With the return of the Clean School Bus Program reportedly still one month away, the U.S. Environmental Protection Agency (EPA) is accepting applications for approximately $180 million through the 2026 Diesel Emissions Reduction Act (DERA) national grant competition.

Eligible projects include school bus replacements powered by battery-electric, diesel, gasoline and propane as well as after-treatment retrofits and engine upgrades. The DERA funding also covers other diesel vehicles and equipment.

EPA announced the national grants on Sept. 24. Applications are due through Grants.gov by 11:59 p.m. Eastern on Jan. 22, 2027. Selection notifications are anticipated in May, with awards expected in July.

According to the Notice of Funding Opportunity, the national competition combines approximately $65 million from fiscal 2024, $62 million from fiscal 2025, and $53 million from fiscal 2026. Final awards depend on funding availability, application quality and agency priorities. EPA said it expects to award 120 entities, with the maximum amount of each award set at $12 million. No minimum dollar amount was provided.

School Bus Eligibility and DERA Funding Limits

Eligible DERA applicants include public school districts responsible for student transportation that own or operate diesel fleets, other qualifying government agencies and certain nonprofits. For-profit school bus contractors cannot apply directly but may receive support through programs administered by eligible grant recipients, including rebates.

Diesel, alternative-fuel and electric school bus replacements are eligible, subject to program requirements. For selected school bus replacement projects, federal funding is limited to 25 percent, 35 percent or 45 percent of eligible vehicle costs, depending on certified nitrogen oxides emissions. Electric replacements fall under the 45 percent limit, but charging equipment including is ineligible. EPA said charging equipment includes chargers/EVSE, electrical panels or service upgrades, wiring and conduit, design and engineering, electricity, and stationary battery storage.

Existing school buses must be operational, have at least three years of remaining life, and have been owned and operated by the participating fleet owner during the two years before the upgrade. They generally must have accumulated at least 7,000 miles annually during those years.

Replacement projects generally require scrapping or permanently disabling the old bus within 90 days after the replacement becomes operational, with limited EPA-approved alternatives.

National program webinars are scheduled for Oct. 13, Oct. 28 and Nov. 12. Questions about the competition are due Nov. 24.

DERA State Funding and Oct. 1 Webinar

Separately, EPA said last week it anticipates approximately $27 million in DERA state funding for fiscal 2025 and another $27 million for fiscal 2026 — approximately $54 million combined, subject to appropriations.

That funding is allocated by formula rather than through the national competition. Participating states and territories will receive both fiscal years’ funding in one grant to support state-administered grants and rebates. School buses are eligible.

States that match their federal base allocation with qualifying nonfederal funding can receive an additional federal incentive equal to 50 percent of that base allocation.

EPA held an Oct. 1 webinar that provided an overview of the state program. State and territorial notices of intent to participate are due Oct. 8, with final allocations scheduled for Oct. 15. Application packages are due Nov. 19.

Those deadlines apply to participating states and territories, according to EPA. School districts seeking state-administered funding should follow their state agency’s grant or rebate process.

Article written with the assistance of AI and EPA documents.

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