Review the following documents before completing and submitting an application:

Eligible Applicants: Eligible applicants under the TxVEMP must operate school buses, shuttle buses, or transit buses of 14,001 pounds or greater at least 51% of the buses’ annual mileage in one of the Priority Areas.

School buses, shuttle buses, and transit buses being replaced or repowered must:

• have a diesel engine with a model year of 2009 or older;
• be considered capable of performing its primary function for the next five years;
• been continuously inspected and registered in Texas for the two years immediately preceding the application signature date;
• been used routinely by the applicant in its primary function in Texas for the two years immediately preceding the application signature date; and
• been owned by the applicant at the time of application and for the two years immediately preceding the application signature date.

New school buses, shuttle buses, and transit buses must:

• be powered by electricity, diesel, or an alternative fuel;
• have an engine model year not more than one year older than the year the application is submitted;
• be certified by the EPA or CARB to a NOx emissions standard or family emissions limit (FEL) of 0.2 g/bhp-hr or lower; and
• be of the same type, weight category, and body and axle configuration as the vehicle being replaced.

Activity Life and Usage Commitment:

• The applicant must commit to use the grant-funded vehicle at least 51% of the vehicle’s annual miles of operation in one of the Priority Areas for the duration of the five-year activity life.

Replacement Activities: Reference Section 2.7 and Appendix B of the RFGA for guidance on determining your grant amount. Applicants may request the applicable table amount under Part A below. Final reimbursement amounts may not exceed the cost percentage from Part B applied the actual invoice cost of the new vehicle.

Repower Activities: Reference Section 2.8, Appendix B, and Appendix D of the RFGA for guidance on determining your grant amount. Applicants may request the lesser amount of either:

1. the applicable table amount under Part A, or
2. the cost percentage from Part B applied to the applicant’s actual, eligible expenditures.

Infrastructure Activities: Reference Section 2.9, Appendix B, and Appendix D of the RFGA for guidance on determining your grant amount. Applicants may request the lesser amount of either:

1. the applicable table amount under Part A, or
2. the cost percentage from Part B applied to the applicant’s actual, eligible expenditures.

Part A. Maximum Funding Amounts

Note: “Government” shall mean a state or local government agency (including school district, municipality, city, county, special district, joint powers authority, or port authority owning fleets purchased with government funds), and a tribal government or native village. A federal government agency or entity is not included in this definition.

Tables for Government-Owned Vehicles

Tables for Non-Government-Owned Vehicles

Download and complete the Project Application Form using the application instructions.

The TCEQ requires applicants to complete the W-9 to certify their Taxpayer Identification Number (TIN). The W-9 Form must be submitted with the Application Forms.

• W-9 Form: Request for Taxpayer Identification Number and Certification(pdf)

Applicants must submit via regular or express mail two (2) original signed copies of the application and W-9 Form in order to be considered for eligibility. Application forms submitted electronically will not be accepted.

Review the following documents before completing and submitting an application:

Eligible Applicants: Eligible applicants under the TxVEMP must operate vehicles configured to collect and transport municipal solid waste (refuse vehicles at least 51% of the vehicle's annual mileage in one of the Priority Areas.

Refuse vehicles being replaced or repowered must:

• be a Class 7 or 8 refuse vehicle with a gross vehicle weight rating greater than 26,001 lbs.
• have a diesel engine with a model year of 1992-2009;
• be considered capable of performing its primary function for the next five years;
• been continuously inspected and registered in Texas for the two years immediately preceding the application signature date;
• been used routinely by the applicant in its primary function in Texas for the two years immediately preceding the application signature date; and
• been owned by the applicant for the two years immediately preceding the application signature date.

New refuse vehicles must:

• be powered by electricity, diesel, or an alternative fuel;
• have an engine model year not more than one year older than the year the application is submitted;
• be certified by the EPA or CARB to a NOx emissions standard or family emissions limit (FEL) of 0.2 g/bhp-hr or lower;
• be used in the same priority priority area as the refuse vehicle being replaced or repowered; and
• be of the same type, weight category, and body and axle configuration as the vehicle being replaced.

