Fuel Transformation Program

First Volkswagen Settlement Request for Proposals Now Open for School Bus Replacement Grants!

The Department of Environmental Quality (DEQ) is working to advance cleaner emissions in Michigan through the new Fuel Transformation Program.  The Fuel Transformation Program is supported with funds allocated to Michigan via the Volkswagen settlement.

The DEQ is pleased to announce its first Fuel Transformation Program funding opportunity for the replacement of old diesel school buses.  Through these grants, the DEQ will incentivize the switch to zero emissions and alternate fuel vehicles resulting in sustainable improvements to air quality, the environment, and human health.

Use the links below to find the full Request for Proposals and application materials.

Grant applications for all-electric school buses CLOSED February 15, 2019.

Grant applications for all other school buses are due by 5:00 p.m., October 15, 2019.

School Bus Replacement Grants Complete Grant Package

School Bus Replacement Grants Request for Proposal

Checklist for Grant Proposal Submission

Budget Form

Grant Proposal Cover Sheet and Template

Fleet Data Sheet

Michigan Prosperity Region Map


Informational Webinar:

A webinar recording of the School Bus Replacement Grants Request for Proposals and application requirements can be found at www.michigan.gov/deqevents under Other Training Opportunities.   The webinar was recorded on January 10, 2019, and is titled, VW State Mitigation Trust School Bus Replacement Grants Webinar.

The Michigan Volkswagen Settlement Beneficiary Mitigation Plan

In accordance with the State Trust Agreement, Michigan has developed the Michigan Volkswagen Settlement Beneficiary Mitigation Plan that outlines how it will administer $64,807,014.63 of settlement funds it was allocated. 

The first request for proposals is for school buses only.  All other eligible mitigation action categories will be funded beginning in 2019.

The plan was developed with public comment, stakeholder input, statewide air quality data, and an evaluation of eligible mitigation actions.  

Michigan will be funding all eligible mitigation action categories but will not be using any settlement dollars to augment its Diesel Emissions Reduction Act Clean Diesel Program.

On behalf of the Michigan Department of Environmental Quality (MDEQ), the Michigan Agency for Energy (MAE) will be administering 15 percent of Michigan’s allocation for projects involving light-duty zero emission vehicle supply equipment.  This includes charging stations and hydrogen dispensing infrastructure. 

The plan outlining how MAE will implement its Light-Duty Zero Emission Vehicle Supply Equipment Program is included in the Michigan Volkswagen Settlement Beneficiary Mitigation Plan as Appendix 1.  For more information contact Mr. Robert Jackson at jacksonR20@michigan.gov or 517-930-6163.

For more information on the Michigan Volkswagen Settlement Beneficiary Mitigation Plan, contact Ms. Debra Swartz at swartzd@michigan.gov or 517-284-6903.


Volkswagen Settlement Background

In the fall of 2015, Volkswagen publicly admitted it had installed emissions control defeat devices – software designed to cheat emissions tests and deceive federal and state regulators – in certain Volkswagen-, Porsche-, and Audi-branded 2.0-liter and 3.0-liter diesel engine vehicles.  The vehicles equipped with emission testing defeat devices resulted in increases in oxides of nitrogen (NOx) emissions, up to forty times the allowable amount, violating the federal Clean Air Act.  The increased NOx emissions had adverse impacts to air quality and contributed to the formation of ground-level ozone, which has harmful effects on ecosystems and impairs lung function and cardiovascular health.

In the litigation that ensued, an Environmental Mitigation Trust (Trust) was established as part of two partial consent decrees to resolve, among other things, claims of the United States’ concerning excess oxides of nitrogen (NOx) from Volkswagen’s 2.0-liter and 3.0-liter diesel engine vehicles equipped with defeat devices.  The Trust allocates more than $2.8 billion to the U.S., Puerto Rico, and the District of Columbia to fund environmental mitigation actions that reduce NOx emissions.  The State of Michigan (Michigan) has been certified as a beneficiary of the Trust and has been allocated $64,807,014.63 of the approximate $2.8 billion.

The MDEQ was designated as the Lead Agency by Governor Rick Snyder to administer Michigan’s allocation.  The MDEQ must adhere to requirements in the Environmental Mitigation Trust Agreement for State Beneficiaries (State Trust Agreement), established pursuant to the partial consent decrees.  Those requirements include provisions for Eligible Mitigation Actions and Expenditures specified in Appendix D-2 of the State Trust Agreement.  Approximately 18,000 vehicles equipped with defeat devices were registered in Michigan.


Other Resources:

Volkswagen Settlement - Michigan Beneficiary Mitigation Plan Informational Webinar (recorded 11/5/18, 64 min)

Representatives from the Michigan Department of Environmental Quality and the Michigan Agency for Energy provide information about Michigan’s Beneficiary Mitigation Plan (BMP). The BMP outlines how Michigan plans to spend $64.8M that it has been allocated as a result of the Volkswagen Settlement. The webinar reviews the details of Michigan’s BMP and provided an opportunity for questions and answers.

Michigan Volkswagen Settlement Beneficiary Mitigation Plan

Environmental Trust Agreement for State Beneficiaries

Michigan's Certification for Beneficiary Status (Appendix D-3)

Volkswagen Clean Air Act Civil Settlement