Overview of Volkswagen settlement Introductory Regional Meeting Lori Clark June 16, 2017

Background Lawsuits Against Volkswagen Group 2.0 and 3.0 Liter Diesel Engine Vehicles Found to Exceed the Environmental Protection Agency’s (EPA) Standard for Nitrogen Oxides (NOX) Emissions Approximately 590,000 Vehicles Sold in the U.S. Approximately 40,000 in Texas (National Renewable Energy Lab data) 2

Settlement Breakdown ($ in Billions) Total Settlement: $14.7 Billion Zero Emission Vehicle (ZEV) Investment - Managed by Electrify America Environmental Mitigation Trust (EMT) - Distributed to States Settlement Breakdown ($ in Billions) Texas’ Share: $209 Million 3

ZEV Investment $1.2 Billion Commitment Four 30-Month Cycles from Q1 2017 to Q2 2019 Cycle 1 Areas of Focus: Charging Infrastructure Installation – Approx. $250 Million Long Distance Highway Network Community Charging (Multifamily Homes, Workplaces, Commercial/Retail, Community, Municipal Lots/Garages) Public Education Initiatives – Approx. $25 Million ZEV Access Initiatives – Under Development $25 Million Reserved for Electrify America Administrative Costs 4

Charging Infrastructure Installation – Cycle 1 ZEV Investment Charging Infrastructure Installation – Cycle 1 Long Distance Highway Network 240 Highway Sites by Cycle End Focus on States with Higher Anticipated ZEV Average Annual Daily Traffic by 2020 High Correlation with FHWA EV Charging Corridors I-30 (5-9 Stations) I-20 (2-4 Stations) I-35 (5-9 Stations) Approx. 66 Miles Between Sites Community Charging Houston Included in Cycle 1 Funding 5

For Each Percentage Point Shortfall, Volkswagen Must Pay… Mitigation trust $2.7 Billion Distributed to States Proportional to Violating Vehicles Sold June 2019: Deadline to Remove 85% of Violating Vehicles Through Approved Emissions Modification or Recall Consequence: Pay Additional Funds to the Mitigation Trust For Each Percentage Point Shortfall, Volkswagen Must Pay… 2.0 Liter Vehicles $85 Million 3.0 Liter Vehicles, Generation 1 $5.5 Million 3.0 Liter Vehicles, Generation 2 $900,000 6

Mitigation trust process Trustee Selected (Wilmington Trust, N.A. Appointed March 15, 2017) Trust Agreement Finalized (Trust Considered Effective) Potential Government Beneficiaries Must File Certification Form to Become Beneficiary and Identify Lead Agency (Up to 60 days from Trust Effective Date) Trustee Files List of Designated Beneficiaries (Up to 120 days from Trust Effective Date) Beneficiaries Must Create Mitigation Plan (Summary of How the Beneficiary Intends to Use Allotted Funds) Mitigation Trust Administered by Trustee (Trustee Required to Transmit Determination of Beneficiary’s Funding Request within 60 Days Upon Receipt) 7

Rtc action to date March 10, 2016: Request to the Department of Justice (DOJ) and Texas Attorney General (AG), if a Financial Settlement is Reached, Funds be Dispersed to Texas Nonattainment Regions March 9, 2017: Request to Governor Abbott and Texas AG to: Pursue $209 Million Allocated to Texas as Part of the Mitigation Trust Designate TCEQ as the Lead Agency Allow Input from Regions and Other Interested Parties to Develop the Mitigation Plan Determine Project Priorities and Distribute Funds through Regional Councils of Governments (or by TCEQ Directly if Region not Interested) Allocate to Regions Based on Total Number Registered Vehicles 8

NCTCOG funding recommendation Fair Share Funding Recommendation Based on Number of Affected Vehicles Per Region After Set-Aside of 10% for Other Interested Regions Region Funding (In Millions) Alamo Area Council of Governments (AACOG) $27.4 90% Capital Area Council of Governments (CAPCOG) $32.9 Houston-Galveston Area Council (H-GAC) $58.9 Rio Grande Council of Governments (RGCOG) $5.9 North Central Texas Council of Governments (NCTCOG) $63.0 Other Regions $20.9 10% Total $209 100% Recommended COGs are within Transportation Management Areas, and Meet at Least One of the Following Criteria: Are Within Recommended Nonattainment Regions (2015 NAAQS for Ozone) Have Existing Vehicle Inspection/Maintenance Programs Are Included In Texas Clear Lanes Initiative 9

Mitigation trust – proposed structure Trustee for Environmental Mitigation Trust (Wilmington Trust, N.A., Appointed March 15, 2017) DRAFT Beneficiary and Lead Agency Structure Defined by Trust; Governor Abbott’s plans still unknown Beneficiary (State of Texas Eligible) Lead Agency (TCEQ?) TCAWG, AACOG, CAPCOG, and NCTCOG Proposal; whether will be accepted is unknown… AACOG CAPCOG H-GAC NCTCOG RGCOG Other COGs …under TCAWG et. al proposal, each regional council would administer funding. Regardless, each council could be a point of contact within their regions to provide technical support, identify priority areas of focus, opportunities suitable for statewide coordination, etc. TCAWG = Texas Clean Air Working Group 10

Eligible NOX mitigation actions Eligible Mitigation Actions 1-9 1. Freight and Port Drayage Trucks (Class 8) 2. School, Shuttle, & Transit Buses (Class 4-8) 3. Freight Switchers 4. Ferries/Tugs 5. Ocean Going Vessels (OGV) Shorepower 6. Freight Trucks (Class 4-7) 7. Airport Ground Support Equipment 8. Forklifts and Port Cargo Handling Equipment 9. Light-Duty Zero Emission Vehicle Supply Equipment Eligible Mitigation Action 10 10. Diesel Emission Reduction Act (DERA) Option 11

VW Opportunity Interest Survey North Central Texas Council of Governments (NCTCOG), in collaboration with Clean Cities and Councils of Government across the state developed a survey: Purpose: Gather Information On Fleet Interest In Anticipation In The Event Texas Does File As A Beneficiary Reasoning: Information Will Guide Feedback During Development Of The State Mitigation Plan What Do You Want to Do? https://www.surveymonkey.com/r/texasVWfunding 12

Questions and discussion 13

Learn more Volkswagen Workshop: Monday, June 26, 10 am – 4 pm @ Austin Convention Center Register: http://www.smartcitiesconnect.com/register.html Select “Expo Floor Only”, Enter Discount Code 17AUSTX Email Donna Tiemann at Donna.Tiemann@austintexas.gov to Confirm 14

Senior Program Manager FOR MORE INFORMATION Chris Klaus Senior Program Manager 817-695-9286 cklaus@nctcog.org Lori Clark Program Manager 817-695-9232 lclark@nctcog.org www.nctcog.org/airquality 15