Activity Life and Usage Commitment:

• The applicant must commit to use the grant-funded vehicle at least 51% of the vehicle’s annual miles of operation in one of the Priority Areas for the duration of the five-year activity life.

Replacement Activities: Reference Section 2.6, Appendix B, and Appendix D of the RFGA for guidance on determining your grant amount. Applicants may request the applicable table amount under Part A below. Final reimbursement amounts may not exceed the cost percentage from Part B applied the actual invoice cost of the new vehicle.

Repower Activities: Reference Section 2.7, Appendix B, and Appendix D of the RFGA for guidance on determining your grant amount. Applicants may request the lesser amount of either:

1. the applicable table amount under Part A, or
2. the cost percentage from Part B applied to the applicant’s actual, eligible expenditures.

Infrastructure Activities: Reference Section 2.8, Appendix B, and Appendix D of the RFGA for guidance on determining your grant amount. Applicants may request the lesser amount of either:

1. the applicable table amount under Part A, or
2. the cost percentage from Part B applied to the applicant’s actual, eligible expenditures.

Part A. Maximum Funding Amounts

Note: “Government” shall mean a state or local government agency (including school district, municipality, city, county, special district, joint powers authority, or port authority owning fleets purchased with government funds), and a tribal government or native village. A federal government agency or entity is not included in this definition.

Tables for Government-Owned Vehicles

Part B: Maximum Percentage of Cost Limits

Apply the maximum percentage of cost limits to your actual, eligble expenditures. The maximum percentage of cost limits by entity, project, and fuel type are provided below.

Download and complete the Project Application Form using the application instructions.

The TCEQ requires applicants to complete the W-9 to certify their Taxpayer Identification Number (TIN). The W-9 Form must be submitted with the Application Forms.

• W-9 Form: Request for Taxpayer Identification Number and Certification(pdf)

Applicants must submit via regular or express mail two (2) original signed copies of the application and W-9 Form in order to be considered for eligibility. Application forms submitted electronically will not be accepted.

Grantees will be required to submit clear colored photographs of the equipment and engine before destruction. Photos should include both sides of the equipment, both sides of the engine block, and a picture of the engine plate (if visible).

Grantees will be required to cut a 3-inch or larger hole on both sides of the engine block along with cutting the frame rails on both sides of the old equipment. Some equipment may require different methods of rendering the equipment permanently inoperable and should be discussed with TxVEMP staff prior to completing disposition.

Grantees will be required to submit clear colored photographs of the equipment and engine after destruction. Photos should include both sides of the equipment with cuts to the frame rails, both sides of the engine block with 3-inch or larger holes, and a picture of the engine plate (if visible). It is recommended that you paint these specific areas before destruction so that the cuts and holes are clearly visible.

After destruction, grantees must obtain a Nonrepairable vehicle title for on-road vehicles. The title will be submitted along with disposition pictures and forms. Form VTR-441, Application for Salvage or Nonrepairable Vehicle Title, can be found on the Texas Department of Motor Vehicles (TXDMV) website. You must check the Nonrepairable Vehicle Title option at the top of the form. A small fee is charged for each title application. The form contains detailed instructions for submitting your application to the TXDMV.

Complete, print, and sign a Form 3A (Replacement Activities) or Form 3B (Repower Activities) for each piece of equipment or engine destroyed. Follow the tips and checklists provided within the Form to ensure you have provided all of the necessary information.

