DIESEL EMISSIONS
REDUCTION ACT
(DERA)

FIFTH REPORT TO CONGRESS

Highlights of the Diesel Emissions Reduction Program

2008-2018

Ok PHA United States
Environmental
^1 # % Agency

Office of Transportation and Air Quality
(OTAQ) 2022 EPA-420-R-22-021
August 2022


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ACRONYMS AND ABBREVIATIONS

ARRA

American Recovery and Reinvestment Act of 2009

O
O

Carbon Dioxide

DERA

Diesel Emissions Reduction Act

DOC

Diesel Oxidation Catalyst

DPF

Diesel Particulate Filter

EPA

Environmental Protection Agency

HC

Hydrocarbons

NOx

Nitrogen Oxides

PM

Particulate Matter

RFA

Request for Applications

VW

Volkswagen

PHOTO CREDITS

All photos in this report were taken by DERA funding recipients, EPA staff managing DERA awards, or
EPA Chief Photographer Eric Vance, unless otherwise noted.

DISCLAIMER OF ENDORSEMENT

Mention of, or referral to, commercial products or services and/or links to non-EPA sites does not imply
official EPA endorsement of, or responsibility for, the opinions, ideas, data, or products presented at those
locations or guarantee the validity of the information provided. Mention of commercial products/services on
non-EPA websites is provided solely as a pointer to information on topics related to environmental protection that
may be useful to EPA staff and the public.

DERA FIFTH REPORT TO CONGRESS: | Highlights of the Diesel Emissions Reduction Program


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TABLE OF CONTENTS

EXECUTIVE SUMMARY	3

EXHIBIT 1: DERA OVERVIEW AND FUNDING OPPORTUNITIES	4

DERA PROGRAM OVERVIEW: FISCAL YEARS 2008 - 2018 	5

EXHIBIT 2: DERA PROGRAM OUTCOMES AND ACCOMPLISHMENTS 	5

EXHIBIT 3: DERA APPROPRIATION FUNDING ($ M) BY FISCAL YEAR	5

CLIMATE IMPACT MITIGATION AND FUEL SAVINGS	6

AIR QUALITY AND PUBLIC HEALTH BENEFITS	6

EXHIBIT 4: DIESEL EXHAUST HEALTH EFFECTS	7

VEHICLES AND EQUIPMENT FUNDED BY SECTORS AND TECHNOLOGIES	8

EXHIBIT 5: DERA FUNDED PROJECTS - TECHNOLOGY TYPE BY QUANTITY	9

EXHIBIT 6: DERA FUNDED PROJECTS: UPGRADES BY SECTOR	9

EXHIBIT 7: FUNDED DERA GRANTS AND REBATES BY LOCATION AND COUNTY LEVEL

AREAS	10

DERA PROJECTS PRIORITIZED IN LOCATIONS WITH POOR AIR QUALITY	11

LOCAL DEMAND FOR THE DERA PROGRAM	12

THE DERA OPTION IN THE VOLKSWAGEN SETTLEMENT	12

THE DERA PROGRAM 2017-2018	13

EXHIBIT 8: DERA PROGRAM OUTCOMES	13

EXHIBIT 9: DERA PROJECTS: VEHICLE AND ENGINE UPGRADES	14

DERA NATIONAL GRANTS	15

DERA NATIONAL PROGRAM FISCAL YEAR 2017 ACTIVITIES	16

EXHIBIT 10: DERA NATIONAL PROGRAM OUTCOMES	16

EXHIBIT 11: DERA NATIONAL PROJECTS: VEHICLE AND ENGINE UPGRADES	16

DERA NATIONAL PROGRAM FISCAL YEAR 2018 ACTIVITIES	17

EXHIBIT 12: DERA NATIONAL PROGRAM OUTCOMES	17

EXHIBIT 13: DERA NATIONAL PROJECTS: VEHICLE AND ENGINE UPGRADES	17

MOVING FORWARD - NATIONAL GRANT PROGRAM	18

CASE STUDY 1	19

CASE STUDY 2	20

DERA TRIBAL GRANTS	21

EXHIBIT 14: DERA TRIBAL PROGRAM OUTCOMES	22

EXHIBIT 15: DERA TRIBAL PROJECTS: VEHICLE AND ENGINE UPGRADES	22

MOVING FORWARD - TRIBAL GRANTS	23

CASE STUDY 3	24

DERA STATE GRANTS	25

EXHIBIT 16: DERA STATE PROGRAM OUTCOMES	26

EXHIBIT 17: DERA STATE PROJECTS: VEHICLE AND ENGINE UPGRADES	26

MOVING FORWARD - STATE GRANTS	26

CASE STUDY 4	27

DERA SCHOOL BUS REBATE PROGRAM	28

EXHIBIT 18: DERA SCHOOL BUS REBATE PROGRAM OUTCOMES	29

MOVING FORWARD - REBATES	29

CASE STUDY 5	30

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DERA FUNDING AT PORTS	31

EXHIBIT 19: DERA GRANT FUNDS AWARDED TO PORT PROJECTS	32

NATIONAL, TRIBAL, AND STATE DERA PROGRAMS	32

MOVING FORWARD - PORTS	33

CASE STUDY 6	34

CASE STUDY 7	35

LOOKING AIIHAD FOR THE DERA PROGRAM	38

DERA ACTIVITIES FOR FISCAL YEARS 2019 AND 2020	39

2021 AMERICAN RESCUE PLAN	39

ZERO EMISSION VEHICLES (ZEV)	39

JUSTICE40	40

CONCLUSION	41

APPENDIX: LIST OF DERA AWARDS	42

DERA FIFTH REPORT TO CONGRESS: | Highlights of the Diesel Emissions Reduction Program


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Page (3

EXECUTIVE SUMMARY

From transportation to energy generation, the diesel engine powers almost every sector of the American
economy. Due to improved EPA diesel engine regulations and emissions standards over the past few decades,
engines currently coming off the manufacturing line are now sixty times cleaner1 than before. However, despite
these tighter standards for new engines, the nearly eight million legacy diesel engines already in use continue to
emit large amounts of PMi s2 and NOx.3 These air pollutants contribute to senous public health problems like
asthma, lung disease, and various other cardiac and respiratory illnesses, which result in thousands of premature
deaths, millions of lost workdays, and numerous other negative health impacts every year in the United States.

EPA's decades-long effort to reduce criteria pollutants, air toxics, and other harmful emissions from diesel fuel
used in transportation has resulted in significant health and environmental benefits while advancing technology
and minimizing cost. These benefits are a result of several programs that address diesel emissions and protect
public health and air quality, including the Diesel Emissions Reduction Act (DERA) program.

A Decade of DERA

The "Diesel Emissions Reduction" program was originally proposed
as the Diesel Emissions Reduction Act of 2005 by Senator Thomas
Carper (DE) and the late Senator George Voinovich (OH) in June
2005. It was favorably voted out of the Environment and Public
Works (EPW) Committee in September of that year and incorporated
into The Energy Policy Act of 2005, thereby creating a financial
assistance program dedicated to reducing diesel emissions -known as
DERA. Enjoying bi-partisan support, the Diesel Emissions Reduction
Act of 2010 reauthorized the program in early 2011. Most recently,
in 2020, current EPW Committee Chairman Carper, then EPW
Committee Chairman John Barrasso (WY), Senator James Inhofe
(OK), current Ranking Member Shelley Moore Capito (WY) and then
Clean Air and Nuclear Safety Subcommittee Ranking Member
Sheldon Whitehouse (RI) were joined by their colleagues in the
House of Representatives, Energy and Commerce Committee Chair
Frank Pallone (NJ), Ranking Member Cathy McMorris Rodgers
(WA), Subcommittee Chair Paul Tonko (NY), former Subcommittee
Ranking Member John Shimkus (IL), current Ranking Member
David McKinley (WV), Representatives Dons Matsui (CA), Billy
Long (MO), Alan Lowenthal (CA) and Rob Wittman (VA) to
collaborate on the latest provisions which reauthorized DERA
through fiscal year 2024. Thanks to the efforts of these members of
Congress, and the many stakeholders that have contributed their
expertise to the program, DERA has provided years of environmental,
economic, and public health benefits. This Report to Congress covers
a decade's worth of benefits resulting from DERA funding.

The DERA program, originally
authorized under the Energy Policy
Act of 2005. was reauthorized in the

Diesel Emissions Reduction Act of
2010 and in the Consolidated
Appropriations Act. 2021. DERA
enables EPA to offer funding to
accelerate the upgrade and turnover
of legacy diesel fleets and is the only
Federal government program
dedicated to addressing legacy
engines. The DERA program
generally targets older, dirtier, diesel
engines that lack modern emission
control systems to be upgraded with
new technologies, such as vehicle
and/or engine replacements with
new diesel, alternative fuel, and zero
emission engines or idle reduction
technologies. EPA's Office of
Transportation and Air Quality
administers the DERA program.

1	https://nepis.epa.gov/Exe/ZyPDFj:gi?Dockey=P100092Z.pdf

2	PM2.5 will be referred to as PM for the rest of the report.

3	"Legacy diesel engines" are defined by the DERA program as the operating nonroad diesel and medium to heavy-duty highway diesel
engines with engine model years 2009 and earlier. Previously, DERA defined legacy engines as 2006 and earlier, but this has been
expanded to include 2007-2009 engines which do not meet current emission standards. The legacy diesel engine population estimate
in this report is derived from EPA's MOVES3.0.1 model vehicle data for onroad and offroad equipment.

DERA FIFTH REPORT TO CONGRESS; | Highlights of the Diesel Emissions Reduction Program


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Page | 4

EPA prioritizes diesel emissions reduction projects that provide immediate and lasting health and
environmental benefits while targeting areas of greatest need. The DERA legislation emphasizes maximizing
health benefits, serving areas of poor air quality, such as non-attainment areas for PM and ozone, and
conserving diesel fuel. Additionally, DERA supports environmental justice by prioritizing emissions
reductions in areas receiving disproportionate impacts, particularly from fleets operating in areas designated
by the Administrator as poor air quality areas. The graphic below highlights categories to be discussed in detail
on the tangible benefits from the DERA program, since the first grants awarded from the program in 2008.

