Arizona Receives Failing Grade on VW Settlement Spending Plan

Media Contacts

Arizona PIRG Education Fund

A new report card from the Arizona PIRG Education Fund issued Arizona a failing grade for missing the opportunity to kick-start electric transportation and infrastructure through its use of funds from Volkswagen’s nearly $3 billion settlement.

After VW was caught three years ago violating emissions standards in 590,000 cars marketed as “clean diesel,” the automaker agreed to create an “Environmental Mitigation Trust” to be distributed across all 50 states (along with the District of Columbia and Puerto Rico).

After the settlement was finalized, the Arizona PIRG Education Fund released recommendations for how Arizona should allocate funds from the Environmental Mitigation Trust. To fully take advantage of the opportunity, the organization recommended using the maximum allowable amount (15 percent) to invest in electric vehicle charging infrastructure and that the remaining amount (85 percent) be spent on new, all-electric transit and school buses to replace older, outdated diesel models.

“The VW settlement money presented our state with a unique chance to accelerate electrification of school and transit buses and to invest in electric vehicle charging infrastructure,” stated Diane E. Brown, Executive Director of the Arizona PIRG Education Fund. “Instead, Arizona steered away from the opportunity to boost transportation electrification by spending VW settlement money on new diesel buses to replace older diesel buses.”

Brown mentioned that the VW settlement does not preclude states from spending the money on new diesel or compressed natural gas technology. However, the organization considered the negative health impacts caused by fossil fuels and prepared the study to focus on whether Arizona and other states used the VW settlement money to electrify transportation.

Brown also noted that although Arizona’s decision will have a net short-term emissions benefit, older diesel vehicles nearing the ends of their useful lives will need to be replaced with or without the VW settlement money. Brown said the VW money should not serve as a substitute for whatever other source of funding would have been used for those replacements; instead it should be used to make up the difference in price between a new diesel replacement and a new electric replacement.

The Arizona PIRG Education Fund scorecard highlights that the state allocated about $38 million of the state’s share of the VW settlement to replacing old, outdated diesel school buses with 330 new diesel buses. According to the scorecard, if the state either provided separate funding or required school districts to obtain funding up to the $111,000 it would cost to replace the diesel bus in normal order, and then provided an additional $119,000 per bus from the VW settlement to cover the cost difference between a diesel and electric bus, Arizona could have replaced old, outdated school buses with 309 new electric buses. If the state increased the allocation towards schools by an additional $1.3 million, it could still have replaced 330 old diesel buses, but with 330 new electric buses instead of new diesel buses. The Union of Concerned Scientists has stated that the emission reduction benefits of 330 new electric buses far outweigh the emission reduction benefits of 330 new diesel buses.   

The study comes as the summertime travel season is underway. The vast majority of miles traveled are in gas-powered cars that contribute to poor air quality, asthma and other respiratory illnesses.

The study gave only 15 states a C or better for money-spending policies that increase access to electric vehicle charging and bolster electric school and transit bus fleets. Fourteen states (including Arizona) and Puerto Rico received a failing score.