Grantees will be required to submit a completed and signed Form 3A or 3B, colored photographs of the equipment before and after destruction, and a copy of a Nonrepairable Vehicle Title (on-road vehicles only) for each activity included in a project application. Pictures may be submitted on a disk or USB. Complete disposition packets may be hand delivered or mailed to the TCEQ. TIP: Please maintain possession of your equipment until your disposition has been approved by the TCEQ. Please contact us toll free at (833) 215-TXVW (8989) to check the status of your RFR. You may also contact us by email at VWsettle@tceq.texas.gov

The first step is to take color photos of your new equipment. Photos may be printed on a traditional color printer or saved to a CD or thumb drive. Photos are required for each activity submitted in the Request for Reimbursement (RFR) Form. For each activity, we need clear color photos of:

• A side view of the new equipment showing the equipment front to back and top to bottom.
• The new engine label in the engine bay or on the engine itself that provides the engine make, model, serial number, engine family code, and manufacture year. Activities that include electric motors do not need to provide pictures of the engine label.
• Some engines have all this information on one sticker, while others have multiple stickers. You will need this infomration to complete the RFR Forms. Take as many photos needed to ensure that you have clearly captured all of the information requested above.
• Repower projects also require photos of the new engine, installed, from several different angles.

The second step is to gather all of the documents you will need to complete the RFR Forms. You will need:

• A copy of your TERP contract for reference.
• The photos you took in Step 1.
• Proof of purchase that provides details on the equipment purchased and the price. This may take the form of an invoice, bill of sale, purchase order, etc.
• Proof of payment that provides details on how you paid for your equipment.
• Did you pay for the equipment entirely out of pocket or make a down payment? If so, we will need a copy of your method of payment such as a check, wire, cashier's check, etc.
• Did you finance or lease the equipment? If so, we will need a copy of the agreement that details the terms and conditions of your loan or lease.

Complete the RFR forms using the documents from Step 2 and the instructions provided within forms:

Helpful tips for completing the RFR Forms:

• You may print the forms first and fill them out by hand, or fill out the forms on your computer and then print. Signatures, however, must be original in blue or black ink.
• On Page 1 of the forms, please make sure to sign the Performing Party’s Certification.
• Sign the Release of Claims section if this is your only and/or last request for reimbursement under your contract. If you have more activities under your contract to request payment for, please do not sign this section.
• On Page 2 of the forms, you will need to provide an address where you would like your reimbursement to be mailed. Please note the instructions for this section begin on the bottom of Page 1.
• If you paid for the new equipment in full OR you paid more than the grant amount as a down payment, please provide your address. You may also disregard the bottom section that discusses assignment.
• If you financed or leased your equipment, you may assign the reimbursement to your financing or leasing company to credit your loan or lease. You may need someone at the financing or leasing company to help you fill out Page 2. In order to assign reimbursement, we will need signatures from you and someone authorized to sign on behalf of your financing or leasing company.
• On Page 3, please provide the information requested for the NEW equipment. If you have more activities than rows, print copies of the "Additional RFR Activity Pages" above.
• Page 3 will require you to reference your proof of purchase to fill out the equipment information. The engine information will come from the photos you took in Step 1. If you have an electric motor, leave the engine information columns blank.
• Once you have filled out the forms, and have all necessary signatures, put the forms in an envelope along with the proof of purchase, proof of payment, and color photos of the equipment and engine plates. You have now completed your Request for Reimbursement (RFR) Packet.

RFR Packets may be submitted via mail or electronic mail to VWsettle@tceq.texas.gov. If submitting by mail, use one of the addresses below:

We will be reaching out to you to confirm information submitted in your RFR and to request additional information. Please make sure to provide us with the most up to date contact information on the forms. We will need to speak with you before we can approve your request.

Wilmington Trust will be issuing your reimbursement to the address provided on Page 2 via the US Postal Service. If you assigned your payment to a financing or leasing company, we suggest that you follow up with them 60 days after you receive RFR confirmation from the TCEQ. You may also be able to refer to your statement or payment history for confirmation.

Review the following documents before completing and submitting an application:

Eligible Applicants: Eligible applicants under the TxVEMP must operate a freight or port drayage truck at least 51% of the vehicle's annual mileage in one of the Priority Areas.

