Vermont Legislature SmartTranscripts:

[Chair Amy Sheldon]: We are going to hear from Deirdre Rutzer, who is

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: Hi, my name is Deirdre Rutzer. I'm with the Air Quality and Climate Division. Thank you for inviting me to speak about the Vermont's allocation of the Volkswagen Environmental Mitigation Trust. I'd eligible projects that mitigate the harm of excess nitrogen oxides or NOx that were emitted by Federal Clean Air Act. Specifically, the Volkswagen settlement agreement, less polluting new diesel alternative fuel for all electric options. And through Act 11 of the 2018 special Volkswagen Trust funds for electrification projects only. Slide. But since 2018, ANR has issued multiple requests for proposals for electrification projects, resulting in awards for the purchase of development and an interagency working group. Those include 75 level two chargers and DC DC fast chargers located in downtowns along highway corridors at major attractions, multifamily housing, and workplaces. Now per the trust agreement, the state needs to have obligated at least 80% of its original allocation by 10/02/2027. And if the state doesn't meet that goal, any remaining unobligated funds will be recaptured by the trust and reallocated to other states that have met that deadline. So this is the current status of obligated versus unobligated funds. And I guess I would point to the obligated fund column at the bottom, there's a range. So remember, we need to get to the 80% as our target. And today we are at about 74, and we have a range of up to almost 79% I've included here because we expect to obligate that funding over the next few months. We're currently working on that. So at 70 almost 79% obligated in the next few months, it seems like we're in a good position to meet the 80% obligated threshold by October 2027. However, there are some concerns. Per the trust agreement, eligible vehicles are limited to those with engine model year ranging from 1992 to 2009. So this requirement has become increasingly more difficult to meet over the years as fleets turnover and eligible vehicles are taken out of service. So today, vehicles need to be a minimum of 17 years old. And this has been a concern of states since day one. However, it is the more recent trends being observed, coupled with that narrow window of eligible vehicles causing concern about meeting that October 2027 deadline. And the recent trends I'm referring to include, one is declining participation in the program. The last two requests for proposals have been undersubscribed. And then two, changes in federal policy and market trends are of a concern. Grantees seeking to purchase heavy duty electric trucks have recently reported difficulty locating suitable vehicles in Vermont and in the greater Northeast region. Significant manufacturers delays are likely the result of reduced national demand caused by the federal administration's policy shift away from electric vehicles. So if the current awardees start to decline their awards due to lack of electric truck availability, This could cause that percentage of funds obligated to decrease. ANR is proposing to remove the limitation that Volkswagen funds only be spent on electrification projects and instead follow the scope of eligible funding designated under the Volkswagen Trust Agreement. ANR will continue to prioritize electrification projects and will only open up funding opportunities to other eligible fuel types as a contingency if deemed necessary to meet that 80% threshold. So presently, the agency is planning to solicit applications for electrification projects on a rolling basis starting this spring and continuing through late twenty twenty six. And if that 80% threshold hasn't been reached at that time, ANR would like to offer funding towards projects involving other fuel types, including replacement of newer diesel vehicles. Doing so may encourage faster turnover of older, more heavily polluting vehicles operating states in instances where the operators are reluctant to commit to an electrification project. While greater NOx emissions reductions would be achieved through electrification projects, Replacing 2009 and earlier diesel vehicles can still achieve NOx emissions reductions of 70% or more, depending on the vehicle. Additionally, funding levels would remain higher for electrification projects. That would still encourage them over other types of projects. So, ANR's proposed legislative change increases the likelihood that the state can retain its existing Volkswagen fund allocation and potentially receive supplemental funds. However, meeting that 80% threshold remains a challenge due to that narrow eligibility window of vehicles required to have engine model year 1992 to 2009, and then the more recent trends trend of requests for applications just being undersubscribed. So thank you.

[Chair Amy Sheldon]: Thank you. And I started by saying that this is a request you took to the Appropriations Committee, but then you we were copied on it, and I thought we should learn a little bit more about it. I guess I'll start with a couple questions. Thanks for your testimony. Are folks not charging stations, electric vehicle charging stations are eligible? They are. And those types of projects are not coming in?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: The trust agreement requires that we can only use 15% of our allocation for light duty electric vehicle charging. We've maxed that out. That's actually some of what's will get us up to the 79% because we have automatically allocated that, and that's what we've been working with ACCD on.

[Chair Amy Sheldon]: And that's just part of the trust agreements that we had to agree to. We can't change that. And then just so I make sure I'm following this, you are replacing public vehicles with those nineteen ninety two to 2,009 that are diesel with electric vehicles. That's the most of the money is for?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: Yes. It's for businesses operating in Vermont, municipalities. Yeah. So it's really open to any of the heavy diesel vehicles in Vermont. Okay.

