EPA DERA School Bus Replacement Grant
The U.S. Environmental Protection Agency (EPA) has announced approximately $180 million in nationwide funding through its 2026 Diesel Emissions Reduction Act (DERA) National Grant Program. This competitive grant provides financial assistance for eligible projects designed to reduce diesel emissions, improve air quality, and modernize transportation fleets.
Additional School Bus Funding on the Horizon
EPA is also preparing another funding opportunity through its separate Clean School Bus Program. The agency has been reviewing program requirements, including greater flexibility in eligible fuel technologies. Although an official application opening date has not been announced, the Ohio Schools Council will continue monitoring this opportunity and share updates as they become available.
Funding Availability and Competition
EPA anticipates awarding approximately 4–12 grants per EPA region, representing an estimated 40–120 awards nationwide. These awards are available to eligible applicants across multiple transportation and equipment sectors, not exclusively school districts.
This program is expected to be highly competitive and requires significant application preparation. Districts should carefully evaluate their eligibility, potential emissions reductions, project costs, and available resources before pursuing funding.
What Types of School Bus Projects May Qualify?
Eligible projects may include:
- Clean Diesel Buses: Replacement of qualifying older diesel buses with newer, cleaner diesel models.
- Propane, Gasoline, and Natural Gas Buses: Replacement with qualifying low-emission vehicles.
- Electric School Buses: Replacement with eligible zero-emission vehicles.
- Engine Replacements: Upgrading existing buses with newer, cleaner engines rather than purchasing entirely new vehicles.
- Other Emissions-Reduction Technologies: Certain EPA-approved retrofits and idle-reduction improvements.
Depending on the replacement technology and certified emissions performance, eligible vehicle replacement projects may receive funding covering approximately 25%–45% of eligible costs, while qualifying engine replacements may receive 40%–60%.
Funding percentages and eligibility vary by project type and technology. Not every vehicle within an eligible fuel category automatically qualifies. Electric charging infrastructure and related electrical upgrades are not eligible expenses under this grant.
Which Existing Buses Are Eligible?
Eligibility depends on the existing bus’s engine model year, operating history, and proposed replacement technology.
Generally, diesel buses with engine model years 2009 or earlier may qualify for replacement with newer clean diesel or eligible alternative-fuel buses.
Diesel buses with 2010 or newer engines may also qualify when replaced with eligible zero-emission or certified low-NOₓ vehicles.
Importantly, DERA is a replacement program, not a fleet expansion program. Existing vehicles must meet EPA eligibility requirements and generally must be permanently retired or disabled when replaced.
Additional requirements include:
- At least two years of prior ownership and operation.
- At least 7,000 miles annually during each of the previous two years, subject to limited exceptions.
- At least three years of estimated remaining useful life.
- Documentation demonstrating that the existing vehicle is operational and eligible.
What Makes a Competitive Application?
EPA evaluates applications using a 130-point scoring system, with environmental results representing the largest individual scoring category.
Districts should consider several factors when selecting buses and developing their applications:
1. Age and Emissions of Existing Buses
Older diesel engines often produce significantly more pollution than modern engines. Replacing these vehicles may generate greater emissions reductions.
2. Annual Mileage and Usage
Buses traveling more miles annually may generate greater cumulative emissions reductions when replaced.
3. Replacement Technology
Districts should compare the certified emissions performance of diesel, propane, gasoline, natural gas, and electric replacement buses.
4. Remaining Useful Life
Replacing an eligible bus with several years of remaining service life can produce additional long-term environmental benefits.
5. Geographic Location and Air Quality
Projects operating in areas with greater air-quality concerns may receive additional consideration.
6. Cost-Effectiveness
Districts should evaluate the emissions reductions achieved relative to the amount of federal funding requested.
A competitive application should clearly quantify expected emissions reductions, demonstrate reasonable project costs, and establish the district’s ability to successfully complete the project. Larger projects do not automatically receive higher scores simply because they replace more buses.
What Should Districts Do Now?
Interested districts are encouraged to begin reviewing their transportation fleets and gathering:
- Existing bus make, model, VIN, and engine model year.
- Annual mileage for the previous two years.
- Engine hours, where applicable.
- Current condition and estimated remaining useful life.
- Preferred replacement technology and applicable emissions certification.
- Estimated replacement or engine-upgrade costs.
- Availability of local matching funds.
Application preparation is substantial. In addition to fleet information, applicants must prepare a detailed project narrative, emissions-reduction analysis, budget, required federal forms, and supporting documentation.
Districts should review the complete funding announcement and verify that their SAM.gov and Grants.gov registrations are current before beginning the application process.
Important Dates
- November 19, 2026: EPA informational webinar, 5:00–6:00 p.m. Eastern.
- November 24, 2026: Deadline to submit questions to EPA.
- January 22, 2027: Grant application deadline, 11:59 p.m. Eastern.
- May 2027: Anticipated notification of selected projects.
- July 2027: Anticipated grant awards.
Learn More
Districts considering an application should carefully review EPA’s official guidance, eligibility requirements, funding percentages, and evaluation criteria.
EPA Program Website: https://www.epa.gov/dera/national
Federal Grant Application: https://grants.gov/search-results-detail/363936
EPA Questions: dera@epa.gov
The Ohio Schools Council encourages members to evaluate this opportunity as part of their long-term transportation fleet replacement and capital planning efforts. Given the competitive nature of the grant and the preparation required, interested districts should begin their evaluation well in advance of the application deadline.
