By Catherine Clabby

Replacing older and polluting buses from school and transit fleets ranks as a high priority in a newly released state plan to start spending $92 million in Volkswagen “Dieselgate” cash.

But how much control Gov. Roy Cooper’s administration will keep over that big pot of money is not yet clear. Cooper, a Democrat, and Republican General Assembly leaders both want to be in charge of where the dollars go.

To catch everyone up: State Department of Environmental Quality officials are holding meetings across the state to gauge public support for the first phase of its draft Volkswagen Mitigation Plan. Volkswagen owes big money to all states after it was caught selling hundreds of thousands of vehicles programmed to cheat on U.S. emission tests.

About 18,700 VW diesels were registered in North Carolina, which determined this state’s share of the dollars. The cash must be used to reduce air pollution produced from a long list of fuel-burning engines on everything from buses and trucks to ferries and equipment at airports and marine ports.

The DEQ draft plan details “phase one” of spending, devoting $30.68 million to government-sector projects only. In addition to replacing buses, it would finance improvements to some heavy-duty freight trucks and equipment used off-road, as well as likely expand this state’s infrastructure for charging electric cars.

But in budget language passed last year, the General Assembly pronounced that legislators, not a governor’s administration, will get the final word on how the money will be spent. It also made clear that leaders there favor projects that benefit North Carolina-based businesses and expand jobs in this state.

That prompted Cooper to amend an ongoing lawsuit against General Assembly leaders that says the House and Senate have taken multiple illegal steps to limit the power of his office.

“[T]the Volkswagen settlement funds are custodial in nature, and it is the Governor’s duty to administer those funds in accordance with the mandates of the federal court and the trustee,” the governor’s court filing says.

Competing priorities

To compensate for pollution that resulted from the Volkswagen cheating scheme, the “mitigation trust” money comes with strings attached. States are required to use it to reduce one of diesel’s most dangerous class of emissions: oxides of nitrogen (NOx), prime ingredients for ozone gas.

 

Ground-level ozone aggravates lung diseases such as asthma, emphysema, and chronic bronchitis and can make human lungs more susceptible to infection.

In addition to the engine upgrades, it would invest in, the draft DEQ plan also calls for making the maximum allowable investment, 15 percent, in infrastructure required by “zero emission vehicles” such as cars powered by electricity or hydrogen fuel cells.

In introducing its plan, DEQ said the proposal was shaped with input from many interested groups that submitted written comments in recent months. Many proposals suggested replacing or changing the engines in school and transit buses because diesel emissions from those buses are a significant contributor to air pollution, DEQ spokesman Jamie Kritzer said.

The plan could change depending on the sorts of public comments it receives between now and May 3, he stressed.

“We can’t speculate on the number of buses or other vehicles that could be replaced or repowered using the settlement monies,” Kritzer said, adding that will depend upon the number and types of projects public organizations apply for.

Among groups that already have weighed in how DEQ should proceed is the Diesel Technology Forum, which represents manufacturers of diesel engines, vehicles and equipment. It has recommended the state purchase new engines or vehicles that use updated diesel engines that produce less pollution than older models.

Paul Eberhart commented on behalf of Gregory Poole Equipment Company, which sells school buses, and advocated for propane-powered buses. “Propane school buses in particular significantly reduce children’s exposure to emissions that are associated with pre-2007 diesel buses, including increased asthma emergencies, bronchitis, and school absenteeism, especially among asthmatic children. Propane school buses also effectively eliminate diesel particulate matter emissions that are associated with cancer and thousands of premature deaths nationwide every year,” he wrote in comments to DEQ.

Some environmental groups requested a more groundbreaking approach: shunning vehicles powered by natural gas, propane or diesel fuels.

Terry Lansdell, public policy manager for Clean Air Carolina, said in a phone interview that DEQ should invest in buses powered by electricity. These vehicles could initially be powered by electricity produced at coal-fired power plants, which emit some air pollution. But, in time, their batteries might draw more of their power from solar-powered electricity sources.

“School buses could be around for 20 years and transit buses six to 10. If you provide a diesel engine, you’ll never be able to use alternative energy,” he said.

Much to consider

Whatever spending plan North Carolina adopts, the state will be obliged by the VW mitigation trust rules to maximize air quality benefits with dollars spent. The state can create more than one process to allocate this money, say, with a competitive grant process or a voucher system. It can also require cost sharing for some purchases.

Rick Sapienza of the NC Clean Energy Technology Center is urging the state to require, where possible, that recipients of any new vehicles contribute something to their cost.

“All entities should have some skin in the game. This will ensure that due diligence is done,” he said. “If the 100 percent level of funding is employed, technology might be deployed in the wrong application and fail.”

Sapienza also advocates that North Carolina consider pooling any other eligible funding it has for vehicle updates to expand its purchasing power and bargaining might. Collaborating with other states looking to make the same types of purchases may help this state with price negotiations too.

“You want to leverage the money so it goes as far as it can,”  Sapienza said.

The conflict

In a court filing responding to Cooper’s challenge to the budget language, Senate President Pro Tempore Phil Berger and House Speaker Tim Moore argue that the General Assembly should steer this spending. “If money flows into the State treasury, there is only one way to get it out: a legislative appropriation,” it states.

Whether the DEQ draft plan will conform to General Assembly leaders’ ideas for the money is not yet clear.

The Senate leader’s office, for one, is not yet at the stage where it can assess the DEQ proposal, said Berger spokeswoman Amy Auth.

“It is premature for us to comment since the proposed plan has not, to our knowledge, been formally submitted to the General Assembly as required,” Auth said.

DEQ officials are expected to share details with the legislature’s Joint Legislative Oversight Committee on Agriculture and Natural and Economic Resources and the Joint Legislative Commission on Energy Policy in April, Auth said.

The ongoing litigation has no bearing on how we are developing a mitigation plan for the settlement, Kritzer said.

“DEQ is moving forward to develop a plan as required by the trustee under the national settlement,” he added.

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