Washington State Volkswagen Federal Settlement Grant Program

The Washington State Volkswagen Federal Settlement Grant Program is administered by the Air Quality Program of the Washington State Department of Ecology. This initiative stems from Washington’s participation as a beneficiary of the federal Volkswagen (VW) environmental mitigation trust, which allocated $112.7 million to the state to address environmental damage caused by excess diesel emissions from Volkswagen vehicles. The Department of Ecology has established this funding opportunity to accelerate the transition of medium- and heavy-duty diesel vehicles and equipment to all-electric or hybrid models, thereby reducing greenhouse gas emissions and improving air quality, especially in overburdened and disproportionately impacted communities across Washington. The purpose of this grant is to fund projects that replace or repower eligible diesel vehicles—including emergency vehicles, paratransit, local freight vehicles, freight switcher locomotives, and tugboats—with all-electric or hybrid alternatives. The program prioritizes projects that demonstrate strong potential for emission reduction, community health improvement, and alignment with Washington’s environmental justice and clean energy objectives. The grant specifically supports projects located in census tracts with higher diesel pollution burden scores, as determined by the Diesel and Disproportionate Impact tool developed with the Washington Department of Health. This emphasis ensures that the benefits of cleaner transportation technology are directed toward communities that face greater health and environmental challenges. Approximately $25 million in total funding is available under this opportunity. Individual award amounts vary by vehicle type, with maximums ranging from $400,000 for paratransit and local freight vehicles, to $9,000,000 for tugboat repowers. The program will cover up to 75% of eligible project costs for government-owned vehicles, and up to 40% for non-government-owned vehicles. Eligible expenses include the purchase and installation of electric vehicle charging infrastructure, project site design, permitting, and related equipment or service upgrades. Non-eligible costs include administrative expenses, real estate purchases, and unrelated construction or maintenance. Eligible applicants include organizations and governments licensed in Washington State such as corporations, partnerships, limited liability companies, nonprofits, investor-owned utilities, state and local governments, tribal governments, and special districts including ports, parks, and air pollution control authorities. All applicants must own eligible vehicles that have been licensed and operational in Washington for at least two years prior to October 2025 and must ensure that all newly purchased or retrofitted vehicles operate within the state for a minimum of five years. Matching funds are required; applicants may leverage other grants, rebates, or incentives, but the total of all funding sources cannot exceed the total project cost. Applications must be submitted electronically through the Ecology Administration of Grants and Loans (EAGL) system between October 8, 2025, and January 8, 2026, by 5 PM PST. Ecology anticipates announcing award decisions in March 2026, with projects required to be completed by October 31, 2027. The Department reserves the right to extend the grant period for projects with long lead times. Applications will be evaluated competitively using criteria including the level of diesel pollution reduction, community impact, tribal coordination, average annual fuel consumption, vehicle model year, and applicant type. Successful applicants will enter into a formal grant agreement with Ecology outlining project milestones, reporting requirements, and destruction verification for replaced vehicles. Grant recipients must adhere to specific reporting and compliance requirements, including quarterly progress reports, verification of cultural resource reviews when applicable, and submission of documentation for vehicle destruction or repower verification. The Department of Ecology reserves the right to withhold payments or reject future applications if recipients fail to maintain compliance. Contact for inquiries and accessibility accommodations can be made via the Air Quality Program at 360-407-6800 or by email to melanie.forster@ecy.wa.gov. Additional resources and forms are available on the Washington State Department of Ecology’s website.

Do not purchase vehicles before agreement; submit complete EAGL package; contact VW Team for multiple vehicles.