Fuel Transformation Program

Program Overview

Michigan was allocated 64.8 million dollars as part of the Volkswagen Settlement.  The Michigan Department of Environment, Great Lakes, and Energy (EGLE) was designated as the Lead Agency and developed a Beneficiary Mitigation Plan that describes how the funds will be spent.

The goals of the Michigan Beneficiary Mitigation Plan are:

  • To reduce oxides of nitrogen (NOx) emissions and maximize air quality benefits statewide with an emphasis on priority areas (areas designated as non-attainment and maintenance areas for the National Ambient Air Quality Standards).
  • To reduce diesel emissions from school buses statewide.
  • To increase adoption of zero emission vehicles (ZEV) and alternate fuel vehicles and equipment.

Michigan has up to ten years from October 2, 2017, to spend its allocation of State Trust Agreement funds as specified in the State Trust Agreement.  Projects will be solicited through a competitive application process and funded on a reimbursement basis after all required documentation has been successfully submitted and approved by EGLE. 


Project Solicitation

A Request for Proposals (RFP) for $12,961,400 for school bus replacements opened December 19, 2018.  The RFP closed on February 15, 2019, for replacing diesel school buses with electric school buses and on October 15, 2019, for replacing diesel school buses with new diesel or propane school buses.

A second RFP will be opening in early 2020 for the following on-road vehicles:

  • Class 4-8:  Local Freight Vehicles (Eligible Medium and Large Trucks and Port Drayage Trucks)
  • Class 4-8:  Shuttle and Transit Buses

A third RFP for off-road vehicles and equipment will open in mid-2020.

Grant application materials will be posted on this page when a Request for Proposals opens, and an announcement will be made via a press release. 

For more information contact Debbie Swartz, Michigan Department of Environment, Great Lakes, and Energy at SwartzD@Michigan.gov.


Projects Selected for Funding

The Michigan Association for Pupil Transportation Electric School Bus Pilot Project was selected for funding and awarded $4,218,668 to replace 17 diesel school buses with 17 new all-electric school buses and charging stations.  Zeeland Public Schools is the grantee and is overseeing the project which involves a total of seven school districts.  For more information contact David Meeuwsen, Zeeland Public Schools at dmeeuwse@zps.org.

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.

For more information on the Michigan Volkswagen Settlement Beneficiary Mitigation Plan, please contact Ms. Debra Swartz at swartzd@michigan.gov or 517-284-6903; or Mr. Robert Jackson at jacksonR20@michigan.gov or 517-930-6163.


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 (revised August 2019)

Environmental Trust Agreement for State Beneficiaries

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

Volkswagen Clean Air Act Civil Settlement