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Beneficiary Mitigation Plan

The Tennessee Department of Environment and Conservation (TDEC) has released a final Beneficiary Mitigation Plan (BMP) for implementing the State’s initial allocation of $45,759,914.40 from the Volkswagen Diesel Settlement (VW Settlement) Environmental Mitigation Trust (EMT). The purpose of the EMT is to execute environmental mitigation projects that reduce emissions of nitrogen oxides (NOx).

The State’s BMP targets the largest contributors of mobile NOx emissions in Tennessee, including the on-road, diesel heavy duty sector and the on-road, non-diesel light duty sector. As NOx emissions contribute to the formation of ozone and particulate matter, reductions in emissions will assist in the State’s efforts to maintain compliance with the National Ambient Air Quality Standard (NAAQS) for Ozone and Particulate Matter.

A proposed BMP was released to the public on July 18, 2018. The public was encouraged to submit comments. Following the close of a 30 day public comment period on August 17, 2018, all comments and input received were reviewed and considered by TDEC personnel prior to the finalization of the BMP.

The State’s final BMP may now be accessed here: State of Tennessee’s Beneficiary Mitigation Plan. TDEC anticipates that it will employ the following order when releasing project solicitations, with the first solicitation now available for Class 4-8 School Buses:

1) Class 4-8 School Buses;
2) Class 4-8 Shuttle and Transit Buses;
3) Class 4-7 Local Freight Trucks, Class 8 Local Freight Trucks and Port Drayage Trucks; and
4) Light Duty ZEV Supply Equipment.

Additional project solicitations for these categories will be released until eligible project funds are exhausted. 

TDEC will also host workshops throughout the state and/or via webinar in order to provide the public with information regarding the proposal process, program and project eligibility, timelines for implementation, and reporting requirements. 

As part of periodic evaluations, the State may revise the final BMP as necessary to reflect major changes in project demand, the State’s priorities, and/or any increases to the State’s EMT allocation in future years. Interested persons and entities are advised to sign up for the VW email list at https://signup.e2ma.net/signup/1843437/1737620/ in order to receive related email updates on topics including, but not limited to, potential revisions to the BMP, funding cycles, and project solicitation. For additional information on the VW Settlement, visit the TDEC Office of Energy Programs website here: http://www.tn.gov/environment/VWSettlement

At the bottom of this page are FAQs related to the BMP and information about the Disproportionate Burden Index (DBI). Refer to Section VI and Appendix 7 of the BMP for more information.

The State Trust Agreement requires Beneficiaries to include within the BMP a “description of how the Beneficiary will consider the potential beneficial impact of the selected Eligible Mitigation Actions on air quality in areas that bear a disproportionate share of the air pollution burden within its jurisdiction.” To address these requirements, the State has developed a “Disproportionate Burden Index” (DBI), which combines environmental, economic, and demographic datasets in a geospatial format to determine geographic units in Tennessee that have the highest air quality burden. Given that disproportionate burden is relative to the location of a project, TDEC will utilize the DBI and its geospatial display during the proposal review phase to assist with project prioritization and selection, focusing on the location and/or service area of the proposed project. 

The DBI considers four datasets that relate to environmental, economic, and demographic conditions at the county level. Each county level data point is evaluated to determine whether it exceeds a defined threshold specific to each dataset; in all datasets, the threshold is established as the arithmetic mean of all 95 county data points within Tennessee. If a county has a higher than average data point for a given dataset, the county is assigned a score of “1”; otherwise, the county receives a score of “0” for that dataset. The maximum DBI score a county can be assigned is a “4.” Datasets utilized for the DBI will be updated by TDEC on an annual basis. With each update to a DBI dataset, a corresponding and revised DBI map for Tennessee counties will be made available on TDEC’s VW Settlement website. The table below includes information on the year, source, and Tennessee specific averages for the four DBI datasets.

dbi dataset table

A DBI map of Tennessee by county, dated September 2018, is available below for reference. In order to afford potential applicants the ability to determine the DBI for a prospective project proposal, TDEC will upload to the TDEC VW Settlement website specific instructions as to its use during future project solicitations. 

DBI September map

For more information on the DBI, refer to Section VI. Consideration of Disproportionate Burden and Appendix 7 – Identification of Areas that Bear a Disproportionate Share of Air Pollution of the State of Tennessee’s Beneficiary Mitigation Plan.

Following Governor Haslam’s designation of TDEC as the Lead Agency for administering the State’s VW EMT allocation, TDEC formed a multidisciplinary Technical Advisory Committee (TAC) to develop a BMP.  The TAC is comprised of representatives from the following TDEC divisions:  Air Pollution Control; Office of Energy Programs; Office of Policy and Sustainable Practices; and Office of General Counsel. From the third quarter of 2017 through April 2018, TDEC’s TAC met on a bi-weekly basis to contemplate issues germane to the development of the State’s BMP and consequent programs through which the State’s EMT allocation will be disbursed.

TDEC’s TAC has engaged in regular interactions with the Governor’s Office and relevant peer State agencies to apprise them of developments relating to the EMT, TDEC's process for developing the State’s proposed BMP, and the types of EMAs that can be funded by the State’s EMT allocation. TDEC has also provided ample opportunities for interested stakeholders and the public to provide input regarding TDEC’s administration of the State’s EMT allocation.

For more information, refer to Section II. The State’s Approach to Development of a Beneficiary Mitigation Plan and Section III. Solicitation and Consideration of Public Input of the State of Tennessee’s Beneficiary Mitigation Plan.

