Rebate Grants Program

Eligible applicants include individuals, state and local governments, corporations, or any other legal entity.

Small Business entities, as defined below, may be eligible for set-aside funding. The application forms will include a section for applicants to certify that the applicant qualifies as a Small Business for this program.

Under this program, a Small Business is defined as a business owned by a person who has owned no more than five vehicles, or pieces of equipment, and one of which has been owned for two years and is:

1. an on-road heavy-duty diesel vehicle; or
2. a non-road heavy-duty diesel piece of equipment.

1. The total amount to be awarded under this grant program will depend upon the amount of revenue received in the TERP Trust Fund at the time of the grant round opening.
2. Funding will be allocated based on the following preferences:
1. $20 million of available funding will be set-aside for applicants who qualify as small businesses
2. $10 million of available funding will be set-aside for new purchase projects.
3. All remaining funds will be available to all other applicants, including small businesses not otherwise funded from the set-aside amount.
3. Depending on demand and the requested grant amounts of eligible applications received, TCEQ may redistribute these allocations to best meet the purposes of the Rebate program. This may include, but is not limited to, redistributing funds within this grant program, moving funds to another grant program, or allocating additional funds to the Rebate program.

1. Replacement of On-Road Heavy-Duty Diesel Vehicles Owned, Registered, and Operated by the Applicant
1. Replacement of vehicles owned, leased, or otherwise commercially financed and registered and operated by the applicant in Texas for the two years immediately preceding the application signature date;
2. In operating condition with at least two years of useful life remaining; and
3. Applicants must certify that they have legal authority to destroy the old vehicle or equipment being replaced.
2. Replacement of Non-Road Diesel Equipment Owned and Operated by the Applicant
1. Replacement of non-road heavy-duty diesel equipment that has been continuously owned by the applicant, and used in its primary function in the routine operations of the applicant in Texas for at least the two years immediately preceding the application signature date;
2. In operating condition with at least two years of useful life remaining; and
3. Applicants must certify that they have legal authority to destroy the old vehicle or equipment being replaced.
3. Repower of On-Road Heavy-Duty Diesel Vehicles Owned, Registered, and Operated by the Applicant
1. The replacement of the engine with a new, rebuilt, or remanufactured engine on an existing vehicle that has been owned, leased, or otherwise commercially financed and registered and operated by the applicant in Texas for at least the two years immediately preceding the application signature date; and
2. At the time of repowering, in operating condition with at least two years of useful life remaining.
4. Repower of Non-Road Diesel Equipment Owned, and Operated by the Applicant
1. The replacement of the engine with a new, rebuilt, or remanufactured engine on an existing piece of non-road equipment that has been owned, leased, or otherwise commercially financed and operated by the applicant in Texas for at least the two years immediately preceding the application signature date; and
2. At the time of repowering, in operating condition with at least two years of useful life remaining.
5. New Purchase Projects for the purchase or lease of select, new on-road heavy-duty vehicles and non-road equipment without the requirement to dispose of an old vehicle or piece of equipment.
6. On-Vehicle Electrification Projects for the purchase and installation of equipment that enables an on-road heavy-duty diesel vehicle or diesel non-road piece of equipment to use electric power to reduce NO_x emissions related to power normally supplied by the propulsion engine or another onboard internal combustion engine (e.g., auxiliary power unit, refrigeration trailer).
7. Refueling Infrastructure for applicants seeking to replace or repower diesel on-road heavy-duty vehicles or non-road pieces of equipment with alternatively fueled equivalents. These applicants may request additional funding for the installation of new refueling infrastructure, or expansion of existing onsite refueling infrastructure that includes the following fuel types:
1. Electricity
2. Hydrogen
3. Compressed Natural Gas (CNG)
4. Liquified Natural Gas (LNG)
5. Propane (LPG)
6. Methanol

1. For on-road replacement projects, the qualifying vehicle must:
1. Be certified to emit at least 25% less NO_x than the old vehicle;
2. Have a vehicle model year no more than three years older than the calendar year in which it was purchased; and
3. Be of the same type, weight category, and body and axle configuration as the vehicle being replaced. The replacement vehicle must be configured and intended for use in the same application or vocation as the vehicle being replaced. TCEQ may accept vehicles of a different type, weight category, or body and axle configuration to account for the latest technology or vehicle type used in a specific vocation.
4. Unless the vocational type of the new vehicle is exempt from registration requirements, the vehicle must be registered for operation in Texas.
2. For non-road replacement projects, the qualifying piece of equipment must:
1. Be certified to emit at least 25% less NO_x than the old equipment;
2. Have an engine with a manufactured year of no more than three years older than the calendar year in which it was purchased; and
3. Of the same type and should be intended for use in the same application or vocation as the equipment being replaced.

1. For on-road, and non-road repower projects, the qualifying engine must:
1. Be certified to meet the same category of emission standards as the original engine (e.g., on-road or non-road); and
2. Use only components procured from the original engine manufacturer (OEM) or an authorized reseller unless otherwise approved by the TCEQ on a case-by-case basis.