Climate Impact
Mitigation and
Fuel Savings

Air Quality and
Public Health
Benefits

Environmental
Justice Promotion

Vehicles and
Equipment
Funded by Sectors
and Technologies

DERA Projects
Prioritized in
Areas of Poor Air
Quality

Local Demand for
the DERA
Program

DERA Option in
the Volkswagen
Settlement

Funding opportunities for diesel emissions reduction projects are provided through an annual appropriation by
Congress to DERA. EPA awarded the first DERA grants in 2008 and continues to award DERA grants and
rebates each fiscal year. The Fourth Report to Congress, published in 2018, covered results from the DERA
program for fiscal years 2008 to 2016. The following pages in this Fifth Report to Congress will discuss results
from DERA for two additional fiscal years, 2017 and 2018, broken down by program funding opportunities.
Note: EPA has continued to award funding for fiscal years 2019 and 2020. A summary on these fiscal years is
included in the 'Looking Ahead for the DERA Program ' section of this document and will be covered in more
detail in the next Report to Congress when these projects are finalized or close to completion.

EXHIBIT 1: DERA OVERVIEW AND FUNDING OPPORTUNITIES

This 5th Report to Congress includes DERA data from 2008 to 2018 on awards and
vehicles funded, emission pollutants reduced, and other program impacts.

DERA provides project funding to eligible entities to achieve significant reduction in
diesel emissions in terms of pollution produced and diesel emissions exposure to
protect human health and improve air quality.

Eligible diesel vehicles, engines, and equipment may include buses, heavy-duty
highway vehicles, marine engines, locomotives, and nonroad engines, equipment, or
vehicles.



Eligible diesel emissions reduction solutions include certified upgrades or
replacements, verified idle reduction or aerodynamic technologies, verified low rolling
resistance tires, and verified retrofit technologies.

$

DERA has four current grant and rebate program funding opportunities:



^ ~T '¦

State Grant School Bus National Grant Tribal Grant
Program Rebate Program Program	Program

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DERA PROGRAM OVERVIEW: FISCAL YEARS 2008 - 2018

The DERA program has achieved the following outcomes and range of benefits:

EXHIBIT 2: DERA PROGRAM OUTCOMES AND ACCOMPLISHMENTS4

(FISCAL YEAR 2008 TO FISCAL YEAR 2018)

Investment of DERA Program

M

$801 million funds appropriated

0

73,700 engines or vehicle
retrofitted or replaced

Approximately $8 billion in
monetized health benefits

M

54% of projects targeted to areas
with air quality challenges

2.1 to 1 leveraging of funds from
non-federal sources

Emission and Fuel Reductions

[©I

491,000 tons ofNOx



16,800 tons of PM

N

65,600 tons of carbon
monoxide

m

5,307,100 tons of carbon
dioxide

1-1

520 million gallons of diesel
fuel saved

Each fiscal year, as stipulated in the 2005 Energy Policy
Act. 30% of the DERA appropriation is allocated to the
states and territories to fund programs for diesel
emissions reduction projects. The remaining 70% of the
DERA appropriation is used for competitive grants and
rebates. The following chart shows the total DERA
appropriation by fiscal year from 2008, when the first
awards were made, through 2018.

	Management and Oversight	

Up to one percent of the DERA appropriation supports
management and oversight (M&O) of the program. M&O
funding may be used for outreach, the Diesel Emissions
Quantifier (DEQ) to calculate diesel emissions benefits,
grant tracking and analysis efforts, and other contracts that
support and strengthen the DERA program administration.

EXHIBIT 3: DERA APPROPRIATION FUNDING ($ M) BY FISCAL YEAR

(FISCAL YEAR 2008 TO 2018)

$300
$250
$200
$150
$100

$50 $49

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CLIMATE IMPACT MITIGATION AND FUEL SAVINGS

DERA projects awarded from fiscal years 2008 to 2018 are estimated to reduce 5,307,100 tons of carbon
dioxide (CO2) over the lifetime of the affected engines. In addition, these projects saved over 500 million
gallons of diesel through the implementation of idle reduction and fuel-efficient technologies.

DERA projects can also provide immediate black carbon (BC) reductions by reducing PM emissions from the
legacy diesel fleet. Black carbon is emitted by older diesel engines and is a key component of fine particulate
matter (PM) air pollution. Roughly 7% of PM emissions from older diesel engines in the U.S. consist of BC.
Black carbon also contributes to climate change by absorbing light and heating the atmosphere, which
exacerbates global warming. Aside from the adverse environmental effects, BC can also cause poor health and
premature death. Therefore, reducing transportation-related PM emissions is critical to reducing black carbon,
the associated adverse health impacts, and finally the rate of warming occurring globally.5 DERA projects
have reduced a total of 16,800 tons of PM over the lifetime of the projects covered in this report.

DERA funds zero emission vehicle engine and equipment replacements as part of its suite of approved projects.
In 2016, EPA increased the federal cost share to 45%, and, in 2020, increased the rebate amount for zero
emission school buses to $65,000, the largest rebate available. EPA has funded more than 650 zero emission
engine and vehicle replacements between 2008 and 2018 and expects to fund more due to increased applicant
interest and more commercially available zero emission technologies.

AIR QUALITY AND PUBLIC HEALTH BENEFITS

DERA grants have funded projects that provide immediate and lasting health and environmental benefits. More
than 73,700 engines in vehicles, vessels, locomotives, or other pieces of equipment were replaced or retrofitted
with DERA funds during fiscal years 2008 to 2018. DERA projects during these years are estimated to reduce
nearly 491,000 tons ofNOx (a precursor to secondarily-formed PM2.5) and 16,800 tons ofPM over the lifetime
of the affected engines. EPA estimates that the total lifetime value of PM-related health benefits attributed to
these reduced emissions range from $8 billion to $8.6 billion and account for approximately 850 fewer
premature deaths over this same period. These diesel emission reduction projects are also estimated to reduce
19,000 tons of hydrocarbon (HC) and 65,600 tons of carbon monoxide (CO) over the lifetime of the affected
engines.6,7

5 U.S. EPA 2017 National Emission Inventory Modeling Platform vl. Fine particles (PM2.5), which are 2.5 micrometers in diameter or
smaller, are produced from all types of combustion, including motor vehicles, power plants, residential wood burning, wildfires,
agricultural burning, and some industrial processes. Black carbon is a component of PM2.5.

0 When a grant is awarded, estimated emissions reduction are calculated. As the grant progresses, DERA grant recipients are required
to submit quarterly programmatic progress reports to EPA. Once a grant is completed, the recipient submits a final programmatic report
which includes an overview of the project's implementation and a final accounting of project expenses and results. EPA evaluates the
reports for consistency and accuracy. EPA estimates emissions reduction for each project through our web-based Diesel Emissions
Quantifier (DEQ) using the information in the final grant reports. Hie DEQ relies on EPA emission models like MOVES3.0.2 as well
as documents like regulatory impact analyses for its calculations. After the emission reductions are calculated, the information is tracked
internally along with all grant recipient information. Final emissions data for each grant is totaled for each fiscal year and program.

7 EPA uses a reduced-form benefit-per-ton (BPT) approach as the basis for our assessment of PM2.5-related health benefits. In this
approach, the PM2.5-related BPT values are the total monetized human health benefits (the sum of the economic value of the reduced
risk of premature death and illness) that are expected from reducing one ton of directly emitted PM2.5 or a PM2.5 precursor, such as
NOx. For the mobile source emissions controlled by the DERA program, we apply national PM2.5-related BPT values derived from
those recently published in Wolfe et al., 2019 and available for download here: https://www.epa.gov/benmap/mobile-sector-source-

DERA FIFTH REPORT TO CONGRESS: | Highlights of the Diesel Emissions Reduction Program


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Credit: FYl 8 National Program, Southeast Missouri Regional Planning Commission, Mississippi Lime Clean Diesel Project

EXHIBIT 4: DIESEL EXHAUST HEALTH EFFECTS

PM and NOx

Direct emissions from diesel engines, especially PM and NOx, and other air toxics, contribute to a wide variety
of health problems. NOx contributes to the formation of PM and ozone through a series of chemical reactions.
PM has been associated with an increased risk of premature mortality, increased hospital admissions for heart
and lung disease, and increased respiratory symptoms. Long-term exposure to components of diesel exhaust,
including diesel PM and diesel exhaust organic gases, is likely to pose a lung cancer hazard. Exposure to ozone
can aggravate asthma and other respiratory symptoms, resulting in more asthma attacks, additional medication,
lost school and workdays, increased emergency room visits and hospitalizations, and even premature mortality.
Repeated exposure to ozone can increase susceptibility to respiratory infection and lung inflammation and can
aggravate preexisting asthma. At sufficient concentrations, ozone can even cause permanent damage to the
lungs, resulting in the development of chronic respiratory illnesses. Children, outdoor workers, those who
exercise outside, people with heart and lung disease, and the elderly are most at risk.

DERA grants fund a range of technologies, from zero emission vehicles to new diesel vehicles which can
reduce emissions up to 95%. PM and NOx controls have been the primary focus for the time of this Report.
For more information on health effects, see Health Assessment Document for Diesel Engine Exhaust, which
examines information regarding the health hazards associated with exposure to diesel engine exhaust.

apportionment-air-quality-and-benefits-ton. EPA estimates that the total lifetime value of PM2.j-related health benefits from emissions
reductions associated with fiscal year 2008 through fiscal year 2018 DERA awards range from $8 billion to $8.6 billion (in 2020
dollars). This range reflects the use of either a three or seven percent discount rate to account for a lag between the change in PM
exposures and the total realization of changes in mortality effects (the "mortality cessation lag"). Estimation of total lifetime benefits
also assumes either a three or seven percent discount rate. EPA estimates that the emissions reductions achieved over the lifetime of
the affected engines will help avoid approximately 850 premature deaths. Premature deaths avoided were estimated using PM-related
mortality incidence-per-ton estimates derived from Wolfe et al., 2019. The morality incidence-per-ton estimates assume a mortality
risk estimate derived from the American Cancer Society cohort study (Krewski et al., 2009). In the prior DERA Fourth Report to
Congress, health benefits were calculated using two different mortality studies - the American Cancer Society cohort study (Krewski
et al., 2009) and the Harvard Six Cities study (Lepeule et al., 2012). After a recent review of the health impacts literature for the 2021
Revised Cross-State Air Pollution Rule Update for the 2008 ozone National Ambient Air Quality Standards Final Rulemaking, the
Agency retained use of the American Cancer Society cohort and removed the Harvard Six Cities study from its analyses. More
information regarding EPA's PM-related health benefits methodology can be found here: https://www.epa.gov/sites/default/
files/2021 -03/documents/estimating_pm2.5-_and_ozone-attributable_health_benefits_tsd.pdf.