Vehicles being replaced or repowered must:

• be a Class 4-7 local freight truck or commercial truck used to deliver cargo and freight with a gross vehicle weight rating (GVWR) between 14,001 - 33,000 lbs. or;
• be a Class 8 local freight truck used for port drayage and/or freight/cargo delivery with a GVWR greater than 33,000 lbs;
• have a diesel engine with a model year of 1992 - 2009;
• be considered capable of performing its primary function for the next five years;
• have been continuously inspected and registered in Texas for the two years immediately preceding the application signature date;
• have been used routinely by the applicant in its primary function in Texas for the two years immediately preceding the application signature date; and
• been owned by the applicant for the two years immediately preceding the application signature date.

New vehicles must:

• be powered by electricity, diesel, or an alternative fuel;
• have an engine model year not more than one year older than the year the application is submitted;
• be certified by the EPA or CARB to a NOx emissions standard or family emissions limit (FEL) of 0.2 g/bhp-hr or lower;
• be used in the same priority priority area as the vehicle being replaced or repowered; and
• be of the same type, weight category, and body and axle configuration as the vehicle being replaced.

Activity Life and Usage Commitment:

• The applicant must commit to use the grant-funded vehicle at least 51% of the vehicle’s annual miles of operation in one of the Priority Areas for the duration of the five-year activity life.

Replacement Activities: Reference Section 2.6, and Appendix B of the RFGA for guidance on determining your grant amount. Applicants may request the applicable table amount under Part A below. Final reimbursement amounts may not exceed the cost percentage from Part B applied the actual invoice cost of the new vehicle.

Repower Activities: Reference Section 2.7, Appendix B, and Appendix D of the RFGA for guidance on determining your grant amount. Applicants may request the lesser amount of either:

1. the applicable table amount under Part A, or
2. the cost percentage from Part B applied to the applicant’s actual, eligible expenditures.

Infrastructure Activities: Reference Section 2.8, Appendix B, and Appendix D of the RFGA for guidance on determining your grant amount. Applicants may request the lesser amount of either:

1. the applicable table amount under Part A, or
2. the cost percentage from Part B applied to the applicant’s actual, eligible expenditures.

Part A. Maximum Funding Amounts

Note: “Government” shall mean a state or local government agency (including school district, municipality, city, county, special district, joint powers authority, or port authority owning fleets purchased with government funds), and a tribal government or native village. A federal government agency or entity is not included in this definition.

Tables for Government-Owned Vehicles

Part B: Maximum Percentage of Cost Limits

Apply the maximum percentage of cost limits to your actual, eligble expenditures. The maximum percentage of cost limits by entity, project, and fuel type are provided below.

Download and complete the Project Application Form using the application instructions.

The TCEQ requires applicants to complete the W-9 to certify their Taxpayer Identification Number (TIN). The W-9 Form must be submitted with the Application Forms.

• W-9 Form: Request for Taxpayer Identification Number and Certification(pdf)

Applicants must submit via regular or express mail two (2) original signed copies of the application and W-9 Form in order to be considered for eligibility. Application forms submitted electronically will not be accepted.

Review the following documents before completing and submitting an application:

Eligible Applicants: The applicant must be the entity that will purchase and own the grant-funded equipment for the life of the grant. Entities leasing equipment or acting as a third party to purchase the equipment and then transfer ownership of the equipment to another entity are not eligible to apply for a grant.

Level 2 charging equipment must:

• offer Society of Automotive Engineers (SAE) Combined Charging System charging protocol connectors (SAE J1772 Connector)
• include a dual mount pedestal or dual port wall mount that is compliant with the Americans with Disabilities Act (ADA) recommended charge connect height of less than 48” and greater than 24”
• utilize open source software where payment is required

Eligible Locations: Funding is available statewide for new Level 2 light-duty zero emission vehicle supply equipment (charging equipment) installed:

• in a public place, workplace, or multi-unit dwelling (i.e., not located at a private residential dwelling that is not a multi-unit dwelling) in Texas
• at a location without existing light-duty ZEV charging equipment, or to expand the number of vehicles that may be serviced at an existing site. Funding is not available to replace existing equipment with newer equipment

Activity Life and Usage Commitment:
The applicant must commit to maintaining the grant-funded charging equipment and ensure its operation in accordance with the LEVL2 Terms and Conditions for a period of at least 5 years from the final date of reimbursement.

