Pennsylvania Announces $20 Million Grant Program to Convert Fleet Vehicles to Natural Gas

by Saul Ewing LLP
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[authors: Andrew T. Bockis, Joel R. Burcat]

On June 4, 2012, the Pennsylvania Department of Environmental Protection announced a $20 million competitive grant program for companies and organizations to convert fleet vehicles to be fueled by natural gas. The grant program will be helpful to companies and other entities seeking to reduce fuel costs associated with operating fleet vehicles. The program will also play a role in developing natural gas fueling stations that are accessible to the public.

In response to the enormous amount of natural gas now available in Pennsylvania as a result of the development of the Marcellus shale gas "play," the General Assembly authorized this grant program to promote the use of this home-grown natural resource. Funds for the program come from the impact fee charged to Marcellus gas drillers. DEP is the agency that is administering the grant program. With the cost of natural gas at about half that of an equivalent amount of diesel fuel, conversion to natural gas vehicles can significantly improve the bottom line of companies with fleet vehicles.

Grants are available to a wide variety of entities including companies doing business in Pennsylvania, non-profit entities, and state-owned or state-related universities, among others. Half of the grant funds are dedicated exclusively to local transportation organizations, which include public transportation authorities and political subdivisions. The other half of funds are available to private companies and other entities doing business in Pennsylvania.

Grants will be awarded to projects that best utilize and promote the use of domestically produced natural gas in the Commonwealth. Proposed projects must include construction and utilization of a natural gas fueling station or utilization of existing natural gas fueling stations. The Department is inviting anyone involved in fleet management to complete a prospective project survey to assist the Department in identifying likely projects and to customize the grant program for potential applicants.

The program is authorized under chapter 27 of Pennsylvania's new Oil and Gas Act (known as "Act 13"). Relevant provisions of Act 13 are available here. Additional information regarding the grant program and the prospective project survey is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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