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According to EPA's calculations of health benefits, diesel emissions reduction projects are cost-effective, with
monetized health benefits estimated to exceed federal funding by a factor of 10. Each federal dollar invested
in diesel emissions reduction projects has leveraged an average of $2.10 in funding from other government
agencies, private organizations, industries, and nonprofit organizations to amplify project results. Federal
dollars invested in DERA ultimately resulted in over 520 million gallons of fuel saved over the lifetime of the
vehicles. DERA funding has accelerated upgrades and replacements for diesel vehicles and equipment,
improving the public and private diesel fleets that are critical to the economy.

ENVIRONMENTAL JUSTICE FOCUS	

Environmental justice is the fair treatment and meaningful involvement of all people regardless of race, color,
national origin, or income, with respect to the development, implementation, and enforcement of
environmental laws, regulations, and policies. DERA supports environmental justice by prioritizing emissions
reductions in areas that suffer disproportionate impacts from diesel fleets to provide an environment where all
people enjoy the same degree of protection from environmental and health hazards.

Priority for DERA funding is given to projects which promote environmental justice.

Disproportionate and adverse environmental and human health impacts result when greater pollution, climate,
or cumulative burdens affect people of color, low income, tribal and indigenous, or other vulnerable
communities or populations. The impacts may result from historical trends and policy decisions. DERA
competitive grant applications are awarded points for how the project benefits these communities and
populations, as well as to the extent to which the project addresses engagement, especially with local residents,
to ensure their meaningful participation with respect to the design, project planning, and performance of the
project.

Under DERA, goods-movement projects are also prioritized because they tend to take place in communities
that are disproportionately impacted by higher levels of diesel exhaust, such as those near ports, rail yards, and
distribution centers. In fiscal year 2017, awarded grants for seaport projects totaled approximately $14.5
million.8 In addition, $9.3 million was awarded for goods movement projects near seaports, and $1.7 million
for airports. In fiscal year 2018, approximately $19 million was awarded for projects in and around ports,
approximately $3 million was awarded for airport projects, and $4 million for locomotive projects.9 Diesel
emissions reduction projects lessen exposure for people living and working in these communities, and the
improved air quality provides immediate health benefits. DERA promotes environmental justice by prioritizing
emissions reductions in areas that suffer disproportionate and adverse impacts from diesel fleets to provide an
environment where all people enjoy the same degree of protection from environmental and health hazards.

VEHICLES AND EQUIPMENT FUNDED BY SECTORS AND TECHNOLOGIES

In the early years of DERA, many applicants requested funding primarily for retrofits of on-highway vehicles,
especially long-haul trucks, and school buses, and EPA funded thousands of retrofits. As the DERA program
progressed over the years and EPA's on-highway 2007 standards were implemented, applicant interest shifted
towards the replacement of vehicles, vessels, and equipment in ports and rail yards. Exhibit 5 below shows the
most frequently funded technologies for fiscal years 2008 through 2018.

8	https://www.epa.gOv/sites/default/files/2018-04/docimients/usepa_fyl7_environmentaljustice_progress_report.pdf

9	https://www.epa.gOv/sites/default/files/2019-08/docmnents/ejprogress_report_fy2018-ll.pdf

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EXHIBIT 5: DERA FUNDED PROJECTS - TECHNOLOGY TYPE BY QUANTITY

(FISCAL YEAR 2008 TO 2018)

Diesel Oxidation Catalyst
Idle Reduction Technologies
Aerodynamic Technologies
Engine Replacement
Vehicle Replacement
Diesel Particulate Filter

T3

2	Low Rolling Resistance Tires

3	Electrified Parking Space

Cleaner Fuels/Additives ¦

8. Other Emission Control Device ¦

E—	Other ¦

Selective Catalytic Reduction i
Compressed Natural Gas i
Hybrid i
Shore Power
Liquid Natural Gas

0	5,000 10,000 15,000 20,000 25,000

Quantity

DERA has funded projects in diverse sectors and project locations as noted in Exhibit 6. The sector with the
largest number of upgrades, at 43%, is school buses, directly helping provide the safest transportation to and
from school. Freight sector projects, at 36%, are comprised of various vehicles, including over 17,000 long-
haul combination truck upgrades. Construction, port, municipal, other (industrial, mining, rail yard, and
stationary), agriculture, airport, and transit account for the remaining 21% of funded sector upgrades.

EXHIBIT 6: DERA FUNDED PROJECTS: UPGRADES BY SECTOR

(FISCAL YEAR 2008 TO 2018)

Airport
1%



Agriculture

Other





2%

2%*

Municipal







3%

Freight * Other includes industrial, mining,
rail yard, and stationary' sectors.

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Page | 10

EXHIBIT 7: FUNDED DERA GRANTS AND REBATES BY LOCATION AND COUNTY LEVEL AREAS

(2008 TO 2018)

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Nonattainment

•	School Bus Rebates

•	State

•	National

•	ARRA National

•	ARRA State

•	Tribal

•	ARRA Emerging Technology

•	Ports RFP

•	Emerging Technology

•	Smartway Finance

The maps above and below provide a visual summary of the number of DERA awards by place of performance (county) for all DERA programs, from 2008-2018.
The primary area where affected vehicles/engines operate, or the primary area where the emissions benefits of the project will be realized, is defined as the "project
area". Nonattainment areas for criteria pollutants are delineated, as identified in the EPA Green Book, which provides detailed information about area National
Ambient Air Quality Standards (NAAQS) designations, classifications, and nonattainment status. To receive points under one evaluation criteria of the DERA
RFA, vehicles or equipment proposed for funding must be operated a majority of the time in one of these priority diesel PM areas that contains at least one census
tract where the modeled ambient diesel PM concentration from the 2014 National Air Toxics Assessment (https://www.epa.gov/national-air-toxics-assessment) is
above the 80th percentile (0.68 |ig/m3) for census tracts nationwide. NATA is a screening tool and there are limitations and uncertainties; see:
https://www.epa.gov/national-air-toxics-assessment/natalimitations.

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Page j 11

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O

, VI

HAWAII

100

200mi

P U E R "IjO
RICO

San Juan

0 30 60m

Puerto Rico and
U.S. Virgin Islands



NORTHERN
MARIANA
I S L A N 0 S

Guam and
Northern

Mariana Islands



518m



Dededo



Hagatna



GUAM



0 20 40mi



DERA PROJECTS PRIORITIZED IN LOCATIONS WITH POOR AIR QUALITY

DERA grants and rebates have been funded nationally with priority given to vehicles, engines, and equipment
operating in areas designated as having poor air quality.10 Ever since the funding of the first DERA grants in
2008, EPA has focused attention on PM and ozone nonattainment areas and areas with elevated air toxic
exposure to achieve maximum benefits for every dollar spent. A total of 54% of projects awarded in fiscal
years 2008 to 2018 were located in areas with these air quality challenges.

10 To receive points under this criterion, vehicles or equipment proposed for funding must be operated a majority of the time in one or more of
the priority project locations based on designations for nonattainment areas or maintenance areas for the following National Ambient Air
Quality Standards (sourced from EPA"s Green Book of Nonattainment Areas for Criteria Pollutants) and National Air Toxics Assessment
(NATA).

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LOCAL DEMAND FOR THE DERA PROGRAM

Stakeholders have shown a tremendous amount of interest in EPA-
fiinded diesel emissions reduction projects. Ever since the inception of
DERA, funding request amounts have exceeded funding availability. In
fiscal years 2017 and 2018, grant and rebate applications requested $170
million more in funds than available from DERA appropriations. These
exceeded funding requests highlight the interest in using the DERA
program to meet the nation's need for diesel emissions reduction and
fleet turnover incentives.

The DERA grant program is designed to meet individual grantee needs
by providing flexibility on eligible diesel vehicles, engines, and
equipment allowing a grantee to target vehicle(s) or equipment that best
meets their needs and circumstances. EPA is committed to the long-
lasting engagement of local communities through unique diesel
emissions reduction projects that will be able to continue to provide
benefits after the project period has closed. Cost-effective, targeted to
disproportionately affected communities, and supported, the DERA
program continues to evolve with market and stakeholder demands.

TI-IE DERA OPTION IN THE VOLKSWAGEN SETTLEMENT

The U.S. government and Volkswagen (VW) resolved allegations that VW violated the Clean Air Act by
selling approximately 590,000 vehicles equipped with defeat devices. As part of this settlement, VW was
required to provide $2.7 billion for the 2.0-liter violating engines and $225 million for the 3.0-liter violating
engines to an environmental trust to fully remediate the amount of excess NOx emissions from the affected
vehicles. The two mitigation trust agreements (one for states, Puerto Rico, and the District of Columbia, and
one for federally recognized Indian tribes) are administered by an independent trustee. The purpose of the
mitigation trusts is to fund mitigation actions that replace diesel emission sources with cleaner technology,
thereby offsetting the excess emissions of NOx caused by the violating 2.0- and 3.0-liter vehicles. The trust
agreements, effective October 2, 2017, provided a broad array of ten Eligible Mitigation Actions (EMAs) that
beneficiaries (states, Puerto Rico. District of Columbia and Indian tribes) could implement. EMAs 1-9 may be
implemented directly by the beneficiary.

Environmental Mitigation Action 10, the Diesel Emission Reduction Act (DERA) Option, allows beneficiaries
to use mitigation trust funds under specific EPA DERA grants. Beneficiaries may use trust funds for their
nonfederal voluntary match, pursuant to Title VII, Subtitle G, Section 793 of the DERA program in the Energy
Policy Act of 2005 (codified at 42 U.S.C. §16133) or Section 792 (codified at 42 U.S.C. §16132). Starting in
fiscal year 2017, Tribes had the option to use their allocation of the VW Environmental Mitigation Trust funds
to match DERA Tribal grants. This allows beneficiaries to use such trust funds for actions not specifically
enumerated in the consent decree, but otherwise eligible under DERA pursuant to all DERA guidance
documents available through the EPA. Trust funds will not be used to meet the nonfederal mandatory cost
share requirements, as defined in applicable DERA program guidance, of any DERA grant. For more
information on the Volkswagen Settlement and the DERA option, visit Volkswagen (VW) Settlement: DERA
Option | US EPA.

