separate
allocation of approximately $59 million. Appendix D-2 provides a broad array of Eligible Mitigation
Actions (EMAs) that beneficiaries can implement. Beneficiaries must elect to become beneficiaries
within 60 days after the executed trust agreements have been filed with the Court (Trust Effective
Date). Beneficiaries have 10 years from the Trust Effective Date to request their allocation and
implement mitigation actions.
Eligible Mitigation Actions 1-9 may be implemented directly by the beneficiary; eligibility
determinations and funding requests under EMAs 1-9 will be handled by the beneficiary. EMA
Option 10 (DERA Option), allows states and tribes to use mitigation trust funds under specific EPA
Diesel Emissions Reduction Program (DERA) grants. This document serves to distinguish between
EMAs 1-9 and the DERA Option, as well as provide guidance for those states choosing to
implement the DERA Option. For the purposes of this document, the term "state" will be used to
describe the 50 states, the District of Columbia and Puerto Rico. Separate guidance will be provided
for tribes.

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Eligible Mitigation Actions
The information in Table 1 summarizes the eligible vehicles and equipment, emissions reduction
activities, and applicable funding limits allowed under EMAs 1-9 versus those allowed under the
DERA Option. Many types of projects are eligible under both EMAs 1-9 and the DERA Option.
However, there are some differences between the options in terms of project eligibility and funding
limits for certain types of projects. Activities allowed under the DERA Option, that are not eligible
under EMAs 1-9, are highlighted below in Table 1. Beneficiaries may split their Mitigation Trust
Funds between EMAs 1-9 and the DERA Option as they choose.
Under VW EMAs 1-9, only a certain portion of the cost of an activity is eligible for funding through
the trust. The mitigation trust funding limits (percentages) shown in Table 1, column 1, represent the
maximum portion of the costs that can be covered with mitigation trust funds under EMAs 1 -9. The
rest of the cost must be borne from other sources of funds.
Under VW EMA 10, the DERA Option, only a certain portion of the cost of an activity is eligible for
funding under EPA's State Clean Diesel Grant Program. The DERA funding limits (percentages)
shown in Table 1, column 2, represent the maximum portion of the costs that can be covered with a
combination of DERA funds and any non-federal voluntary matching funds provided by a grantee.
The portion of the costs that exceed the DERA funding limit is referred to as the "mandatory cost-
share," and is the responsibility of the grantee. Voluntary and mandatory cost-shares are discussed
in more detail below under "Implementing the DERA Option."
Where the funding limit in Table 1 is listed as a range, the funding limit varies based on the specific
type of engine purchased (e.g. conventional diesel vs electric). Full details on EMAs 1-9 may be
found in Appendix D, and full details on eligible DERA activities may be found in the applicable EPA
State Clean Diesel Grant Program Information Guide. Additionally, a more detailed version of the
information provided in Table 1, containing more specific eligibility information and funding limits, is
available in Detailed Comparison of Volkswagen Eligible Mitigation Action 1-9 and Eligible Mitigation
Action #10 (DERA Option) at www.eDa.gov/cleandiesel/volkswaaen-vw-settlement-dera-ODtion.
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Table 1. Comparison of EMAs 1-9 and EMA 10 (DERA Option)
VW EMAs 1-9
Eligible Activities and
Mitigation Trust Funding Limits
VW EMA 10 (DERA Option)
Eligible Activities and
DERA Funding Limits*
Class 4-7 Local Freight Truck
Class 8 Local Freight Trucks
Class 8 Port Drayage Trucks
Engine Model Year 1992-2009
Engine Replacement: 40-75% non-gov, 100% gov
Vehicle Replacement: 25-75% non-gov, 100% gov
Class 5-8 All Diesel Highway Vehicles
Class 8 Diesel Drayage Trucks
Engine Model Year 1996-2009
Engine Replacement: 40-60%
Vehicle Replacement: 25-45% (50% for Dray)
Retrofits +/- Aero, LRR Tires: 100%
Engine Model Year 2010-2012 only where State
regulations already require upgrades to 1992-2009
engine model year trucks
Engine Replacement: 40-75% non-gov, 100% gov
Vehicle Replacement: 25-75% non-gov, 100% gov
Idle Reduction (no APUs or generators on 2007 or
newer model year engines): 25% (100% w/ retrofit)
Clean Alternative Fuel Conversion: 40%
Engine Model Year 1996 or newer
Engine Replacement (All-electric): 60%
Vehicle Replacement (All-electric): 45% (50% for
Dray)
Clean Alternative Fuel Conversion: 40%
Clean Alternative Fuel Conversion: 40%
VW EMAs 1-9
Eligible Activities and
Mitigation Trust Funding Limits
VW EMA 10 (DERA Option)
Eligible Activities and
DERA Funding Limits*
Class 4-8 School Bus
Class 4-8 Shuttle or Transit Bus
Engine Model year 2009 or Older
Engine Replacement: 40-75% non-gov, 100% gov
Vehicle Replacement: 25-75% non-gov, 100% gov
Engine Model Year 2010-2012 only where State
regulations already require upgrades to 1992-2009
engine model year buses
Engine Replacement: 40-75% non-gov, 100% gov
Vehicle Replacement: 25-75% non-gov, 100% gov
Type A, B, C, D Diesel School Bus
Class 5-8 Diesel Shuttle, Transit or Other Bus
Engine Model Year 1996-2009
Engine Replacement: 40-60%
Vehicle Replacement: 25-45%
Retrofits +/- Aero, LRR Tires: 100%
Idle Reduction: 25%
Clean Alternative Fuel Conversion: 40%
Engine Model Year 1996 or newer
Engine Replacement (All-electric): 60%
Vehicle Replacement (All-electric): 45%
Clean Alternative Fuel Conversion: 40%
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Freight Switchers
1000+ hours per year
Pre-Tier 4
Engine Replacement: 40-75% non-gov,100% gov
Vehicle Replacement: 25-75% non-gov, 100% gov
Diesel Locomotives
1000+ hours per year
Unregulated - Tier 2 Line Haul and Switcher
Tier 2+ Switcher
Engine Replacement: 40-60%
Remanufacture: 40%
Vehicle Replacement: 25-45%
Retrofits: 100%
Idle Reduction/Shorepower: 40%
Tier 2+ Line Haul
Retrofits: 100%
Idle Reduction/Shorepower: 40%
Remanufacture: 40%
Ferries/Tugs
Unregulated-Tier 2 Ferry and Tug Engines
Engine Replacement/Reman/Upgrade:
40-75% non-gov, 100% gov
Vehicle Replacement: 25-75% non-gov, 100% gov
Marine Diesel Engines
1000+ hours per year
Unregulated-Tier 2 Marine Engines
Engine Replacement/Reman/Upgrade: 40-60%
Vessel Replacement: 25-45%
Ocean Going Vessel and Great Lakes Vessels
Shorepower
Costs associated with the shore-side system and
installation
Non-government Owned: 25%
Government Owned: 100%
Marine Shore Power Connection Systems
Costs associated with the shore-side system and
installation: 25%
VW EM As 1-9
Eligible Activities and
Mitigation Trust Funding Limits
VW EM A 10 (DERA Option)
Eligible Activities and
DERA Funding Limits*