Grant recipients will be eligible for a reimbursement of up to $2,500 per activity (charging unit installed). Grant amounts may not exceed the following percentages of eligible costs:

• electric chargers available to the public: 70%
• electric chargers available at a workplace or multi-unit dwelling: 60%

Review the application instructions:

• Application Instructions

Download and complete the project application and W-9 form:

• Project Application
• W-9 Form: Request for Taxpayer Identification Number and Certification

The TCEQ requires applicants to complete the W-9 to certify their Taxpayer Identification Number (TIN). The W-9 Form must be submitted with the Application Forms.

The TCEQ is committed to accessibility. If you would like to request a more accessible version of the project application, please contact the TERP program at 800-919-TERP (8377).

The following items must be completed in full to be considered for eligibility:

• Project Application
• W-9

Applications may be submitted via email at VWsettle@tceq.texas.gov or by mail to one of the addresses below:

The Volkswagen State Environmental Trust (Trust) is part of a settlement agreement in the litigation between the United States Environmental Protection Agency (EPA), the State of California, and Volkswagen (VW) and its related entities. The EPA and the State of California filed suit in the U.S. District Court for the Northern District of California against VW alleging that VW violated provisions of the Federal Clean Air Act. The suit alleged that approximately 590,000 light-duty 2.0-liter and 3.0-liter diesel vehicles manufactured by VW and its subsidiaries contain emission defeat devices. These devices cause the emissions control system of those vehicles to perform differently during emissions testing compared to performance during normal vehicle operation and use. The subject vehicles emit nitrogen oxides (NO_X) at a level above required standards during normal vehicle operation and use.

The EPA, California, and VW have resolved this case through three partial settlements (Amended 2.0 Liter Partial Consent Decree, 3.0 Liter Second Partial Consent Decree, Third Partial Consent Decree). As part of the settlement agreements, VW must pay approximately $2.9 billion into the Trust referenced above. The 50 states, the District of Columbia, and Puerto Rico may elect to become a beneficiary to receive an allocation from the Trust. An Indian Tribe Mitigation Trust has been established separate from the state mitigation trust.

On March 15, 2017, the Court appointed Wilmington Trust, N.A. to serve as the Trustee for the Trust. The final Trust Agreement was filed and became effective on October 2, 2017. The Trustee filed the designation of beneficiaries with the court on January 29, 2018. Texas is among the designated beneficiaries.

The EPA has identified ozone as criteria pollutant under the National Ambient Air Quality Standards (NAAQS). The Texas Commission on Environmental Quality (TCEQ, agency, or commission) monitors areas of the state for compliance with the NAAQS. For areas not meeting those standards, the TCEQ is responsible for developing a state implementation plan (SIP) to outline strategies that will be implemented to bring those areas into attainment of the NAAQS. In terms of compliance with the NAAQS, the pollutant that has been most challenging to show attainment in some areas of Texas is ground-level ozone.

Ozone is a gas formed in the atmosphere when three atoms of oxygen combine. Stratospheric ozone is found naturally in the Earth's upper atmosphere and forms a protective layer that shields us from the sun's ultraviolet rays. However, ground-level ozone is a respiratory toxic agent that can cause acute respiratory health effects when people breathe high concentrations of it over several hours. These effects include decreased lung function and pain with deep breaths, and aggravated asthma symptoms.

Ozone is not emitted directly into the air, but created by chemical reactions between NO_X and volatile organic compounds (VOCs) in the presence of sunlight. Ozone forms in the highest concentrations on warm, sunny days with light wind speeds, which allows more of the pollutant to form and accumulate. In Texas, much of the NO_X emissions are from motor vehicle and off-road equipment exhaust. Reducing those emissions by replacing or upgrading older vehicles and equipment to newer models with less emissions is an important tool in addressing the state’s air quality goals related to ground-level ozone.