Credit: FY17 National Program,
Georgia Ports Authority, Drayage
Truck Rebate Replacement

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THE DERA PROGRAM
2017 - 2018

$129 MILLION FUNDED ACROSS THE COUNTRY IN
FISCAL YEARS 2017 AND 2018 TO REPLACE OR
RETROFIT NEARLY 5,700 DIESEL ENGINES AND
VEHICLES, RESULTING IN EMISSIONS REDUCTIONS OF
OVER 17,500 TONS OF NOx AND 1,300 TONS OF PM.

The following four sections of this report
identify recent fiscal year 2017 and 2018
activities for the National grant program,
Tribal grant program, State grant program,
and School Bus rebate program. The 4th
Report to Congress provided detailed
activity data for fiscal years 2014, 2015, and 2016. The remaining sections of this report will focus on fiscal
years 2017, 201811, and beyond, as defined in the reporting requirements in the DERA statute.

In fiscal year 2017 and 2018, EPA funded approximately $129 million across the country via competitive
grants, state grants, and school bus rebates to replace or retrofit approximately 5,700 diesel engines and
vehicles. These grants and rebates fund equipment and engines in multiple sectors, including school buses,
ports, and freight, and covered a variety of upgrade types, including vehicle and engine replacements.

Vehicle and engine information, health benefits, and emissions and fuel reductions included in this report are
estimates. DERA grant and rebate recipients faced serious economic uncertainty at the start of the COVID-19
pandemic. To help accommodate this uncertainty, EPA offered extensions to open grants and rebates.
Approximately 85% of DERA diesel emission vehicle records for fiscal years 2017 and 2018 in this report are
considered 'proposed" records until the grant or rebate is closed and final vehicle data is submitted to EPA.
After closeout, 'proposed" records will be updated to "final' records to be included in future reports.12

EXHIBIT 8: DERA PROGRAM OUTCOMES
(FISCAL YEARS 2017 AND 2018)

Investment of DERA Program

Emission and Fuel Reductions



17,500 tons of NOx



$129 million funds awarded

1,300 tons of PM



84 national competitive grants
awarded

3,600 tons of carbon monoxide



11 tribal competitive grants
awarded

225,400 tons of carbon dioxide



53 of 56 eligible states and
territories were awarded grants

22 million gallons of diesel
saved



5,700 engines or vehicle
retrofitted or replaced

11	The Tribal grant program combined fiscal years 2018 and 2019 into a single grant competition, indicating that 2019 data is included
in the DERA program estimates in this report only for the Tribal grant program.

12	Program result specifics, like emissions reduction, vary depending on multiple variables, including legal changes, applicant request,
and other factors.

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Exhibit 8 specifies emission reductions and investment details of the DERA program for fiscal years 2017 and
2018. EPA estimates a reduction of 17,500 tons of NOx, 1,300 tons of PM, 1,000 tons of HC, 3,600 tons of
CO, 225,400 tons of CO2, and 22 million gallons of diesel fuel over the lifetime of the engines and vehicles
funded under fiscal years 2017 and 2018 of the DERA program. See Exhibit 7 for further identification of
vehicle and engine upgrades.

EXHIBIT 9: DERA PROJECTS: VEHICLE AND ENGINE UPGRADES

(FISCAL YEARS 2017 AND 2018)

TYPES BY QUANTITY

TYPES BY SECTOR

-

W)

a

P

Airport 0ther

Vehicle Replacement

Electrified Parking Space

Agriculture

Municipal

Idle Reduction
Technologies

o Engine Replacement
H

Other Emission Control
Device

Diesel Particulate Filter

1000 2000 3000 4000 5000
Quantity

Other includes construction, railyard, and transit sectors.

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DERA NATIONAL GRANTS

2017-2018

$74.9 MILLION FUNDED 84 NATIONAL GRANTS ACROSS
THE COUNTRY IN FISCAL YEARS 2017 AND 2018 TO
REPLACE OR RETROFIT NEARLY 3,000 DIESEL ENGINES
AND VEHICLES, RESULTING IN EMISSIONS REDUCTIONS
OF OVER 13,000 TONS OF NOx AND 1,100 TONS OF PM.

EPA's Office of Transportation and Air
Quality solicits applications nationwide
through the DERA National competitive
grant program for projects that achieve
significant reduction in diesel emissions.
DERA grants provide funding to eligible
recipients so that they may implement programs which incentivize and accelerate the upgrade or retirement of
the legacy diesel fleet. Eligible activities include the retrofit or replacement of existing diesel engines, vehicles,
and equipment with EPA and California Air Resources Board (CARB) certified engine configurations and
verified retrofit and idle reduction technologies. Aside from the National competitive program, DERA has two
other competitive funding opportunities: the DERA School Bus Rebates program, and the DERA Tribal grants
program, discussed later in this report. While replacing a school bus is one of many eligible activities under
the DERA National grant program, the DERA School Bus Rebates program provides funding only for school
bus vehicle replacements. Additionally, states are allocated appropriated DERA funding to implement projects
for fleets within their states and details are discussed later in this report.

Applications in the National and Tribal competitions are evaluated based on the extent to which they
demonstrate how the project effectively addresses the disproportionate and adverse cumulative impacts (human
health, environmental, climate-related and others) that have affected and/or currently affect
people/communities of color, low income, tribal, and indigenous populations, and, if applicable, other
vulnerable populations such as the elderly, children, and those with pre-existing medical conditions. Evaluation
criteria also considers the accompanying economic challenges of these impacts, including the lack of resources
or other impediments to addressing the
adverse impacts that these communities
and/or populations may experience.

Applicants must describe the extent to
which the project addresses engagement
with these communities and/or
populations, especially local residents, to
ensure their meaningful participation with
respect to the design, planning, and
performance of the project.

Priority for funding under this program is given to fleets operating in areas designated as having poor air quality
and fleets which service goods movement facilities. Further priority for funding is given to projects with
outcomes that benefit affected communities, those that engage affected communities in the design and
performance of the project, and those which demonstrate the ability to promote and continue efforts to reduce
emissions after the project has ended.

DER4 Funding by Program for Fiscal Year 2017 and 2018
DERA Program

Grants
Tribal Grants
State Grants
School Bus Rebates

DM 10 M 20 M 30 M 40M 50M 60M 70M
Awarded Funds $ (In millions)

Note: The table above is reflective of fiscal year 2017 and 2018 data for
the National DER4 grant program, in $ millions.

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DERA NATIONAL PROGRAM FISCAL YEAR 2017 ACTIVITIES

In fiscal year 2017, EPA awarded
$31.5 million on DERA national
program competitive grants.

In fiscal year 2017, a total of 91 applications were received
requesting over $86 million, more than twice the available funding.

EPA funded 38 national competitive grants to reduce emissions
from 800 diesel engines or pieces of equipment for a total of $31.5 million. The competitive program providec
grants for equipment and engines in multiple sectors, including school buses, ports, and freight, and covered a
variety of upgrade types, including vehicle and engine replacements.

I

EXHIBIT 10: DERA NATIONAL PROGRAM OUTCOMES

(FISCAL YEAR 2017)

Emission and Fuel Reductions	Investment of DERA Program

01

6,100 tons ofNOx

pj

500 tons of PM

N

1,600 tons of carbon monoxide



39,800 tons of carbon dioxide



4 million gallons of diesel saved

$31.5 million funds awarded

m
a

a

38 national competitive grants
awarded

800 engines or vehicle
retrofitted or replaced

87% of awards targeted to areas
with air quality challenges

Exhibit 10 specifies emission reductions and investment details of the DERA National program. EPA estimates
a reduction of 6,100 tons ofNOx, 500 tons of PM, 300 tons of HC, 1,600 tons of CO, 39,800 tons of CO2, and
4,000,000 gallons of diesel fuel over the lifetime of the engines and vehicles funded under the fiscal year 2017
National program. See Exhibit 7 for further identification of vehicle and engine upgrades.

EXHIBIT 11: DERA NATIONAL PROJECTS: VEHICLE AND ENGINE UPGRADES

(FISCAL YEAR 2017)

TYPES BY QUANTITY	TYPES BY SECTOR

Airport
4% Construction

Vehicle Replacement
Other

0>	1	1

C3

g Idle Reduction Technologies
Engine Replacement
Diesel Oxidation Catalyst

c.
P

St-

0

01

a.

H

Diesel Particulate Filter

0 100 200 300 400 500 600
Quantity

Freight

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DERA NATIONAL PROGRAM FISCAL YEAR 2018 ACTIVITIES

[

In fiscal year 2018, EPA awarded
$43.4 million on DERA national
program competitive grants.

In fiscal year 2018, a total of 84 applications were received requesting
approximately $96 million, more than twice the available funding. In
fiscal year 2018, EPA funded 46 national competitive grants to
reduce emissions from 2,100 diesel engines or pieces of equipment for a total of $43.4 million. The competitive
program provided grants for equipment and engines in multiple sectors, including school buses, ports, and
freight, and covered a variety of upgrade types, including vehicle and engine replacements.

EXHIBIT 12: DERA NATIONAL PROGRAM OUTCOMES

(FISCAL YEAR 2018)

Emission and Fuel Reductions

01

6,900 tons of NOx



600 tons of PM

1

1,000 tons of carbon monoxide



131,600 tons of carbon dioxide



13 million gallons of diesel saved

Investment of DERA Program

$43.4 million funds awarded

46 national competitive grants
awarded

2,100 engines or vehicle
retrofitted or replaced

87% of awards targeted to areas
with air quality challenges

Exhibit 12 specifies emission reductions and investment details of the DERA National program. EPA estimates
a reduction of 6,900 tons of NOx, 600 tons of PM, 500 tons of HC, 1,000 tons of CO, 131,600 tons of CO2,
and 13 million gallons of diesel fuel over the lifetime of the engines and vehicles funded under the fiscal year
2018 National program. See Exhibit 13 for further identification of vehicle and engine upgrades.

EXHIBIT 13: DERA NATIONAL PROJECTS: VEHICLE AND ENGINE UPGRADES

(FISCAL YEAR 2018)

TYPES BY QUANTITY

TYPES BY SECTOR

e3
•-

OX)

a.

o
a.
H

Vehicle Replacement

Electrified Parking Space

Idle Reduction
Technologies

Engine Replacement

Other Emission Control
Device

Diesel Particulate Filter

0 500 1000 1500
Quantity

Municipal

3%

Agriculture

5%

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During fiscal years 2017 and 2018, the DERA National program funded diverse projects in multiple sectors
and varied technology upgrade types. While the school bus and freight sectors together accounted for the
majority of vehicle and engine upgrades in both 2017 and 2018, airport, agriculture, construction, municipal,
and ports accounted for the remaining vehicle and engine upgrades.

