Rauner’s EPA Drafts Compromise Plan To Distribute Volkswagen Settlement Funds

Bending to pressures from public health and environmental groups, state proposes electric car charging stations, cleaner school buses and public transit money to reduce air pollution.

A sign marks the location of a Volkswagen dealership in Chicago. (Scott Olson/Getty Images)

UPDATE: Wednesday, Aug. 29, 3:53 p.m.

On Wednesday, Gov. Bruce Rauner confirmed the Illinois EPA's plans, which call for initially accepting applications for $20 million in grants to largely fund Metra and other public transit projects in the Chicago area.

“We’re concentrating on areas where diesel emissions are having the largest impact on air quality and health and we’ll be looking at every possible transit agency, school district, municipality, local government, business,” the governor said during the press conference at Union Station in Chicago. “We want everyone to come together to improve the air quality of the people in Illinois.”

About $14 million of the initial round of funding is set aside to replace or refurbish locomotives or engines for Metra, according to Illinois EPA’s website. The money funds the commuter line’s switch to new diesel, alternate fuel or electric engines that produce less air pollution. Another $5 million is available to public transit agencies to replace old diesel-engine buses and $1 million will be granted for a pilot electric school bus project in Cook County.


The Rauner Administration plans to use $109 million in lawsuit-settlement money won from a Volkswagen emissions scandal to fund less-polluting trains, trucks and school buses as well as electric car charging stations, the Better Government Association has learned.

The proposal, which sources said could be announced as early as Wednesday, is a shift from the administration’s previous plans, which had earmarked much of the cash for diesel-engine makers. The new plan by the Illinois Environmental Protection Agency follows earlier criticism from health and environmental groups that the VW cash would be spent on pro-business interests rather than addressing car exhaust pollution.

The plan, which distributes money over 10 years, earmarks 30 percent of the settlement funds for public transit projects, 20 percent for cleaner school buses and 10 percent for electric car charging stations, according to three people with knowledge of the proposal who spoke on the condition their names not be used. Another 28 percent of the money would be dedicated for so-called off-road projects that may include diesel-fuel locomotive engines and ferries, the sources said.

Kim Biggs, a spokeswoman for the state EPA, confirmed the spending percentages but declined further comment.

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In March, the Better Government Association first detailed plans by the state EPA to begin doling out the VW windfall and criticism the agency was moving too fast without public input. The agency eventually bowed to the criticism and held three public meetings before formulating its latest plans, which were detailed to the BGA.

“This is a compromise,” said one critic of the administration’s preliminary efforts, state Sen. Cristina Castro, D-Elgin, after being told by the BGA the details of the proposal. “I think everyone agreed that some parts were for the environmental groups. There was going to be some things for business and for public transportation.”

The updated proposal strikes a balance between desires of health and environmental advocates and business interests, such as the Illinois Manufacturers’ Association. Also included in the plan is money for cleaner-burning engines for large trucks, a 10 percent allocation that would fund either new diesel, alternative fuel or electric engines.

The Volkswagen windfall offers Rauner, a Republican in a tough re-election battle with Democrat J.B. Pritzker, a chance to boast about both job creation and environmental protection. The settlement money also gives the governor a pre-election opportunity to dole out money to improve transit infrastructure and boost private manufacturing while also touting his commitment to the environment.

Castro sponsored legislation earlier this year that would force public meetings and put responsibility for the settlement spending plan into the hands of a task force. The state EPA initially resisted the idea of public meetings to air out concerns over how the VW money would be used but ultimately agreed to three.

“Is it perfect?” Castro asked. “Compromises aren’t always perfect. But compromise is a good thing. We got more transparency. They were forced to hold hearings. They were forced to put more groups at the table and have this discourse.”

The electric car charging stations, in particular, were a contentious issue with health and environmental groups because the Illinois EPA initially had no plans to use settlement money for electric vehicle infrastructure. The health advocates argued that building infrastructure would promote the use of electric vehicles.

The Illinois funds are part of a larger national settlement struck with states after the German automaker was caught cheating pollution tests on its diesel powered cars. Chicago and its suburbs would be the first priority area for clean-air projects because most of the Volkswagen cars in question were sold in the area which suffers from a high amount of air pollution.

Earlier this year, critics accused Rauner’s EPA and agency director Alec Messina of catering to the concerns of big business by drafting a plan that in great measure helped diesel-engine manufacturers.

Under Rauner’s new plan, half of the money for school buses would go toward electric powered vehicles, while the other half would fund vehicles running on cleaner diesel or alternative fuels.

Environmental reporting at the BGA is supported by Joel M. Friedman, President of The Alvin H. Baum Family Fund.

About the Author

Brett Chase

Brett Chase investigates waste, fraud and corruption in a number of areas, including the environment, housing, health care and transportation. A former reporter and editor for Crain's Chicago Business, the Milwaukee Journal Sentinel and Bloomberg News, Chase has covered government and business for more than 20 years.