Diesel Emissions Reduction Act (DERA) State Grants

EPA allocates DERA funds to eligible U.S. states and territories for the establishment of clean diesel grant, rebate, and loan programs. These programs replace, retrofit, reduce idling, or otherwise upgrade older diesel vehicles and equipment to reduce harmful emissions.

EPA presumes that the state agency with jurisdiction over air quality will be the lead agency to receive these funds. If a state’s circumstances dictate that another state agency administer the funds, then a letter from the state governor or designee to the Administrator of EPA is required in order to certify one state agency as the recipient of funds who has the legal and administrative authority to enter into a grant or cooperative agreement with EPA. 2 CFR 200, Subpart E - Cost Principles applies to this program.

There is no statutory match requirement for this program. However, there is a statutory incentive match provision (42 U.S.C. 16133(c)(3)). Program guidance may restrict the eligibility and amount of grant funds that may be used for certain types of projects. While there is no statutory requirement for a matching contribution from applicants, programmatic policy guidance requires a mandatory match for certain type of projects (engine upgrades, idle reduction technologies, engine replacements, vehicle/equipment replacements, and alternative fuel conversions). Any voluntary matching funds provide by the state to qualify for the matching incentive are included in the “EPA funds and state voluntary matching funds” described below. Mandatory cost-share funds provided by the state and/or eligible third parties cannot count towards the state’s voluntary matching funds to qualify for the matching incentive. However, if a state requires a third-party cost-share contribution above and beyond the mandatory cost-share amount for the elected technology, then the “excess” cost-share may be applied towards the state voluntary match funds for the purpose of qualifying for the matching incentive. The recipient may not use EPA funds and state voluntary matching funds to provide more than the cost-share percentages outlined below, as applicable, of the final equipment costs. Recipients must satisfy any applicable cost-share requirements with allowable costs as set forth in 2 CFR §200.306. The cost-share requirements are as follows: • Engine Upgrades: EPA funds and state voluntary matching funds can cover up to 40% of the cost (labor and equipment) of an eligible engine upgrade; states and/or eligible third parties are responsible for the mandatory cost-share of at least 60% of the cost of an eligible engine upgrade. • Idle Reduction Technologies on Locomotives: EPA funds and state voluntary matching funds can cover up to 40% of the cost (labor and equipment) of an eligible idle reduction technology for a locomotive; states and/or eligible third parties are responsible for the mandatory cost-share of at least 60% of the cost of an eligible idle reduction technology for a locomotive. • Idle Reduction Technologies on Highway Diesel Vehicles: EPA funds and state voluntary matching funds can cover up to 25% of the cost (labor and equipment) of eligible, verified idle technologies on Class 8 long-haul trucks and school buses without verified engine retrofits; states and/or eligible third parties are responsible for the mandatory cost-share of at least 75% of the cost of eligible, verified idle reduction technologies on Class 8 long-haul trucks and school buses without verified engine retrofits. • Marine Shore Power Connection Systems: EPA funds and state voluntary matching funds can cover up to 25% of the cost (labor and equipment) of an eligible shore connection system; states and/or eligible third parties are responsible for the mandatory cost-share of at least 75% of the cost of an eligible shore connection system. • Electrified Parking Spaces (EPS): EPA funds and state voluntary matching funds can cover up to 30% of the cost (labor and equipment) of eligible EPS technology; states and/or eligible third parties are responsible for the mandatory cost-share of at least 70% of the cost of eligible EPS technology. • Certified Engine Replacement: • EPA funds and state voluntary matching funds can cover up to 40% of the cost (labor and equipment) of an eligible diesel or alternative fuel engine replacement. States and/or eligible third parties are responsible for the mandatory cost-share of at least 60% of the cost of an eligible engine replacement. • Highway Low-NOx: EPA funds and state voluntary matching funds can cover up to 50% of the cost (labor and equipment) of replacing a highway diesel engine with a 2016 model year or newer engine that is certified to CARB’s Optional Low-NOx Standards of 0.1 g/bhp-hr, 0.05 g/bhp-hr, or 0.02 g/bhp-hr NOx. States and/or eligible third parties are responsible for the mandatory cost-share of at least 50% of the cost of eligible Low-NOx engine replacement. • All-Electric: EPA funds and state voluntary matching funds can cover up to 60% of the cost (labor and equipment) of an eligible all-electric engine replacement. States and/or eligible third parties are responsible for the mandatory cost-share of at least 40% of the cost of an eligible all-electric engine replacement. • Certified Vehicle/Equipment Replacement: • EPA funds and state voluntary matching funds can cover up to 25% of the cost of an eligible replacement vehicle or piece of equipment powered by a 2016 model year or newer certified engine; states and/or eligible third parties are responsible for the mandatory cost-share of at least 75% of the cost of an eligible replacement vehicle or piece of equipment. • Highway Low-NOx: EPA funds and state voluntary matching funds can cover up to 35% of the cost of an eligible highway replacement vehicle powered by a 2016 model year or newer engine certified to meet CARB’s Optional Low-NOx Standards of 0.1 g/bhp-hr, 0.05 g/bhp-hr, or 0.02 g/bhp-hr NOx. Engines certified to CARB’s Optional Low NOx Standards may be found by searching CARB’s Executive Orders for Heavy-duty Engines and Vehicles, found at: www.arb.ca.gov/msprog/onroad/cert/cert.php. States and/or eligible third parties are responsible for the mandatory cost-share of at least 65% of the cost of an eligible replacement vehicle. • All-Electric: EPA funds and state voluntary matching funds can cover up to 45% of the cost of an eligible all-electric replacement vehicle or equipment. States and/or eligible third parties are responsible for the mandatory cost-share of at least 55% of the cost of an eligible all-electric replacement vehicle or piece of equipment. • Drayage Trucks: EPA funds and state voluntary matching funds can cover up to 50% of the cost of an eligible replacement drayage truck powered by a 2013 model year or newer certified engine. States and/or eligible third parties are responsible for the mandatory cost-share of at least 50% of the cost of an eligible replacement drayage vehicle. • Clean Alternative Fuel Conversion: EPA funds and state voluntary matching funds can cover up to 40% of the cost (labor and equipment) of an eligible certified or compliant clean alternative fuel conversion. States and/or eligible third parties are responsible for the mandatory cost-share of at least 60% of the cost of an eligible clean alternative fuel conversion.

This program has a statutory allocation formula (42 U.S.C. 16133(c)). 30% of total DERA funding is for the State DERA Program. Of the 30%, 2/3 is split between states and territories as their base funding amount. The other 1/3 of the 30% is set aside for a matching incentive. The bonus is 50% of the match. The final amounts are based on the number of states and territories participating in the DERA program in a given year.