MOVING FORWARD - NATIONAL GRANT PROGRAM

EPA continues to target DERA funds to maximize cost-effectiveness and make significant emissions
reductions in areas disproportionately exposed to diesel exhaust. The agency continues to target those engines
in the remaining fleet that have significant useful life left but are heavy emitters. These engines are often found
at ports and are used for goods movement. Each funding opportunity has been crafted to attract and fund the
most impactful projects, often in the goods movement sector. These projects may be in urban or rural areas.

For the national competitive program, demand from
applicants continues to exceed program resources.
During fiscal years 2017 and 2018, applications
submitted for the DERA national program totaled
$182 million, leaving more than $107 million
requested from applicants unfunded. The large amount
of interest in the program continues to show a demand
for older vehicle upgrades from various fleets, such as
transit buses, short haul/delivery trucks, refuse haulers,
locomotives, agriculture, construction, city/county
vehicles, school buses, marine, ports and airports, and
long-haul trucks.

Credit: FY17 National Program, Georgia Ports
Authority, Drayage Truck Rebate Replacement

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CASE STUDY 1

NATIONAL GRANT PROGRAM - FISCAL YEAR 2017

New Hampshire Department of Transportation (NHDOT)
Offroad and Construction Equipment Replacements

The New Hampshire Department of Transportation (NHDOT) used
$560,310 from a 2017 DERA National grant to replace old diesel
equipment used for roadway maintenance. NHDOT replaced an
engine model year 1998 roadway grader with a new Tier 4 John Deere
Grader. NHDOT also replaced 18 engine model year 1998-2006 diesel
front-end loaders with 18 new Tier 4 John Deere loaders that are used
for moving material around the maintenance patrol yards, assisting in
operation's construction projects, and loading winter highway
maintenance material such as salt and sand into the spreader trucks.
The vehicles operate year-round throughout the State of New
Hampshire.

NHDOT employs an anti-idling policy that has been in effect since
December 2007. All the Departments heavy trucks are set up from the
factory with a programmed maximum idle time before the engine shuts
down, except for some vehicles such as aerial, cranes, or other trucks,
where it is necessary to continue to run. Additionally, all operators of
NHDOT vehicles are encouraged to shut off their equipment when not
in production mode unless they are operating under certain conditions
that require the vehicle to remain on.

NHDOT consistently operates within a shortfall of funding
appropriations so the equipment would not have been replaced without
the funding provided. The total cost-share from NHDOT was
$1,959,145.

REGION 1

NEW HAMPSHIRE

FRONT-END
LOADERS

ROADWAY GRADER

ANTI-IDLING POLICY

Credit: FY17 National Program, New Hampshire Department of Transportation, Offroad and Construction
Equipment Replacements

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CASE STUDY 2

NATIONAL GRANT PROGRAM - FISCAL YEAR 2017	REGION 5

Moving Towards Electric for Sustainable and Resilient Supply
Chains

The American Lung Association (ALA) recently completed a project in
partnership with Waste Management and Firefly Transportation
Services, LLC13 to reduce harmful diesel emissions in the Cleveland and
Columbus, Ohio areas. Funding for this project was awarded to the ALA
by EPA through the 2017 DERA National grants program. This project
included the replacement of seven old diesel refuse haulers with new
CNG refuse haulers for Waste Management in Geauga County, Ohio,
and the replacement of three old diesel terminal /trucks with zero
emission electric terminal tractors for Firefly at the Kraft Heinz
distribution center in Franklin County, Ohio. Firefly will operate three
Orange EV pure electric terminal trucks to do work formerly
accomplished by five diesel trucks. With this deployment, Kraft Heinz
plans to virtually eliminate diesel terminal truck emissions at their
distribution center.

"This decision by Kraft Heinz demonstrates thoughtful mitigation of the
extremely high operational, economic, and environmental costs of using
diesel trucks," said Mike Saxton, Orange EV chief commercial officer.

"With this deployment, Kraft Heinz becomes the first site in Ohio to
fully commit to pure electric in their heavy duty, Class 8 terminal truck
fleet."

OHIO

ELECTRIC
TERMINAL
TRACTOR

WASTE
MANAGEMENT

SUSTAIN ABILITY

Credit: FY 17 National Program, American Lung
Association, Moving Towards Electric for
Sustainable and Resilient Supply Chains

13 Firefly's operation at the Kraft Heinz location has recently been acquired by Lazer Spot, INC, a logistics company that shares
Firefly 's commitment to creating a more sustainable and resilient supply chain for its business by opting for electric over diesel engines.

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DERA TRIBAL GRANTS

2017-2019

$4.2 MILLION FUNDED 11 TRIBAL GRANTS IN MULTIPLE
STATES IN FISCAL YEARS 2017 TO 2019 TO REPLACE OR
RETROFIT 37 DIESEL ENGINES AND VEHICLES.
RESULTING IN EMISSION REDUCTIONS OF OVER 70
TONS OF NO < AND 6 TONS OF PM.

Competitive grants for tribal governments
(including intertribal consortia) and
Alaska Native Villages, which have
jurisdiction over transportation or air
quality, fund a wide variety of diesel
emissions reduction projects. A priority for the DERA program is to work with Tribes to reduce diesel
emissions. The United States maintains a government-to-government relationship with the 574 federally
recognized Native American Indian tribes and Alaska Native entities.14

During fiscal years 2009 through 2013, Tribal funding
was offered as a "set-aside" within the framework of the
National grant program. Recognizing that tribes may
have various administrative, technical, and financial
considerations that national applicants may not, EPA
began a separate competition for tribes in 2014 to address
the unique needs and concerns of tribal grantees. In fiscal
year 2017 to 2019, a total of 12 applications were
received requesting more than $4 million. During fiscal
years 2017 to 2019, EPA funded 11 DERA Tribal grants
in Alaska, California, and Washington to reduce
emissions from 3 7 diesel engines or pieces of equipment
for a total of $4.2 million. Funding for fiscal years 2018
and 2019 were combined in the same grant cycle.

Credit: EPA; Chignik Bay, Alaska, 2021

Starting in fiscal year 2017, Tribes had the option
to use their allocation of the VW Environmental
Mitigation Trust funds to match their DERA
Tribal grants. Tribes opting to use some or all of
their allocation of Volkswagen trust funds for the
available "DERA Option" have had a broader list
of diesel emission reduction projects to choose
from than are available under the other nine
eligible mitigation actions under the VW
Environmental Mitigation Trust (see Volkswagen
(VW) Settlement: DERA Option for more
information).

DERA Funding by Program for Fiscal Year 2017 and 2018*

DERA Program

National Grants
Tribal Grants ~

State Grants
School Bus Rebates

OM 10 M 20M 30 M 40M 5QM GOM 70M
Awarded Funds $ (in millions)

Note: The table above is reflective of fiscal year 2017 and 2018
data for the DERA grant program, in $ millions. *Tribal grants
include 2019 funding, as fiscal years 2018 and 2019 were
combined into a single RFA, defined further in this section.

14 https://wrww.doi.gov/international/what-we-do/tribes

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The DERA Tribal grant program funds equipment and engines in multiple sectors, including power generation,
ports, and freight, and covered a variety of upgrade types, including vehicle and engine replacements.

EXHIBIT 14: DERA TRIBAL PROGRAM OUTCOMES
(FISCAL YEARS 2017 TO 2019)

Emission and Fuel Reductions

70 tons ofNOx



6 tons of PM

M

10 tons of carbon monoxide

• I

5,100 tons of carbon dioxide

I

500,000 gallons of diesel saved

Investment of DERA Program

($]

$4.2 million funds awarded

lei

11 tribal competitive grants
awarded

N

37 engines or vehicle retrofitted or
replaced

MS

Note: Fiscal years 2018 and 2019
were combined

Exhibit 14 specifies emission reductions and investment details of the DERA National program. EPA estimates
a reduction of 70 tons ofNOx, 6 tons of PM, four tons of HC, 10 tons of CO, 5,100 tons of CO2, and 500,000
gallons of diesel fuel over the lifetime of the engines and vehicles funded under the tribal program for fiscal
years 2017 to 2019. See Exhibit 15 for further identification of vehicle and engine upgrades. The largest
upgrade sector for the tribal program was port, which included auxiliary and propulsion engine replacements,
while the second largest sector, industrial, was comprised of stational generators.

EXHIBIT 15: DERA TRIBAL PROJECTS: VEHICLE AND ENGINE UPGRADES

(FISCAL YEARS 2017 TO 2019)

TYPES BY QUANTITY	TYPES BY SECTOR

Municipal School Bus

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MOVING FORWARD - TRIBAL GRANTS

EPA appreciates stakeholder feedback, which has largely supported stand-alone Request for Applications
(RFAs) for tribes. Based on stakeholder input, EPA made two major changes in 2021 to the Tribal grants
program. The first change was to waive the mandatory cost share requirement for the Tribal grants program,
which makes DERA funding more accessible to applicants that face severe financial constraints. The second
change allowed DERA to offer a separate funding opportunity for the U.S. territories of Guam, U.S. Virgin
Islands, the Northern Mariana Islands, and American Samoa to encourage their participation in the DERA
grant program. To that end, EPA offered the first DERA Tribal and Insular Area RFA in 2021.

EPA limits eligibility under the Tribal RFA to allow eligible entities to compete for DERA grant funds and
implement diesel emissions reduction projects. The following variations from the National program encourage
competition from tribal and insular areas: 1) longer application period; 2) less stringent eligibility requirements
for vehicles and equipment; and 3) no mandatory cost shares. Although funds are competed under a single
RFA, Tribal applicants only compete against Tribal applicants, and insular areas only compete against other
insular area applicants. EPA is committed to strengthening partnerships with Tribal communities and insular
areas. Contingent upon future appropriations and Congressional direction, EPA plans to continue to offer a
stand-alone RFA for Tribes and insular areas with targeted outreach.

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CASE STUDY 3

TRIBAL GRANT PROGRAM - FISCAL YEAR 2017

Chalkyitsik Village Diesel Generator Replacement

Chalkyitsik Village Council operates a small community powerhouse
that supplies power to the entire community of Chalkyitsik. The
community is located north of the Arctic Circle and the powerhouse
provides prime power for all residents, the community airport, clinic, and
school; it is a vital piece of local infrastructure.

