Two federal programs administered by the United States Environmental Protection Agency (the “EPA”) provide financial assistance in the form of grants and rebates to public and non-profit entities seeking to replace their existing buses and trucks into clean vehicles. The most recent program was created by the Inflation Reduction Act of 2022 (the “IRA”), which appropriated $1 billion to fund a grant and rebate program for states, municipalities, Indian tribal governments, and nonprofit school transportation associations to help them acquire, charge, and maintain zero-emission heavy-duty vehicles in replacement of their existing fleet. The other program, the Clean School Bus Program, has been in existence since 2005, but was amended and expanded by the Infrastructure Investment and Jobs Act of 2021 (the “IIJA”),which appropriated $5 billion for the EPA to offer rebates to replace existing school buses with clean and zero-emission models. Both programs also set certain priorities: the IRA sets aside 40 percent of the funds under its program for regions particularly impacted by air pollution, and the IIJA allows the EPA to prioritize rural, tribal, and low-income school districts in the selection process and the funding amounts.

What You Need to Know:​

• Two federal programs are offering funding solutions for public and nonprofit entities seeking to replace their trucks and buses with electric models.
• The Inflation Reduction Act of 2022 appropriated $1 billion to help public and nonprofit entities convert their trucks and bus fleet to electric vehicles, with a focus on zones particularly affected by air pollution.
• The Infrastructure Investment and Jobs Act of 2021 appropriated $5 billion to provide grants to schools to pay for the costs of replacing school buses with clean and zero-emission models.

Under the Clean Vehicle Program, the eligible recipients for grants and rebates include states, local government units, Indian tribal governments, and nonprofit school transportation associations. The EPA will also be able to contract with vendors willing and able to provide rebates for the sale, maintenance, operation, or financing of eligible clean vehicles.

The Clean Vehicle Program applies to heavy-duty motor vehicles that have a gross vehicle weight rating above 19,500 pounds and below 33,000 pounds under federal regulations. Depending on the rating of each individual vehicle, the Clean Vehicle Program should apply to certain school buses, garbage trucks, emergency vehicles, and other trucks used by public entities to perform infrastructure or utilities maintenance.

Finally, the IRA sets aside $400 million of the amount appropriated for the Clean Vehicle Program for eligible recipients located in nonattainment air quality areas under the Clean Air Act. Nonattainment areas are geographic zones that do not meet the national standards for concentration of certain pollutants in the air. Most metropolitan areas in the United States are designated as nonattainment zones, and more information can be found on the EPA website here. 

The Clean Vehicle Program has yet to be implemented by the EPA, but it is likely to resemble and to encounter the same success as the amended Clean School Bus Program.

On October 26, 2022, the EPA announced it had awarded almost $1 billion in grants and rebates under the Clean School Bus Program to 391 applicants throughout the United States to help them acquire 2,468 clean and zero-emission school buses. The Clean School Bus Program was created by the Energy Policy Act of 2005 and was amended and expanded by the Infrastructure Investment and Jobs Act of 2021 (the “IIJA”) which appropriated $5 billion for the EPA to offer rebates to replace existing school buses with clean and zero-emission models. The federal government is appropriating $1 billion a year for the program from 2022 until 2026.

Eligible applicants for the Clean School Bus Program include (1) state and local governmental entities that provide bus service, including public school districts and charter schools; (2) eligible contractors; (3) nonprofit school transportation associations; and (4) Indian tribal entities responsible for providing school bus services or the purchase of public school buses. The awards cover up to 100 percent of the costs of replacing existing school buses with clean and zero-emission school buses, including the charging or fueling infrastructure.

The IIJA has expand the definition of “clean school buses” to include electric vehicles and has modified the list of alternative fuels that could be used for clean buses, to include natural gas, hydrogen, propane, or biofuels, but not liquefied petroleum gas, ethanol, or biodiesel. The IIJA also requires that at least 50 percent of the funds allocated for the Clean School Bus Program would go towards zero-emission buses and removed some weight and fuel restrictions for clean school buses. As a result of these changes, the vast majority of the buses that received rebates in 2022 were electric (2,353 out of the 2,468 school buses). More information on the Clean School Bus Program, including application guidelines, is available on the EPA website here.