1. For new purchase projects, the new purchase must:
1. Be specific on-road vehicles and non-road equipment types listed as eligible for the new purchase set-aside;
2. Be certified by the US EPA or the California Air Resource Board to an emission standard that is less than or equal to 0.02g/bhp-hr of NO_x;
3. Be at least one of the following fuels: natural gas, propane, hydrogen, or electricity; and
4. Of a vehicle model year (on-road vehicles), or engine model year (non-road equipment) no more than three years older than the calendar year in which it was purchased.

1. Project types for on-vehicle electrification projects will include:
1. The installation of battery-powered auxiliary power units (APU) which, at a minimum, can offset 4 continuous hours of engine idle operation time;
2. The installation of a battery-powered refrigeration unit on refrigeration trucks or trailers that can accept a direct plug-in connection while parked; and
3. The installation of a heavy-duty electric hybrid power train system which can demonstrably reduce fuel consumption by at least 5%.
2. The on-road vehicles or non-road equipment that this equipment is installed on must:
1. Be of a model year no more than three years older than the calendar year in which the on-vehicle electrification equipment was purchased;
2. Owned by the grant applicant, including the installed add-on equipment; and
3. Meet all requirements of Qualifying (Replacement) Vehicles and Equipment.

1. For refueling infrastructure projects:
1. Refueling infrastructure must be related to providing refueling capacity to the on-road vehicles or non-road equipment replaced or repowered through this grant program;
2. Applicants may expand existing onsite refueling infrastructure in lieu of installing new service; and
3. Applicants will be required to demonstrate their ability to install, operate and maintain the refueling infrastructure.

1. Replacement/Repower/New Purchase/On-Vehicle Electrification Projects

For replacement, repower, new purchase, and on-vehicle electrification projects, applicants will receive up to the lesser of the following options:

1. Applicants may be eligible to receive up to the grant amounts shown in the Rebate grant tables; or
2. 80% of the incremental cost.
2. Refueling Infrastructure Projects

For refueling infrastructure associated with replacement, repower, or new purchase projects, applicants will receive up to the lesser of the following options:

1. $100,000 plus $50,000 for each on-road vehicle or non-road piece of equipment that is fueled by the associated infrastructure in the project;
2. 50% of the incremental cost of the refueling infrastructure project; or
3. $600,000.

1. Eligible Costs for Replacement Projects and New Purchase Projects
1. The cost (or if leased, the capital lease cost basis) of the grant funded vehicle, or equipment including:
1. Taxes and government fees;
2. Delivery and shipping fees;
3. Factory and/or extended warranties;
4. Service contracts;
5. Mechanic and safety inspections;
6. Cooperative fees; and
7. Dealer processing fees not related to financing.
2. Eligible Costs for Repower Projects and On-Vehicle Electrification Projects
1. The cost of the new engine or upgrade, including sales tax and delivery charges;
2. The cost(s) of additional equipment that must be installed with the new engine or upgrade;
3. The associated supplies directly related to the installation of the engine or system;
4. The cost to remove and dispose of the old engine, if applicable;
5. Installation costs;
6. Reengineering costs, if the vehicle or equipment must be modified for the new engine to fit; and
7. Other ancillary costs which include shipping costs, factory and/or extended warranties, mechanic and safety inspections, cooperative fees, and dealer or manufacturer fees.
3. Eligible Costs for Refueling Infrastructure Projects
1. Equipment includes tangible personal property having a unit acquisition cost of $5,000 or more (including sales tax and delivery) with an estimated useful life of over one year. Equipment purchased with grant funds should be budgeted as equipment if the sum of the separate component parts (including tax and delivery) has an original value of $5,000 or more. TCEQ will require an itemized invoice and proof of payment for reimbursement of all equipment costs. Eligible equipment costs for natural gas and alternative fuel dispensing equipment include natural gas and alternative fuel storage tanks, compressors, electrical infrastructure, and other equipment at the facility directly needed to store and dispense eligible alternative fuels. Eligible equipment-related costs include contractual costs and supplies and non-capital items necessary for the installation of the equipment.
2. Supplies and Materials includes non-construction related costs for goods and materials having a unit acquisition cost (including sales tax and delivery) of less than $5,000 per unit. An itemized invoice and proof of payment will be required for reimbursement of all supplies and materials costs.
3. Construction includes the costs for the enhancement or building of permanent facilities. Construction costs include:
1. Planning, designing, and engineering;
2. Materials and labor;
3. Subcontracts for services in connection with the construction; and
4. Facility Improvements, such as paving, foundations, and covers.
4. Contractual includes non-construction related costs for subcontracted or hired out professional services or tasks provided by a firm or individual who is not employed by the applicant. List each subcontractor/consultant separately.