The powerhouse has three (3) generators, two (2) of which were older
Tier I and Tier 0 generators. The diesel generators run a combined 8,760
hours per year and are located within 100 yards of the Chalkyitsik School.
This project replaced the two Tier 0 generators with marine jacketed Tier
3 diesel generators that are significantly cleaner and operate more
efficiently. In addition to the electricity produced from the generators, the
marine jackets send heat to a heat loop, which then heats the nearby
school. According to the power plant operator and school maintenance
manager, the school's fuel usage dropped by about 50% since the new
engines were installed. Anecdotally, the project is seen as a great success
in the eyes of both the school and the community. This project also
highlights an example of a successful environmental justice initiative, as
it achieved significant emissions reduction and improved air quality and
public health in an underserved Tribal community.

As a result, both Beaver and Stevens Village (downriver from
Chalkyitsik) expressed interest in completing diesel generator upgrades
and applied for both VW Settlement funds and EPA Tribal DERA funds
to complete similar projects led by Tanana Chiefs Conference. They both
received funding through the fiscal year 2017 Tribal DERA solicitation.

REGION 10

ALASKA

DIESEL
GENERATORS

SCHOOL HEAT

GENERATOR
ELECTRICITY

Old Tier 0 Diesel Generator

New Tier 3 Diesel Generators

New Generators

Credit: FY 17 Tribal Program, Chalkyitsik Village Council, Diesel Generator Replacement

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DERA STATE GRANTS

2017-2018

The DERA legislation requires EPA to
offer 30% of the annual appropriation to
states and territories to implement their
own diesel emissions reduction programs.
Eligible entities include government
agencies in the fifty states, the District of
Columbia, Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands. Per the DERA
statute, EPA offers states and territories a base funding amount. If the state or territory matches this amount
dollar-for-dollar, EPA offers additional DERA funds equal to 50% of the base amount. Agencies run their own
programs to implement projects and offer funding to fleets within their states. State agencies must select
projects according to EPA's eligibility and cost-share requirements, but the selections are made entirely by the
states to best fit state and local needs.

The principal objective of funding assistance to be awarded under the state program is to achieve significant
reductions in diesel emissions in terms of tons of pollution produced and reductions in diesel emissions
exposure from vehicles, engines, and equipment operating in areas designated as poor air quality areas. Each
state's workplan must discuss how the state will ensure that projects selected for funding support the
programmatic priorities listed in the DERA state grants program guide. In total, states and territories received
$33.8 million in fiscal year 2017 and 2018 funds.15 EPA awarded grants to 53 of 56 eligible states and
territories in fiscal years 2017 and 2018 to fund projects highlighted below.

Starting in fiscal year 2017, states had the option 1
Trust funds to match their DERA State grants.

While these funds cannot cover the mandatory
cost-shares for DERA projects, states opting to
use some or all of their allocation of Volkswagen
trust funds for the available "DERA Option" have
had a broader list of diesel emission reduction
projects to choose from than are available under
the other nine eligible mitigation actions under the
VW Environmental Mitigation Trust (see
Volkswagen (VW) Settlement: DERA Option for
more information).

$33.8 MILLION FUNDED GRANTS IN 53 OF 56 ELIGIBLE
STATES AND TERRITORIES IN FISCAL YEARS 2017 AND
2018 TO REPLACE OR RETROFIT OVER 1,600 DIESEL
ENGINES AND VEHICLES, RESULTING IN EMISSION
REDUCTIONS OF OVER 4,000 TONS OF NOx AND 200
TONS OF PM.

to use their allocation of the VW Environmental Mitigation

DER4 Funding by Program for Fiscal Year 2017 and 2018

DERA Program

National Grants
Tribal Grants
State Grants
School Bus Rebates

OM 10 M 20 M 30M 40M 50M 60M 70M
Awarded Funds $ (in millions)

Note: The table above is reflective of fiscal year 2017 and 2018
data for the DERA grant program, in $ millions.

15 Fiscal year 2017 and 2018 state grant results are combined because fiscal year 2018 funds were awarded as a supplemental
amendment and extension to the fiscal year 2017 grant awards.

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Page | 26

EXHIBIT 16: DERA STATE PROGRAM OUTCOMES
(FISCAL YEAR 2017 AND 2018)

Emission and Fuel Reductions

—y

4,000 tons of NOx

V

200 tons of PM

800 tons of carbon monoxide

48,900 tons of carbon dioxide

5 million gallons of diesel
saved

Exhibit 16 specifies emission reductions and investaients details of the DERA State program. EPA estimates a
reduction of 4,000 tons of NOx, 200 tons of PM, 300 tons of HC, 800 tons of CO, 48,900 tons of CO2, and 5 million
gallons of diesel fuel over the lifetime of the engines and vehicles funded under the state program during fiscal years
2017 and 2018. See Exhibit 17 for further identification of vehicle and engine upgrades.

EXHIBIT 17: DERA STATE PROJECTS: VEHICLE AND ENGINE UPGRADES

(FISCAL YEAR 2017 AND 2018)

TYPES BY QUANTITY

Vehicle Replacement 	|

Engine Replacement
Diesel Particulate Filter

Idle Reduction Technologies |

Other Emission Control
Device

0 500 1000 1500
QUANTITY

MOVING FORWARD - STATE GRANTS

The DERA State program continues to be popular in diverse sections and regions. Between 2019 and 2020,
55 out of 56 states and territories requested funding to pursue their own diesel emission reduction programs.
EPA continues to respond to feedback from the states and territories in the program.

Investment of DERA Program

c

JD)

$33.8 million funds awarded

IT"/7

Grants awarded to 53 of 56
eligible grants and territories

~~~q

1©—©j

1,600 engines or vehicle
retrofitted or replaced

TYPES BY SECTOR

Construction or Transit Agriculture Freight

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Page j 27

CASE STUDY 4

STATE GRANT PROGRAM - FISCAL YEAR 2017-2018

School Bus and Public Works Vehicle Replacements from a DERA
State Grant and Volkswagen (VW) Funds

The Nevada Division of Environmental Protection (NDEP) created a
school bus and public works vehicle replacement project. This project
was implemented using 1) over $760,000 in 2017-2018 DERA State
grant funding, 2) nearly $507,000 in matching funds from Nevada
Division of Environmental Protection (NDEP) and the Volkswagen
Environmental Mitigation Trust, and 3) more than $3.8 million in cost-
share funds from participating fleet partners: Clark County School
Distnct and the City of Reno Public Works Department.

NDEP and its partners replaced 23 older diesel school buses and five
older diesel public works vehicles with new diesel vehicles that are more
fuel efficient and significantly reduce harmful emissions because of their
modern emission control systems.

REGION 7

NEVADA

SCHOOL BUS
REPLACEMENT

PUBLIC WORKS

VEHICLE
REPLACEMENT

Caption: The photos above represent the diverse vehicle upgrades under this grant including the replacement
of school buses and public works vehicles. The top left is an old school bus being scrapped. The remaining
three photos represent new Reno Public Works Department trucks.

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DERA SCHOOL BUS
REBATE PROGRAM

2017-2018

The Diesel Emissions Reduction Act of

$16.1 MILLION FUNDED 820 SCHOOL BUS VEHICLE	• , • ,	,	, ,

2010, signed in January 2011, provided

RETROFITS OR REPLACEMENTS IN FISCAL YEARS 2017 cnA ,, +, .+ .	, , . .

EPA with the authority to award rebates, in
AND 2018, RESULTING IN EMISSION REDUCTIONS OF ,JV.	" . ,	,

addition to grants. Rebates may be
OVER 400 TONS OF NOx AND 40 TONS OF PM.	, , ... . . .

awarded to public institutions, some non-
profit organizations, and private entities that have a license, lease, or contract with an eligible public
organization. The School Bus Rebate Program was the first-ever rebate program within EPA.

Rebates and grants differ in a variety of ways. One distinction is the simplified one-page rebate application
compared to the more complex grant application process. The amount of the rebates is specified up-front, and
selections are made using a lottery process. Once the selected applicant has completed all required work and
submitted all documentation, they are reimbursed with the rebate funds. The simple rebate process allows EPA
to ran each rebate funding opportunity in a short timeline, with the timespan between the application deadline
and disbursement of funds typically as less than one year.

School buses collectively travel over four billion miles each
year, providing the safest transportation to and from school
for more than 25,000,000 American children every day.

However, despite how otherwise safe school bus travel is,
diesel exhaust from these buses has a negative impact on
human health. Children are particularly vulnerable to the
negative impacts of diesel exhaust, as they generally have
faster breathing rates than adults and their lungs are not yet
fully developed. EPA designed this rebate program to
encourage school bus fleet turnover so more children can ride
buses meeting the cleanest emissions standards. These new €redit: Eric V EPA Photographer, Idaho
buses can reduce pollution like NOx and PM by over 90%,

compared to older diesel buses. This results in cleaner air on the bus, in bus loading areas, and throughout the
communities in which they operate.

School buses play cm integral role in reducing emissions and improving public health of
children, a high priority in the DERA program.

EPA has a long and successful history implementing diesel emissions reduction projects in the school bus
sector. Ever since the inaugural year for the School Bus Rebate Program in fiscal year 2012, school bus fleets
have showed overwhelming interest in participating in the program. Since then, EPA has adapted the program
to offer more funding for school bus replacements as appropriation funding is available. These funding

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opportunities are targeted at school bus fleet owners who are seeking to replace their existing pre-2007 engine
model year diesel buses with new school buses that utilize modern exhaust control technologies. Eligible
replacement school buses may operate on ultra-low sulfur diesel, battery, or alternative fuels, like propane or
compressed natural gas. Health benefits are achieved by scrapping the old buses and replacing them with
cleaner ones.

During fiscal year 2017 and fiscal year 2018, EPA received over 900
school bus rebate applications that requested $80 million dollars in rebate
funds. In total, EPA awarded $16.1 million in rebates for 244 fleets to
replace 820 school buses under the DERA school bus rebate program. EPA
estimates a reduction of 400 tons of NOx, 40 tons of PM, 70 tons of HC,

200 tons of CO, and 1 ton of CO2 over the lifetime of the engines and
vehicles funded under the DERA School Bus Rebate Program for fiscal years 2017 and 2018.

EXHIBIT 18: DERA SCHOOL BUS REBATE PROGRAM OUTCOMES

(FISCAL YEAR 2017 AND 2018)

In fiscal years 2017 and 2018,
EPA awarded $16.1 million
through the School Bus
Rebate program to fund 820
school buses.

Emission and Fuel Reductions

O]

400 tons of NOx

Pi

40 tons of PM

; 1

200 tons of carbon monoxide

'M

1 ton of carbon dioxide

Investment of DERA Program

c

JK

$16.1 million funds awarded

P7

244 fleets awarded funding

~~~Q
0—©J

820 vehicles retrofitted or
replaced

MOVING FORWARD - REBATES

Rebates for school bus replacements continue to be one of the most popular projects funded under DERA.
Since 2018, EPA has seen more interest from applicants in replacing their old diesel buses with alternative
fueled buses, like propane. In the 2019 School Bus Rebate Program, EPA funded the first zero-emission
battery-electric school bus replacement in the program. To better accommodate cleaner zero-emission and
alternative fueled buses that have higher up-front costs, EPA revised the rebate compensation for fiscal year
2020 to offer four rebate amounts for school buses between $20,000 to $65,000. Instead of basing the rebate
amount on bus size, the rebate amount is now based on the fuel type of the replacement bus, with zero-emission
vehicles receiving the highest possible rebate amount. As a result, EPA will now be funding more electric
buses in fiscal year 2020 rebate program than in all other years combined. These rebates make a visible impact
in communities across the country by providing children with healthier rides to school.

