For eight years, the Nebraska Department of Water, Energy, and Environment (DWEE) has been administering the state’s $12.25 million share of the Volkswagen (VW) State Trust.

The VW State Trust (Volkswagen Diesel Emissions Environmental Mitigation Trust for State Beneficiaries, Puerto Rico, and the District of Columbia), was established as part of court settlements with Volkswagen to resolve charges that the company’s diesel passenger vehicles had devices that allowed them to circumvent emissions testing in the U.S. As a result, Volkswagen vehicles emitted excess nitrogen oxide gases (NOx) in normal operation, violating the Clean Air Act.

As part of the Trust Agreement, the funds are to be used to reduce NOx emissions in the state. NOx and other diesel emissions can cause asthma, bronchitis, and lung damage and increase one’s risk of lung cancer. NOx emissions also contribute to the formation of ground-level ozone, which has similar adverse health effects.

To determine what emissions-reducing actions Nebraska would fund, DWEE sought public input and used it to develop a Beneficiary Mitigation Plan, which explains how the state will spend its share of the VW State Trust funds. The goal of the Nebraska plan is to achieve significant, sustainable, and cost-effective reductions in NOx and other diesel pollutants to improve air quality in the state. 

Each state must spend at least 80% of its VW settlement allocation by Oct. 2, 2027; otherwise, the unexpended funds will be reallocated to other states that have spent their funds. By the end of 2024, DWEE had expended 96% of the VW principal, meeting that threshold, and has set a goal of expending Nebraska’s remaining share of the funds by the end of 2027.

In addition, DWEE’s goal has been to limit administrative costs to no more than 5% of the trust funds spent. As of the end of 2024, only 2.4% of the trust funds have been spent on administrative costs.

Here are updates on each of the mitigation actions, as of 2024:

Transit bus alternative fuel replacements

Funds earmarked for this action have been expended. Omaha Metro was awarded $724,901 to replace two diesel buses with compressed natural gas (CNG) fueled Bus Rapid Transit vehicles. Lincoln’s StarTran was awarded $489,934 to replace two diesel buses with battery-electric buses. 

School bus diesel and propane replacements

Funding for this action has also been expended. DWEE awarded to schools nearly $6.5 million to replace 148 diesel buses with new buses fueled by diesel, CNG, or propane.

Electric vehicle charging infrastructure

Funding for this action has been expended. Initially, DWEE proposed to use 10% ($1.2 million) of the state’s allocation to provide rebates to acquire, install, operate, and maintain electric vehicle (EV) charging stations. DWEE received 53 applications requesting a total of $3.8 million. As a result, DWEE increased the allocation to 15% of the total funds, or $1.8 million. In total, 28 projects were selected, resulting in 35 new EV charging locations in 18 counties. 

DERA matching funds

DWEE also administers the Nebraska Clean Diesel Program, which receives annual funding from the U.S. Environmental Protection Agency (EPA). Nebraska plans to use 18% of its VW settlement allocation as a voluntary state match. The Clean Diesel Program provides rebates to replace old diesel school buses and trucks with newer, cleaner-burning alternatives, as well as rebates to replace diesel irrigation engines with electric equipment.