Electrified Parking Spaces (EPS)



Costs associated with the equipment and installation
to provide off-board electrical power to
heating/cooling/electrical systems of hoteling trucks,
or to plug-in trailer refrigeration
systems: 30%
Airport Ground Support Equipment (GSE)
Nonroad Diesel Engines
Construction, Cargo Handling (Ports and Airports),
Tier 0-Tier 2 Diesel engines
Uncertified, or certified to 3 g/bhp-hr or higher
emissions, spark ignition engines
Engine Replacement (All-electric): 75% non-gov,
100% gov
Agriculture, Mining, Energy Production
500+ hours per year (250+ hrs for ag pumps)
Tier 0-Tier 3
0-50 HP, 2006 and newer
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Vehicle Replacement (All-electric): 75% non-gov,
100% gov
51-300 HP, 1996 and newer
301+ HP, 1986 and newer
Engine Replacement/Reman/Upgrade: 40-60%

Vehicle/Equipment Replacement (Diesel, Alt Fuel,
Hybrid): 25-35%
Forklifts and Port Cargo Handling Equipment
Forklifts, reach stackers, side loaders, and top loaders
with >8000lbs lift capacity
Rubber-tired gantry cranes, straddle carriers, shuttle
carriers, terminal tractors
Engine Replacement (All-electric): 75% non-gov,
100% gov
Vehicle Replacement (All-electric): 75% non-gov,
100% gov
Vehicle/Equipment Replacement (All-electric): 45%
Retrofits: 100%
Engine Replacement (Diesel, Alt Fuel): 40-50%
Engine Replacement (All-electric): 60%
Reman/Upgrade: 40%
Light Duty Zero Emission Vehicle Supply
Equipment
A State may use up to fifteen percent (15%) of its
allocation of Trust Funds on costs for the acquisition,
installation, operation and maintenance of new light
duty zero emission vehicle supply equipment for
projects as specified in Appendix D-2, EMA #9.