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CASE STUDY 5

SCHOOL BUS REBATE PROGRAM - FISCAL YEAR 2018

REGION 3

MARYLAND

SCHOOL BUS
REPLACEMENT

SCHOOL DIESEL
EMISSIONS

MODERN EMISSION
CONTROLS

Frederick County Public Schools Rebate Project

Frederick County Public Schools (FCPS) in Maryland received funds
in the 2018 DERA School Bus Rebate program. The $200,000 awarded
through this program helped the school purchase 10 new diesel school
buses, equipped with modern emission controls, that are much cleaner
for the community and the students of FCPS. Following the guidelines
of the program, FCPS scrapped the 10 buses that were replaced. By
scrapping these buses, FCPS was able to ensure the older, dirty buses
would not be placed back into use, where they could pollute other
communities.

Credit: FY 18, Frederick County Public Schools, Purchased 10 New
Diesel School Buses

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DERA FUNDING AT PORTS

Ports play a significant role in the nation's transportation system and goods movement supply chain. Many
ports are located near low-income populations and communities of color, which are often disproportionately
impacted by diesel emissions associated with port activities. Ships, harbor craft, cargo handling equipment,
drayage trucks, and locomotives can be significant contributors to diesel pollution at ports. Port authorities,
terminal operators, fleet owners, drayage truckers, and rail operators all have a role in reducing diesel emissions
at ports and nearby communities where millions of people live and work. Reducing exposure to diesel exhaust
in and near ports is key for public health and the environment.

Port projects, as discussed here,
refer to projects occurring in
places alongside navigable
water with facilities for the
loading and unloading of
passengers and/or cargo from
ships, ferries, and other vessels.

DERA grants have also been
awarded for projects taking
place at inland ports, railyards,
and other goods movement
facilities. Since 2008, fleets at
coastal and inland water ports
have been a priority for DERA
funding with nearly $143 million (including over $30 million from ARRA) going to ports projects from fiscal
years 2008 to 2018. An additional 74 grants have been awarded through DERA to multi-sector projects that
involve ports (note that only a portion of the $79 million of funds for these projects goes to the port sector). In
fiscal year 2013, EPA set aside $4 million for the first year of a stand-alone Ports DERA RFA. In fiscal year
2014, EPA issued a second stand-alone Ports RFA and received 15 applications requesting over $15 million
in funding. EPA awarded $5 million for four projects that replaced drayage trucks, retrofitted cargo handling
equipment, replaced a diesel crane with an electric crane, and replaced ferry engines. Eligible entities included
public port authorities at coastal or inland water ports. EPA awarded points to applicants that partnered with
community groups and encouraged partnerships with local governments, terminal operators, shipping carriers,
and other business entities involved in port operations.

In subsequent years, EPA did not issue a stand-alone ports RFA to reduce the burden associated with multiple
grant opportunities. Instead, ports and goods movement were prioritized in the DERA National grant program
by awarding additional points for ports and goods movement projects. EPA funded over $24 million in DERA
awards to ports projects under the National, Tribal, and State grant programs in fiscal years 2017 and 2018. A
full list of port sector DERA grants from fiscal year 2008 to 2018 is available at https://www.epa.gov/ports-
initiative/overview-dera-grants-awarded-port-proi ects.

Shore Power

One strategy to reduce emissions at ports is shore power. Shore power
technology allows marine vessels to plug into the local electricity grid
while at-dock. While connected to shore power, auxiliary systems (such
as lighting, air conditioning, and crew berths) source energy from the
local electrical grid. Since these auxiliary systems would otherwise be
powered by diesel engines, engines that utilize shore power typically
produce zero onsite emissions. In 2017, EPA published the Shore Power
Technology! Assessment at U.S. Ports that included a calculator for ports
to estimate emission reductions from shore power installations. For
more information on shore power, the Shore Power Technology
Assessment, and the Shore Power Emissions Calculator, visit
https://www.epa.gov/ports-initiative/shore-power-technology-
assessment-us-ports.

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The figure below shows an overview of DERA funding by year for port projects (multi-sector projects
including the port sector are excluded from this depiction). This figure displays DERA grants awarded through
all programs including National, Tribal, Ports, Emerging Technologies and American Recovery and
Reinvestment Act (ARRA) programs as well as allocations to states. Port projects have been eligible under all
DERA grant programs since 2008, and a separate DERA Ports solicitation was offered in 2013 and 2014.

EXHIBIT 19: DERA GRANT FUNDS AWARDED TO PORT PROJECTS
NATIONAL, TRIBAL, AND STATE DERA PROGRAMS
(FISCAL YEARS 2008 TO 2018)

$30.7M

$30,000,000

$20,000,000

$10,000,000

$0

$15.2M

Program

ARRA Emerging

Technologies

ARRA National

Emerging

Technologies

National

Ports

State

Tribal

2008 ARRA 2009-2010 2011 2012 2013 2014 2015 2016 2017 2018

Note: Data in this figure are considered proposed until the grant is closed, and final data is submitted to EPA.
Final award amounts and project descriptions may change as grants are implemented and completed. Multi-
year awards are shown in this figure by the first fiscal year of the grant. Open grants from the State program
and all multi-sector grants that include the port sector are excluded from this figure because funding amounts
by sector are not readily available for these grants.

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MOVING FORWARD - PORTS

DERA funding has been instrumental in supporting emissions reduction through ports-related diesel emissions
reduction projects. EPA anticipates that DERA will continue to prioritize diesel emissions reduction at ports
and other freight distribution centers to complement the work being done by the port industry, communities,
and all levels of government to improve air quality at ports. Further priority is given to projects whose leaders
engage and partner with affected communities with environmental justice concerns to directly address those
needs and concerns and where the applicant or their partner(s) have or commit to creating a policy or process
to engage communities on operations and projects that impact air quality beyond the specific DERA project.
EPA encourages prospective DERA grant applicants to take advantage of a series of community-port
collaboration materials16, published by EPA's Ports Initiative, including case studies on four community-port
collaboration pilot projects that took place in Seattle, New Orleans, Savannah, and Providence17.

EPA's Ports Initiative works in tandem with the DERA program to address diesel emissions at ports. In
partnership with port stakeholders, EPA's Ports Initiative provides tools and assistance to help accelerate
adoption of cleaner technologies, clean air planning practices such as emissions inventories, and community

engagement to address diesel emissions at ports
across the country. Informed by the 2016
V f	recommendations from the Clean Air Act Advisor.

Credit: EPA Region 4; Dale Aspv, Port Everglades,
Broward County, Florida; 2015

Committee, the program has developed a number
of resources including updated )ort emissions
inventory guidance, emissions reduction strategy
assessments such as the National Port Strategy
Assessment, an interactive map highlighting clean
air practices being implemented at some of the
busiest ports across the U.S., and tools to promote
community-port collaboration for more effective
planning.

16 For more information, please visit: https://www.epa.gov/communitv-port-collaboration/communitv-port-collaboration-toolkit. 17
For more information, please visit: https://www.epa.gov/ports-initiative/case-studies-improving-environmental-perfonnance-
and-economiic-prosperity-ports-and.

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CASE STUDY 6

PORT PROJECT - NATIONAL PROGRAM

Virginia Port Authority Terminal Optimization Via Diesel with
Hybrid Straddle Carriers

Under the 2017 DERA National grants, the Port of Virginia (POV)
Virginia Port Authority replaced nine diesel straddle carriers at Norfolk
International Terminals (NIT) with nine new hybrid shuttle carriers. This
project supports a terminal optimization at the southern portion of NIT,
moving from a predominately diesel-powered operation to an electrified
operation supported by hybrid cargo handling equipment.

The hybrid shuttle carriers were purchased from Kalmar USA, Inc. for a
total of $8,136,000. The $2,000,000 in grant funding received under the
DERA program accounted for slightly less than 25% of the purchase
price. The port provided $6,136,000 in matching funds. This project
builds upon the previous deployment of hybrid shuttle carriers at the
port's tenninal in Portsmouth, Virginia - Virginia International Gateway
(VIG) Port of Virginia. In 2014, the port successfully deployed three
hybrid shuttle carriers at VIG with the assistance of DERA grant funding
that resulted in NOx and PM reductions of over 95 percent from older
diesel shuttle carriers. The success measured during this demonstration
and of hybrid technology has further solidified the port's commitment to
providing an efficient level of service in a more environmentally
sustainable manner

This project also supports POV sustamability efforts in demonstrating
and advancing the use of hybrid, electric, capacitor, and other clean
fuel/energy technologies. This is another example of projects involving
a partnership between the Virginia Port Authority and the EPA.