Governor Greg Abbott selected the TCEQ as the lead agency responsible for the administration of funds received from the Trust. The governor submitted the necessary certification documents for Texas to be designated a beneficiary state under the Trust, and the Trustee filed the beneficiary notifications with the court on January 29, 2018. At that time, Texas became a designated beneficiary of the allocated funds.

The funds in the Trust are allocated based on the number of affected vehicles registered within the boundaries of each beneficiary. A minimum of $209,319,163 is available to Texas for projects that reduce NO_X in the environment.

The TCEQ proposed four primary goals for use of the mitigation funds to alleviate the air quality impacts from the affected vehicles.

1. Reduce NO_X Emissions

   The primary goal for use of the funds will be to reduce NO_X emissions in those areas with the potential to be most impacted by NO_X emissions and, in particular, the areas of the state designated nonattainment for National Ambient Air Quality Standards (NAAQS) for ground level ozone and in other areas monitoring ground-level ozone levels near the NAAQS for ozone. These “Priority Areas” are impacted by or are immediately adjacent to those areas that measure a disproportionate share of the air pollution burden within the regional and local jurisdictions. The Priority Areas are listed in Table A.1 and shown on Figure A.1 in Appendix A of the draft plan.
   In addressing this goal, the TCEQ will place a high priority on program administration efficiency to maximize the amount of funding used for NO_X emissions reduction.

1. Reduce the Potential for Exposure of the Public to Pollutants

   A second goal of the program will be to reduce the potential for exposure of the public to pollutants that are often emitted along with NO_X from older vehicles and equipment.
   The program will address this goal through funding to replace or repower vehicles and equipment that operate within communities and at facilities where emission sources may be concentrated, including refuse vehicles, school buses, and cargo handling equipment.

1. Prepare for Increased and Sustained Use of Zero Emission Vehicles (ZEV)

   The Trust Agreement allows for allocation of up to 15% of the funds for equipment to supply light-duty ZEV with electricity or hydrogen for hydrogen fuel cells. While the other mitigation actions will result in immediate reductions in NO_X emissions and other pollutants, funding ZEV infrastructure will help prepare the state for the increased use of ZEV in Texas and will help sustain the use of those vehicles.

1. Complement Other Incentive Funding Programs

   The Texas Emissions Reduction Plan (TERP) provides grants to reduce NO_X emissions that would otherwise occur in the future if the grant-funded project were not implemented. Conversely, the VW funding is intended to help mitigate the impact of NO_X emissions that should not have previously occurred and were not considered in air quality inventories and planning to ensure compliance with the NAAQS. To use the funds as efficiently as possible, it is important that the VW funding be used to complement the efforts of the TERP program.

The plan includes a proposed allocation of funds for administration, one statewide program, and five priority areas.

Proposed Funding Allocation

Estimated Administrative Funding (up to 4%)
The TCEQ's initial estimates are that it will need less than 4% of the allocated funds (approximately $8 million) to administer the program. These estimates are still preliminary, and the final administrative needs will depend on the number of years the program is implemented and the final resource needs of the TCEQ to administer the program. However, the TCEQ anticipates needing much less than the 15% of the funding authorized for administration.

Statewide Funding for Light-Duty ZEV Supply Equipment (up to 15%)
The TCEQ proposes to provide up to 15% of allocated funds (approximately $31.4 million) statewide to increase available infrastructure for providing electricity to light-duty electric vehicles and, where warranted, hydrogen for hydrogen fuel cell vehicles. Providing statewide funding will help establish additional availability of charging or refueling infrastructure so that vehicles may travel longer distances and in a greater number of areas within the state.
The TCEQ will consider the efforts of Electrify America, LLC to implement the national ZEV Investment Plan when considering projects for funding under this category.

Priority Areas Allocation (up to 81%)
The TCEQ proposes to initially allocate 81% of the total funds (approximately $170 million) among the five Priority Areas. The allocation is weighted toward three Priority Areas where air quality is closest to or above the 2015 ozone NAAQS, with two-thirds of the Priority Area funds allocated by population among the San Antonio, El Paso, and Beaumont-Port Arthur Areas. The remaining third is divided, based on population, between Houston-Galveston-Brazoria and Dallas-Fort Worth Areas.