'Notes:
•	Project eligibility criteria and applicable funding limits for the DERA Option are subject to change pending final
program guidance issued by EPA for the State Clean Diesel Grant Program. The summarized criteria come from
the FY 2019 State Clean Diesel Grant Program Information Guide.
•	Items that are highlighted are allowed under the DERA Option, and are not eligible under EMAs 1 -9.
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Implementing the DERA Option
As defined in Title 2 Code of Federal Regulations Section 200.99, voluntary committed cost sharing
(or matching) means funds specifically pledged on a voluntary basis in the proposal's budget or the
Federal award on the part of the non-Federal entity and that becomes a binding requirement of
Federal award. Under the DERA Option, states may use mitigation trust funds as their non-federal
voluntary match under EPA's State Clean Diesel Grant Program. Per DERA's statutory authority, if a
state provides a voluntary match equal to the base allocation offered by EPA, EPA will provide a
matching incentive equal to 50 percent of the base allocation. For example, if EPA offers a base
allocation of $200,000 to the state, the state could contribute $200,000 of its Trust Funds as a
voluntary match and the state would receive an additional $100,000 in EPA funding as a matching
incentive. The total project budget would then be $500,000, not including any mandatory cost-share
funds contributed by project partners, fleet owners, or other another source (not Federal or trust
funds). See Figure 1 below for an example. In addition to a voluntary match provided by a state in
order to receive the EPA matching incentive, a state may contribute mitigation trust funds as a larger
voluntary match in order to achieve additional NOx reductions under their State Clean Diesel
Program grant. See Figure 2 below for an example.
Figure 1. DERA Option: Trust Funds as
Voluntary Match to Receive EPA Matching
Incentive
Figure 2. DERA Option: Trust Funds as a
Larger Voluntary Match to Achieve
Additional NOx Reductions
EPA Bonus
$100,000
Total Funding
$1.3M
Mitigation
Trust Funds
$1M
DERA
Allocation
$200,000
DERA
Allocation
$200,000
Mitigation
Trust Funds
$200,000
EPA Bonus
$100,000
Total Funding
$500,000
Any voluntary matching funds provided by the state, including mitigation trust funds, are subject to
the DERA funding limits defined in the applicable State Clean Diesel Grant Program guidance. Many
of the eligible project types under EPA's State Clean Diesel Grant Program are funded at less than
100% and therefore require a mandatory cost-share. These mandatory cost-share requirements are
typically provided by project partners (e.g., fleet owners). Mitigation trust funds cannot be used to
meet the non-federal mandatory cost-share requirements of any DERA grant. See Table 2 for
a summary of DERA funding limits and mandatory cost-shares required under EPA's State Clean
Diesel Grant Program.
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It is possible that the state entity which is designated as the trust beneficiary is not the same entity
that has been designated as the lead state agency which receives and administers DERA funds
under the State Clean Diesel Grant Program. In these instances, the beneficiary and the state DERA
grantee will need to coordinate project planning, reporting, and funding.
Table 2. Maximum Funding Limits and Minimum Mandatory Cost-Shares for
EPA's State Clean Diesel Grant Program
DERA Eligible Activities
DERA Funding Limits
(DERA Funds +
Voluntary Match)
Minimum Mandatory
Cost-Share
(Fleet Owner
Contribution)
Exhaust Control Retrofit
100%
0%
Engine Upgrade / Remanufacture
40%
60%
Highway Idle Reduction Bundled with
Exhaust Control Retrofit
100%
0%
Stand-alone Highway Idle Reduction
25%
75%
Locomotive Idle Reduction
40%
60%
Marine Shore Power
25%
75%
Electrified Parking Space
30%
70%
Engine Replacement
- Diesel or Alternative Fuel
40%
60%
Engine Replacement
- Low NOx
50%
50%
Engine Replacement
- All-Electric
60%
40%
Vehicle/Equipment Replacement
- Diesel or Alternative Fuel
25%
75%
Vehicle/Equipment Replacement
- Low NOx
35%
65%
Vehicle/Equipment Replacement
- All-Electric
45%
55%
Clean Alternative Fuel Conversion
40%
60%
Note: Project eligibility criteria and applicable funding limits for the DERA Option are subject to change pending final
program guidance issued by EPA for the State Clean Diesel Grant Program
How to Apply Trust Funds to State Clean Diesel Grants
At the beginning of the annual State Clean Diesel Grant Program cycle, EPA asks for a Notice of
Intent to Participate from each state. After the Notice is submitted, states will submit final workplans
and applications to EPA. States choosing to implement the DERA Option may include mitigation
trust funds as a non-federal voluntary match in their State Clean Diesel Program applications as
shown in Figures 1 and 2 above. States that wish to receive the matching incentive from EPA must
include a voluntary match at least equal to the base EPA funding amount on their Notice of Intent to
Participate and on their application submitted to EPA.
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Note: If DERA funding is not available, then trust funds will not be available under the DERA Option
until such time as DERA may be appropriated funding and the state is awarded a new State Clean
Diesel Program grant.
Reporting Requirements
Recipients of DERA grants must submit Quarterly Programmatic Reports and a Final Programmatic
Report to EPA as required under the DERA grant terms and conditions. A beneficiary implementing
the DERA Option may submit its DERA reports to the trustee to fulfill its reporting requirement for
any portion of its mitigation trust funds utilized under the DERA Option. Additionally, a beneficiary
may submit its state's Final Approved State Clean Diesel Workplan to the trustee as its beneficiary
Mitigation Plan and as its funding request for actions funded under the DERA Option.
Resources
Link to Consent Decree: www.epa.qov/enforcement/partial-consent-decree-volkswagen
State Program Guide and information: www.epa.qov/cleandiesel/clean-diesel-state-allocations
Questions
Please submit questions related to the DERA Option to the Clean Diesel helpline.
Clean Diesel Helpline: CleanDiesel@epa.gov | 1-866-623-2322
Questions about the rest of the Consent Decree, including EMAs 1-9, should be directed to your
state agency designated as the beneficiary.
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