The suit, filed in January, said the funding for 61 road projects violated federal environmental rules. Atlanta's ozone levels have been out of compliance with federal standards since 1995.
The projects were authorized for funding after Atlanta fell out of compliance. But because planning and construction had begun before Atlanta's ozone levels got to that point, officials argued that the projects should be allowed to continue.
A federal appeals court rules in another lawsuit that such "grandfathering" was illegal.
The projects that will continue are those already under construction. The settlement allows the state to continue negotiating to buy rights of way where a written offer has already been tender. That's the case in 20 projects.
Before any project begins construction, it must be included in a regional transportation plan approved by the Atlanta Regional Commission and the new Georgia Regional Transportation Authority. The plan must show it will reduce ozone before more federal funds are allocated.
However, the Atlanta Regional Commission's new three-year plan, approved last week, includes virtually no funds for road improvements. The Interim Transportation Improvement Program, which must be approved by state and federal officials, instead focuses on sidewalks, bike paths and other environmentally friendly projects. The agency does have more than $1 billion for road projects it plans to add when the region gets back into compliance with clean air standards. The ARC hopes to do that with a 25-year transportation plan it hopes to adopt next spring.