[Chair Amy Sheldon]: Not not necessarily public, but heavy duty. Yes. And the type of project you're imagining that would help reduce NOx, but not be necessarily electrification. What would that what kind of projects would those be?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: So the trust agreement limits the they're called eligible mitigation actions. So that's those are the only projects we can spend our money on. There are 10 of them. One is the light duty electric vehicle charging. The remainder are class four through eight freight trucks. So we've been focusing on those heavy duty trucks. And then there are buses. So it's class four through eight, maybe class four through seven off the top of my head, school buses, shuttle buses, transit buses. And then there are some non road equipment that can be replaced, such as forklifts, I believe ferries and tugs can be repowered. And repowered is not replacing the whole vehicle. It's just replacing the engine. And then there are quite a few others, I think, oceangoing vessels. We're kind of limited. And when we did our first request for proposals, we we've opened it up to all of the eligible actions to see where the interest lies. So far, we've only really gotten interest in in the trucks and the buses. So that's been primarily projects we've been spending our money on. So if we were to open it up to the additional fuel types that are eligible, it would be replacing older diesels that to be 2,009 and older, with a newer diesel or alternative fuel or

[Chair Amy Sheldon]: all electric. Other questions? Representative North.

[Rep. Rob North]: Just to build on the chair's question, are private companies eligible for these funds or does it have to be public? Private companies, yes. Yes, or somebody's a landscaping company, they have a replacement of the equivalent sized electric truck is a pretty good thing. Would the funding enable them to get the charging station installed at their facility, all that, so the whole buying hours?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: Yes. Our funding can go towards

[Rep. Rob North]: How much promotion has been done to the private companies so that they know they could get a free truck if they want one?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: It's not quite free because they do have some skin in the game. But we do have a pretty big mailing list. We also work with Vermont Clean Cities Coalition. I think they might be clean communities now because they often work with fleets across the state of Vermont. And she's got a very robust mailing list as well as a newsletter that goes out.

[Chair Amy Sheldon]: So I'm not sure was that the the answer to the how has it been promoted? And if you could follow-up a little on what is the business's obligation. Like, so they would they have to match or whatever. What is their what is their financing?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: So for nongovernment owned, the cost share is 75. Well, the cost share is 25 percent. We would fund 75%. And then for government owned, we have it that the trust funds 85% and then the remaining 15% would be on municipality or

[Rep. Rob North]: Still have to be replacing a vehicle 2,900.

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: Yes, it needs to be scrapped, permanently disabled. And so we promote it through email blasts, the Clean Cities Coalition newsletter. We also reach out to the Vermont League of Cities and Towns on our mailing list. Trying to think and schools, superintendents, of the bus side of things. So municipalities.

[Rep. Rob North]: Got any electric tractors?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: Agriculture tractors or truck tractors? We have had interest and I don't know. So we manage two programs that are very similar. One is the Volkswagen one and then the Diesel Emissions Reduction Act grant one, which is EPA funded. And I do know we've had a couple of entities interested in electric tractors. I don't think any of them have been completed, but we have made awards for that.

[Rep. Kristi Morris]: Kristi Yep. Is this a multi year or was it a multi year payment and then we at the end of it? Yeah.

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: It was it's a the trust agreement the environmental mitigation trust is for ten years. And so we're coming up to Oh, you're coming up that ten year anniversary. Last

[Rep. Kristi Morris]: yeah. Just full disclosure, my son works for Beta. And I'm just wondering with the ground transportation for equipment, is that would that be would BETA be eligible for that?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: Yeah. If if they had airport ground support equipment that was diesel, yeah, they would be eligible.

[Chair Amy Sheldon]: And you've presented this to appropriations and where what's their status of their view of the request?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: I am not sure.

[Chair Amy Sheldon]: Do members have further questions?

[Rep. Rob North]: I just noticed in her report that actually for having to turn the pitch, all electric airport ground support equipment is eligible for up to 100% of the cost.

[Chair Amy Sheldon]: There you go, Sarita.

[Rep. Kristi Morris]: That's if it's diesel, right?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: Yes. Yeah, diesel, two electric. And

[Rep. Rob North]: 2,009?

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: The airport ground support equipment might have different parameters. I'm not entirely sure. But, yeah, one of the documents that we provided is called appendix D two, and that lists all of the eligible actions and eligible vehicles and equipment.

[Rep. Rob North]: All

[Chair Amy Sheldon]: right. Any further questions? Thanks for joining us.

[Deirdre Rutzer (ANR, Air Quality & Climate Division)]: Thank you.

[Chair Amy Sheldon]: Nope. We have looks like we have a few minutes between witnesses here. So if folks have comments on, I guess, the posting bill that they wanna bring up now, we could entertain those, or we'll have Bradley in at 02:00 to talk about it.