Ineligible costs include:

1. Insurance premiums;
2. Finance fees and charges;
3. Salaries and travel expenses for employees of the grantee;
4. Expenses of any lobbyist registered in Texas;
5. Costs associated with the preparation and submission of the grant application;
6. Administrative costs of the grantee, including overhead and indirect costs (e.g., office supplies, rent, marketing, and advertising);
7. Costs that do not involve an arms-length transaction, such as the use of existing inventory without a proof of purchase;
8. Any costs paid prior to the opening of the grant round; and
9. Food and drink.

1. TCEQ will consider funding for applications that are substantially complete in the order they are received.
2. Applications which meet the criteria for the small business set-aside will be separately reviewed and awarded until the small business set-aside is exhausted.
1. Any small business applications that remain after the small business set-aside is exhausted will be considered in the order they were received when compared to all other applicants.
3. Applications which meet the criteria for the new purchase set-aside will be separately reviewed and awarded until the new purchase set-aside is exhausted. These applications will not be considered outside of this allocation.
4. Applicants, including their legal affiliates, may not request more than $4 million in total Rebate grant funds per calendar month that the program is open.
5. Applicants, including their legal affiliates, may not request more than $2 million in total Rebate grant funds per calendar month for the new purchase set-aside.

1. Vehicle/Equipment Disposition (destruction). For replacement and repower projects, the vehicle/equipment and/or engine being replaced must be rendered permanently destroyed and inoperable within 90 days of receiving reimbursement from the TCEQ. Applicants may request alternative destruction methods at the time of application.
2. Operation of the Grant-Funded Vehicle or Equipment. Not less than 55% of the grant-funded on-road vehicle or non-road equipment operation must occur in one or more of the non-attainment areas and affected counties for the duration of the five-year contract life. Applicants may elect to increase this value to not less than 80% of their operation in these same areas to receive additional grant funds.
3. Operation of the Grant-Funded Refueling Infrastructure. Grant-funded refueling infrastructure must be owned, operated, and maintained for 5 years starting on the date of reimbursement.
4. Monitoring and Reporting. Grantees must monitor and track the use of the grant-funded vehicles, equipment, and infrastructure for 5 years. Reports will be submitted to TCEQ on an annual basis.

An applicant may submit a request to waive one or more of the ownership, registration, or operation requirements. TCEQ will review waiver requests on a case-by-case basis and approve requests based on a determination of good cause.

Austin Area: Bastrop, Caldwell, Hays, Travis, and Williamson Counties

Beaumont-Port Arthur Area: Hardin, Jefferson, and Orange Counties

Corpus Christi Area: Nueces and San Patricio Counties

Dallas-Fort Worth Area: Collin, Dallas, Denton, Ellis, Henderson, Hood, Hunt, Johnson, Kaufman, Parker, Rockwall, Tarrant, and Wise Counties

El Paso Area: El Paso County

Houston-Galveston-Brazoria Area: Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller Counties

San Antonio Area: Bexar, Comal, Guadalupe, and Wilson Counties

Tyler-Longview Area: Gregg, Harrison, Rusk, Smith, and Upshur Counties

Other: Anderson, Freestone, Howard, Hutchinson, Navarro, Panola, and Titus Counties

The included Rebate grant tables are for example purposes only and may be changed prior to the grant round opening.

On-Road Replacement Projects

Replacing a Diesel Haul Truck (GVWR of 80,000+ lbs)

80% in-area commitment

Replacing a Diesel Haul Truck (GVWR of 80,000+ lbs)

55% in-area commitment

¹Some manufacturers were producing 2003 engines that met the more stringent 2.375 g/bhp-hr standard for NO_x. Vehicles that meet the 2.375 g/bhp-hr NO_x standard should use the 2004-2006 grant amounts instead. Contact TERP if you are unsure of your grant amount for your 2003 vehicle.

²It is not guaranteed that a 2007-2009 model year vehicle and engine will be eligible to receive a grant because manufacturers were phasing in the current NO_x emission standard of 0.2 g/bhp-hr during these years. Replacement and repower projects must result in a minimum 25% reduction in the NO_x emission standard to be eligible. This means a vehicle must have an emission rate of 0.27 g/bhp-hr or higher to qualify for a grant. Contact TERP if you are unsure if your vehicle is eligible to receive a grant.

The included Rebate grant tables are for example purposes only and may be changed prior to the grant round opening.

Non-Road Replacement Projects

Replacing a Diesel Agricultural Tractor (100-175hp)

80% in-area commitment

Replacing a Diesel Agricultural Tractor (100-175hp)

55% in-area commitment

¹It is not guaranteed that model year 2012-2013 non-road engines will be eligible to receive a grant because manufacturers were phasing in the current NO_x emission standard of 0.3 g/bhp-hr during these years. Replacement and repower projects must result in a minimum 25% reduction in the NO_x emission standard to be eligible. This means a a non-road engine must have an emission rate of 0.4 g/bhp-hr or higher to qualify for a grant. Contact TERP if you are unsure if your vehicle is eligible to receive a grant.