SAN FRANCISCO California legislators on Thursday tightened rules requiring Volkswagen AG (VOWG_p.DE) to spend a portion of clean car infrastructure funds in disadvantaged communities, passing a bill as part of a budget package agreed with Governor Jerry Brown.
The German automaker previously agreed to support clean vehicles by spending $800 million in California, part of a total of $2 billion nationally, to atone for secretly installing software in diesel vehicles that allowed them to emit excess pollution.
But critics said the plan by VW unit Electrify America for the first $200 million of spending in California could give the automaker a competitive advantage over other vehicle and charging station makers and ignore poorer communities where the state wants to promote clean cars.
Volkswagen proposed spending $120 million on more than 400 highways and community EV charging stations by 2019, often in high-traffic areas where rivals hoped to set up commercial stations.
The state's regulator, the Air Resources Board, last month told VW to "make every attempt" to investment 35 percent of the first 30-month investment cycle in disadvantaged communities disproportionately affected by air pollution.
The bill passed on Thursday by both chambers of the state legislature raised that pressure by instructing the Air Resources Board to "ensure to the maximum extent allowable" that at least 35 percent of investment funds go to low-income and disadvantaged communities and requiring the board's directors approve all VW plans at public hearings.
Electrify America did not immediately respond to a request for comment. It had said in May that it was committed to investing $2 billion in line with court-approved agreements with the U.S. Environmental Protection Agency and California.
Brown has not signed the bill but on Tuesday said he supported the budget package of which it is part.
(Reporting By Peter Henderson; Editing by Cynthia Osterman)