State Diverts $69M from VW Settlement to General Fund

Clean-air advocates wind up with $72 million, had hoped total amount would go to fighting greenhouse-gas emissions

Roughly half of the $141 million the state will receive from settlements with Volkswagen involving air-pollution violations and cheating on emissions tests will go into the general fund instead of clean-car initiatives.

The state Department of Environmental Protection told lawmakers $69 million from the auto manufacturer resulting from a settlement reached with the attorney general’s office has been directed to the state budget.

Clean-energy advocates had hoped the money, along with $72 million from a separate settlement involving the auto manufacturer and the federal Environmental Protection Agency, would go to funding a series of programs to reduce air pollution from vehicles.

But the DEP, in answering questions from the Office of Legislative Services, indicated yesterday the money from the settlement with New Jersey is being diverted to the general fund.

“The $69 million was directed to the general fund, consistent with the disposition of all penalty receipts,’’ the DEP answered in response to a question from the OLS, a routine part of the annual budget review.

Concerned with climate change

The issue is important to advocates worried about climate change, because the transportation sector is the biggest source of greenhouse-gas emissions. They had hoped the state would direct the money to programs that would clean up emissions from cars, including working with the state to electrify the transportation sector.

There is huge interest among manufacturers, businesses, local communities, and others in helping to achieve that goal as evidenced by the 116 applications received by DEP to get a piece of the funding from the $72 million settlement with the federal government.

In her statement before the Assembly Budget Committee yesterday, acting DEP Commissioner Catherine McCabe told lawmakers the agency is working with the governor’s office to evaluate how to select projects from the Volkswagen settlement.

The priority is to select cost-effective, technically feasible projects that benefit large populations, with a focus on environmental-justice communities, according to McCabe. Last week, McCabe told the Clean Air Council that at least 15 percent of the settlement money would go to fund building out the infrastructure for plug-in electric-vehicle charging stations.

By many projections, New Jersey is falling behind other states in deploying the charging stations that are required to convince motorists to switch to electric vehicles, a goal critical to achieving dramatic reductions in emissions that contribute to climate change.

Some lawmakers have suggested using funds the state will receive from the Regional Greenhouse Gas Initiative, a multistate effort that sends money back to members from surcharges on power-plant emissions. New Jersey used to be part of the program, but was taken out by the Christie administration.

Gov. Phil Murphy has announced New Jersey will rejoin the initiative, but DEP indicated revenues from the program are not expected to materialize in fiscal year 2020.

New Jersey is one of eight states that have agreed to implement the California zero-emission vehicle program, which requires cleaner-running cars to be bought and sold in participating states. By 2025, the state is projected to need 330,000 electric vehicles on the road to comply with the California program.