Following the finalization of the BMP, TDEC will release funding opportunity announcements and/or project solicitations for corresponding programs. TDEC will also host workshops throughout the State and/or via webinar in order to provide the public with information regarding the proposal process, program and project eligibility, timelines for implementation, and reporting requirements. All program-related documents and announcements will be posted to the TDEC VW Settlement website and shared with the TDEC VW Settlement email list (interested parties may sign up here).  Additionally, announcements regarding workshops or other public events will be shared via media and/or press releases.

TDEC plans to release separate project solicitations for each of the EMA categories. TDEC anticipates that it will employ the following order, with the first project solicitation now available for Class 4-8 School Buses:

1.   Class 4-8 School Buses
2.   Class 4-8 Shuttle and Transit
3.   Class 4-7 Local Freight Trucks, Class 8 Local Freight and Port Drayage Trucks; and
4.   Light Duty Zero Emission Vehicle Supply Equipment.

Additional project solicitations for these EMA categories will be released until eligible project funds are exhausted. TDEC will strive to obligate, if not exhaust, Initial Eligible Project Funds by the end of calendar year 2023.

Bi-fuel engines and vehicles will be considered on a case-by-case basis for Emergency Response Vehicles only under the Class 8 Local Freight Trucks and Port Drayage Trucks, Class 4-7 Local Freight Trucks, and Class 4-8 Transit and Shuttle bus EMA categories. Please see Appendix 4 – Additional Defined Terms of the State of Tennessee’s Beneficiary Mitigation Plan for definitions of the terms “Bi-fuel” and “Emergency Response Vehicles.”

Expected ranges of emissions benefits were calculated for EMA categories #1-4, 6-8, and 10 using EPA’s Diesel Emissions Quantifier (DEQ), which provides a standard platform for computing the expected range in emissions reductions across a variety of on-road and nonroad vehicles and engines. Emissions benefits were not calculated for EMA category #5 (Ocean Going Vessel Shorepower), as this category was determined to not be viable in Tennessee. For EMA category #9 (Light Duty Zero Emission Vehicle Supply Equipment), emissions for a Tier 2 light duty passenger vehicle were utilized, as this type of vehicle was assumed to be the vehicle that would be purchased, had a zero emission vehicle not been purchased. EPA emission rates for a Tier 2 vehicle were then multiplied across an assumed utilization of the charging infrastructure, which was estimated based on data contained in a 2015 report by Idaho National Laboratory.

In order to provide a side-by-side comparison of project types by annual emission reduction benefit, expected ranges of emissions benefits for all EMA categories were captured in tons/year. During the project solicitation and review phases, the State expects to also consider and evaluate lifetime emissions benefits (i.e., total emissions reductions to be achieved when taking into consideration the remaining useful life of the vehicle to be Repowered or replaced) once additional and specific project details are known (e.g., actual model years and engine types proposed to be Repowered or replaced).

Refer to Section V.B. of the State of Tennessee’s Beneficiary Mitigation Plan for more information.

“Local” shall refer to vehicles that operate in Tennessee counties for 70% or more of the time. Please see Section V. Implementation and Appendix 4 – Additional Defined Terms of the State of Tennessee’s Beneficiary Mitigation Plan for more information.

“Port” shall refer to facilities along navigable water for the loading and unloading of cargo from ships; places from which aircraft operate that have paved runways and passenger and cargo terminals which include baggage-movement and passenger-transit operations; or nodes in the larger goods movement supply chain, to include cruise terminals, bulk terminals, container terminals, and intermodal container transfer facilities. Please see Section V. Implementation and Appendix 4 – Additional Defined Terms of the State of Tennessee’s Beneficiary Mitigation Plan for more information.

Appendix D-2 to the State Trust Agreement provides the following definition for “Government” for purposes of administering the Environmental Mitigation Trust (EMT):

“Government” shall mean a State or local government agency (including a school district, municipality, city, county, special district, transit district, joint powers authority, or port authority, owning fleets purchased with government funds), and a tribal government or native village. The term “State” means the several States, the District of Columbia, and the Commonwealth of Puerto Rico.

For information regarding the State’s treatment of Federal Agencies, which are not included in the definition of Government set forth in Appendix D-2 of the State Trust Agreement, please see Appendix 3 of the State of Tennessee’s Beneficiary Mitigation Plan

If vehicles are expected to operate in multiple counties, applicants for any of the State's VW EMT grant programs will be required to detail the expected breakout in percentage of time that the vehicle(s) will operate in each county and provide supporting documentation to justify this breakout (e.g., driving routes of vehicles to be Repowered and/or replaced).

As noted, Government Owned entities are eligible to receive up to 75% of the cost of a Repower and/or replacement for vehicle projects located in current or former nonattainment areas for Ozone and/or PM2.5 NAAQS or located in Distressed Counties. To be eligible for the 75% reimbursement rate, these Government Owned vehicles must operate 70% or more of the time in a county or counties located in current or former nonattainment areas for Ozone and/or PM2.5 NAAQS and/or in a county or counties designated as Distressed. Otherwise, Government Owned vehicles will only be eligible to receive up to 50% of the cost of a Repower and/or replacement project.

TDEC will provide additional eligibility guidelines for such projects in its project solicitations. See Section V. Implementation of the State of Tennessee’s Beneficiary Mitigation Plan for more information.