In Texas, there are three nonattainment areas that do not meet the NAAQS for ground-level ozone based on the EPA's currently implemented 2008 eight-hour ground-level ozone standard of 0.075 parts per million (ppm), Dallas-Fort Worth (DFW), Houston-Galveston-Brazoria (HGB), and Bexar County. On October 1, 2015, the EPA revised the primary NAAQS for ozone from the eight-hour standard of 0.075 ppm to an eight-hour standard of 0.070 ppm. As a result, Bexar County was designated nonattainment, in addition to the other two nonattainment areas.

Additional counties are included in the San Antonio Area based on proximity to Bexar County. Hood County is included in the DFW Area for similar reasons.

The other areas of primary interest from an ozone NAAQS perspective are El Paso and Beaumont-Port Arthur (BPA). Preliminary data for 2018 indicate that El Paso has some monitored values near or above the 2015 NAAQS for ozone. The BPA area is considered a priority for mitigation for several reasons. First, the BPA area is under a federally enforceable ozone maintenance plan and was designated nonattainment for the revoked 1997 eight-hour ozone NAAQS. In addition, the BPA area has a history of elevated ozone, including the period when the subject vehicles were being sold and driven. Specifically, the BPA area had ozone design values of 80 ppb as recently as 2012 and as high as 92 ppb in 2004.

Light-Duty Zero Emission Vehicle (ZEV) Supply Equipment
The TCEQ proposes statewide funding for electric charging infrastructure for light-duty plug-in electric vehicles and hydrogen for fueling a vehicle powered by a hydrogen fuel cell. This funding category will help achieve the goal of preparing for increased and sustained use of ZEV.

Under the proposed plan, the following mitigation action categories would be eligible for funding in the Priority Areas.

• Class 4–7 Local Freight Trucks
• Class 8 Local Freight Trucks and Port Drayage Trucks
• Class 7–8 Refuse Vehicles
• School Buses
• Transit and Shuttle Buses
• Electric Forklifts and Port Cargo Handling Equipment
• Electric Airport Ground Support Equipment
• Ocean-Going Vessel Shore Power

The draft plan incorporates the limits on mitigation action funding established in the Trust Agreement, with some differences. Some of the key limits proposed in the plan that go beyond the criteria set out in the Trust Agreement are outlined below.

1. Under the proposed statewide light-duty ZEV supply equipment program, up to 50% of the costs of electric charging systems would be eligible for reimbursement. The Trust Agreement allows for higher percentages, based on location (e.g., public, workplace, multi-family).

   Limits on the reimbursement for hydrogen fueling systems would be the same as allowed under the Trust Agreement. Up to 33% of eligible costs would be eligible for reimbursement for equipment capable of dispensing at least 250 kilograms (kg) per day, and up to 25% of eligible costs for equipment capable dispensing at least 100 kg per day.

2. Replacement and repower projects involving the purchase of all-electric vehicles, equipment, and engines would be eligible for up to 60% of the costs, including the cost for electric charging infrastructure. The Trust Agreement allows reimbursement of up to 100% of the costs for publicly-owned vehicles and equipment.

3. Replacement and repower projects involving the purchase of diesel or alternative fuel vehicles and engines would be eligible for up to 60% of the costs for publicly-owned vehicles and privately-owned school buses operated under contract with a public school district. The Trust Agreement allows reimbursement of up to 100% of publicly-owned vehicles and equipment.

   Replacement projects involving privately-owned vehicles would be eligible for the same percentages allowed in the Trust Agreement, up to 25% of the costs and repower projects would be eligible for up to 40% of the costs.

4. For government-owned shore power projects, up to 60% of eligible costs would be eligible for reimbursement. The Trust Agreement allows reimbursement of up to 100% of the costs for government shore power projects.

   Privately-owned shore power projects would be eligible for up to 25% of the costs, the same as allowed under the Trust Agreement.

