(a) Eligible projects include:
  (1) diesel oxidation catalysts for school buses built before 1994;
  (2) diesel particulate filters for school buses built from 1994 to 1998;
  (3) the purchase and use of emission-reducing add-on equipment for school buses, including devices that reduce crankcase emissions;
  (4) the use of qualifying fuel;
  (5) other technologies that the commission finds will bring about significant emissions reductions; and
  (6) replacement of a pre-2007 model year school bus.
(b) The commission may limit funding under a particular funding round to certain areas of the state, types of applicants, and/or types of projects. The commission may place a priority on funding for projects conducted in areas that do not attain certain national ambient air quality standards.
(c) Prior to each funding period, the commission may establish priorities and other criteria for reductions in diesel exhaust emissions to be achieved by projects funded during that period, including designation of additional pollutants to be addressed. A proposed project must achieve a reduction in emissions of diesel exhaust compared with the baseline emissions according to the percentage reduction level and other priorities established by the commission. The commission may also establish maximum levels for the funding awarded in relation to the emission reductions projected to be achieved by a project, in order to maximize the use of available funds.
(d) A school bus proposed for retrofit must be used on a regular, daily route to and from a school during the school year and have at least five years of useful life remaining unless the applicant agrees to remove the retrofit device at the end of the life of the bus and reinstall the device on another bus.
(e) A school bus proposed for replacement must:
  (1) be of a pre-2007 model year;
  (2) have been owned and operated by the applicant for at least two years before submission of the grant application;
  (3) be in good operational condition; and
  (4) be currently used on a regular, daily route to and from a school during the school year.
(f) A school bus proposed for purchase to replace a pre-2007 model year school bus must be of the current model year or the year before the current model year at the time of submission of the grant application.
(g) A school bus acquired to replace an existing school bus must be purchased and the grant recipient must agree to own and operate the school bus on a regular, daily route to and from a school during the school year for at least five years after a start date established by the commission, which will be based on the date the commission accepts documentation of the permanent destruction or permanent removal of the school bus being replaced.
(h) A school bus replaced under this program must be rendered permanently inoperable by crushing the bus, by making a hole in the engine block and permanently destroying the frame of the bus, or by another method approved by the commission, or be permanently removed from the state to a destination outside of the United States, Canada, or the United Mexican States.
(i) An application for a grant under this program is only eligible if it is made on the form provided by the commission and contains the information required by the commission.
(j) A recipient of a grant under this division shall use the grant to pay incremental costs of the project for which the grant is made, which may include the reasonable and necessary expenses incurred for the labor needed to install emissions-reducing equipment. The recipient may not use the grant to pay the recipient's administrative expenses.
(k) Projects funded with a grant from this program may not be used for credit under any state or federal emissions reduction credit averaging, banking, or trading program except as provided under Texas Health and Safety Code, §386.056.
(l) A proposed project as listed in subsection (a) of this section is not eligible if it is required by any state or federal law, rule or regulation, memorandum of agreement, or other legally binding document. This subsection does not apply to an otherwise qualified project, regardless of the fact that the state implementation plan assumes that the change in equipment, vehicles, or operations will occur, if on the date the grant is awarded the change is not required by any state or federal law, rule or regulation, memorandum of agreement, or other legally binding document or the purchase of an on-road diesel or equipment required only by local law or regulation or by corporate or controlling board policy of a public or private entity.
(m) If a grant recipient fails to meet the terms of a project grant or the conditions of this division, the executive director can require that the grant recipient return some or all of the grant funding to the extent that emission reductions are not achieved or cannot be demonstrated.

Source Note: The provisions of this §114.644 adopted to be effective April 17, 2014, 39 TexReg 2898; amended to be effective April 26, 2018, 43 TexReg 2442