The lower percentage-of-cost limits are intended to ensure that applicants have a financial stake in the viability and sustainability of the grant-funded project, and to fund a greater number of projects with the available funds.

In addition these limits, the TCEQ may establish limits on the maximum grant amounts and may set limits on the cost per ton of NO_X reduced by a mitigation action.

The TCEQ proposes to award the funds as grants, which would be solicited through a Request for Grant Applications process. Different grant rounds may be used for the two different statewide programs and for the different priority areas.

The plan proposes to award funds under a first-come, first-served process, when that approach would be appropriate. Under this approach, the TCEQ might establish pre-determined maximum funding amounts or caps on funding.

However, in some cases, the TCEQ might use a competitive grant selection process for certain categories. Project selections would be made based on criteria established for that grant round, which might include the cost-effectiveness of the project in reducing NO_X.

Successful applicants would need to enter into a grant contract for the funds. However, the TCEQ would not be obligated to reimburse expenses until the TCEQ issues the grant recipient a Notice to Proceed (NTP).

The TCEQ would submit funding requests to the trustee for the contracted projects. The trustee will have 60 days after receipt of each funding request to approve, deny, or request modification to the request, or request additional information. The trustee will then have 15 days after approval of a request to disburse the requested funds.

Subject to acceptance of the approach by the trustee, the TCEQ will request funding for the approved projects and the administrative costs of the agency. The funds will be held in an agency account for use in reimbursing the grant expenses and the agency's administrative costs. As the TCEQ receives funds for a project, the TCEQ will issue the grant recipient an NTP, after which a grant recipient may be reimbursed for eligible expenses in accordance with the grant contract.

For those projects requiring scrappage of the vehicle, equipment, and/or engine, the applicant will be required to complete the disposition process before requesting reimbursement from the TCEQ. If a grantee does not complete the scrappage and submit required documentation, reimbursement would not be authorized and the grant contract may be cancelled.

The TCEQ proposes to use the same methodology as used for the TERP program. The draft plan outlines the calculation methodology. The TCEQ will provide default usage figures for the calculations.

Except in cases where cost-effectiveness will be a competitive selection factor, applicants will not be asked to calculate the NO_X reductions and cost-effectiveness of their proposed project.

For reporting to the trustee, the TCEQ will calculate NO_X reductions and particulate matter (PM) reductions for the funded projects.

Based on the priorities established in the final Plan, the TCEQ may begin accepting applications for grants under some of the project categories outlined in the Plan by late Fall 2018.

No more than 1/3 of the total funds available to Texas may be requested from the Trustee the first year after the effective date of the Trust Agreement (October 2, 2017), or 2/3 the second year.

Applicants selected for funding will be sent a contract to sign and return to the TCEQ. The TCEQ will execute the contract and return a copy to the grantee. Executed contracts will then be contingent upon the TCEQ sending the grantee a Notice to Proceed (NTP). The TCEQ will submit a funding request to the Trustee for the selected projects and will issue the NTPs upon receipt of the funds. The grantee may then complete the eligible purchase and submit reimbursement requests to the TCEQ for payment.

Applicants selected for funding should expect the contracting process and the TCEQ obtaining the funds from the Trustee to take several months before the grantee would receive a NTP and be able to request reimbursement. For example, the Trustee has up to 75 days to review and approve a funding request.

Beneficiaries have between three and 10 years to spend their allocated funds on specific types of projects as outlined in the Trust Agreement. After that, unused trust funds will be redistributed as supplemental funding among beneficiaries that have used at least 80% of their allocated trust funds. Those beneficiaries will be given five additional years to use the supplemental funds.

The TCEQ intends to award the funds allocated to Texas much sooner than the authorized 10-year period over which the funds are available.

Actual administrative costs may be reimbursed from the funds allocated to Texas, not to exceed 15% of the total cost of the Eligible Mitigation Actions funded under the program. The proposed funding allocation includes up to 4% (~$8 million) of the allocated funds going to administrative costs. However, the TCEQ expects to need less than that amount, and any of those funds not used would be available for additional projects.