Credit: FY17 National Program Port Project, Port of Virginia,
Terminal Optimization Via Diesel with Hybrid Straddle Carriers

VIRGINIA

HYBRID STRADLE
CARRIERS

CLEAN ENERGY
TECHNOLOGIES

PORT TERMINAL

SUSTAIN ABILITY
COMMITTMENTS

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CASE STUDY 7

PORT PROJECT - NATIONAL PROGRAM

REGION 4

ALABAMA

BATTERY-ELECTRIC
FERRY

DIESEL EMISSIONS
REDUCTION

Gees Bend Ferry Converted from Diesel to Electric Power in
Alabama

The Alabama Department of Transportation received a $1 million 2016
DERA National grant to convert the Gees Bend Ferry from diesel power
to battery-electric power. The ferry connects the community of Gees
Bend, which is surrounded by the Alabama River on three sides, with
the county seat of Camden. This ferry is historically significant due to
the area's involvement in civil nghts. In 2012, the U. S. Census Bureau
listed Wilcox County as having the lowest median household income in
the nation at $22,126. The seven hundred or so residents of this small,
rural community are mostly descendants of enslaved people. Prior to the
current ferry service, there were only two ways for the residents of Gees
Bend to get to Camden. One way was to drive approximately 40 miles
to cross the river and the other way was to take a cable operated ferry
several hundred yards across the river. That fern stopped operating in
1962, and reduced access for Gees Bend citizens to get to Camden. In
the 1990s, Congress allocated funding to pay for a ferry service and its
operating costs. However, due to a variety of issues diesel ferry service
did not begin until 2006. Now, the successful electrification of this ferry
enabled passengers on the ferry to journey between the two communities
without being exposed to diesel emissions. The project also served to
reduce diesel emissions in the area as the ferry no longer must idle its
engines between crossings.

Gees Bend Ferry Under Battery-Electric Power

Credit: FY 16 National Program Port Project, Alabama Department of Transportation, Historic Gees Bend Ferry
Converted from Diesel to Electric Power

Gees Bend Ferry Prior to Diesel Engine Replacement

lEE Hi

CWIDEN, U

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CONTINUOUS
IMPROVEMENT IN THE
DERA PROGRAM

STRONG FISCAL STEWARDSHIP

The DERA program is committed to continuously strengthening the management and oversight of the program.
Following recommendations from the U.S. EPA's Office of Inspector General's 2014 report, the program
revised methodologies for emissions reporting, offered yearly project officer and grantee training, created
technical guidance related to DERA-specific assistance agreement management, and continued baseline and
advanced monitoring on the DERA program.

EPA staff conducted site visits to ensure that the new buses are in use and available, and between 2018 and
2019, a third-party audit was conducted for the school bus rebate program. The audit contract completed site
visits for 40 rebate selectees in 15 states. A total of 175 out of 176 replacement buses were verified to be on
site. The only absent bus was later verified to have been on a field trip at the time of the site visit. The program
continuously monitors success and lessons learned from the program and welcomes feedback from potential
beneficiaries through the DERA website, helplines, regional collaboratives. conferences, and webinars.

IMPROVEMENTS TO EMISSIONS CALCULATIONS

DERA has continually updated its web-
based emissions reduction calculator, the
Diesel Emissions Quantifier (DEQ), to
improve the accuracy of its emissions
reduction estimates. These updates include
emission factors based on EPA's MOVES
model. Due to changes in demand for
retrofits, improvements to our emissions
calculator, and reduction in the pool of the
oldest, dirtiest legacy diesel vehicles over
time, the cost per ton of emissions reduction
of the DERA program has increased
slightly. However, even with these changes,
DERA remains a highly cost-effective
program for reducing harmful emissions.

Credit: FY 18, National Program, Fulton County Schools, Propane-
Powered School Bus Expansion Project

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DERA EVOLVES WITH TECHNOLOGY IMPROVEMENTS

The DERA program has continuously been responsive to changes in technology and applicant interest in
adopting new technology. The most common projects in the early years of DERA were diesel exhaust retrofits
like diesel particular filters (DPF) and diesel oxidation catalysts (DOC). While DERA continues to offer
financial support for these highly cost-effective projects, applicant interest has shifted more towards vehicle
replacements that meet current EPA emission standards. New alternative fuel and battery-electric vehicles can
easily outperform those EPA emission standards, but the equipment often has higher up-front costs. In response
to the increased availability and applicant interest in these technologies, DERA has increased its funding cost-
shares for both alternative fuel vehicles meeting California Air Resource Board's optional low-NOx emission
standards and zero emission vehicles. DERA will continue to monitor and incorporate advancements in cleaner
medium- and heavy-duty equipment to ensure that applicants can benefit from these new technologies.

WORKING TOWARD ENVIRONMENTAL JUSTICE	

Beyond technology improvements to the program, DERA continuously seeks to improve sustainability
opportunities and environmental justice impacts.

•	First, the mandatory cost share requirement can limit applicants with severe financial or resource
constraints. EPA made the decision to waive the cost share requirement for the Tribal grants program
to make DERA funding more accessible. In addition, DERA offers a separate funding opportunity
under the tribal competition for insular areas to encourage participation.

•	Second, community engagement is vital to sustainability of a successful DERA project. EPA added
sustainability criteria to the RFA evaluation to award points to projects that have committed to
community engagement and the extent to which the project addresses engagement with these
communities and/or populations, especially local residents, to ensure their meaningful participation
with respect to the design, planning, and performance of the project.

EPA prioritizes environmental justice and diesel emissions reduction projects that provide immediate health
and environmental benefits and target areas of greatest need. The DERA legislation emphasizes maximizing
health benefits, serving areas of poor air quality, and reducing diesel fuel. DERA funding has accelerated
upgrades and replacements for diesel vehicles and equipment, improving the public and private diesel fleets
that are critical to the economy.

COVID-19: DERA grant and rebate recipients faced serious economic uncertainty at the start of the COVID-
19 pandemic. To help accommodate this uncertainty, EPA offered one-year extensions to open grants and
rebates. This allowed DERA funding recipients time to assess their ability to continue with the grant or rebate,
adjust, and complete their projects and achieve the emissions reduction.

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LOOKING AHEAD FOR THE
DERA PROGRAM

Even with implementation of EPA's stringent standards for new on-highway and nonroad engines, EPA
estimates that millions of engines from the legacy fleet will remain in use by the end of the decade in 2030.
These engines will continue to affect the environment and public health. Some of these engines will be decades
old, pre-dating modern engine technology, yet still in use. In fact, EPA estimates that in 2023, mobile sources
will still make up about 48% of total NOx sources, with the legacy fleet contributing 15% of mobile source
NOx emissions. In addition, mobile sources will represent about 3% of the direct PM emissions, with the
legacy fleet contributing approximately 21% of the direct PM emissions from mobile sources in the year
2023.18 The DERA program is designed to target retrofit, removal, and replacement of these remaining engines
of the legacy fleet to protect public health and the environment.

DERA is not alone in the effort to clean up old diesel engines.

Longstanding programs like the Texas Emissions Reduction

Plan (TERP). California's Carl Mover program, the
Department of Transportation's Congestion Mitigation and Air
Quality Improvement (CMAO) Program, and the Federal
Transit Administration's Low or No Emission Vehicle
Program all provide financial incentives to help to reduce the
size of the legacy diesel fleet.

One major source of funding that was available to states and
Tribes, effective October 2, 2017, was the Volkswagen Credit: Eric Vance, EPA Photographer,
Environmental Mitigation Trusts. These Trusts offered nearly West Virginia
$3 billion to fully mitigate the total lifetime excess NOx

emissions from the violating vehicles involved in the Volkswagen settlements. Tribes had the option to use
their allocation of the VW Environmental Mitigation Trust funds to match their DERA Tribal grants for yearly
funding cycles through 2021. Beneficiaries to the Trusts could use these funds for the replacement or repower
of medium- and heavy-duty diesel engines or pieces of equipment and light-duty zero emission vehicle supply
equipment. EPA will continue to support state projects that apply VW trust funding to their DERA state grants
until the trust timeframe concludes.

18 The onroad and nonroad inventories are based on MOVES3 (https://www.epa.gov/moves/latest-version-motor-vehicle-emission-
simulator-moves); the rest of the mobile sources (rail, aircraft, CMV) and the non-mobile sources are from the 2016vl Emissions
Modeling Platform (https://www.epa.gov/air-emissions-modeling/2016vl-platfonn).

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DERA ACTIVITIES FOR FISCAL YEARS 2019 AND 2020

The Diesel Emissions Reduction Act
received annual appropriations of $84
million in fiscal year 2019 and $87
million in fiscal year 2020. In fiscal
year 2019, EPA awarded 42 grants
under the National Program, 53
awards under the State Program, 8
grants under the Tribal Program, and
funds for 586 school bus replacements in the School Bus Rebate Program. EPA will report on the results of
fiscal year 2019 and fiscal year 2020 DERA projects in the next Report to Congress, when the projects are
finalized or close to completion. EPA will continue to target funding to areas that suffer from poor air quality
and prioritize projects that engage local communities and provide lasting benefits. In addition to prioritizing
projects that benefit communities that are disproportionately impacted by environmental pollution, the DERA
program will continue to focus on environmental j ustice and opportunities to improve community engagement.

2021 AMERICAN RESCUE PLAN

The 2021 American Rescue Plan (ARP) appropriated $100 million to the Environmental Protection Agency.
Of this funding, $50 million was specifically allocated towards grants and contracts that identify and address
disproportionate environmental or public health harms and risks in minority populations or low-income
populations. A total of seven million of the ARP funding will fund a rebate program through DERA to address
priority environmental justice issues for reducing diesel pollution. This DERA rebate program will fund
electric school buses in low-income communities.

ZERO EMISSION VEHICLES (ZEV)

To make electric vehicles more accessible to applicants, the
cost share for zero emissions vehicle replacements was
increased to 45% under the National, State, and Tribal
programs. In fiscal years 2017 and 2018, DERA funded
approximately 300 electric engine and vehicle replacements
under the National and State programs. As more
communities and fleets become interested in zero-emission
technologies, the program will seek to balance the types of
technologies available in relation to the resources available.
The program has adapted as technologies and demands
change.

The 2021 American Rescue Plan (ARP) Electric School Bus
Rebate Program offers a higher cost share for these electric school buses and eligibility is limited to low-
income school districts. This rebate program for electric buses is in addition to the DERA School Bus Rebate
program cycle, which provides approximately $10,000,000 annually to fund new diesel, alternative fuels
(propane, gas, CNG), or ZEV buses. The lessons learned from the 2021 ARP Electric School Bus Rebate
Program will help inform future DERA funding opportunities including setting appropriate cost share, limiting
eligibility to low-income communities, and ensuring that outreach efforts reach all potential applicants.

DERA FIFTH REPORT TO CONGRESS: | Highlights of the Diesel Emissions Reduction Program

DERA Reauthorization in 2020

In 2020, DERA was reauthorized under Division S - Innovation
for the Environment section of the Consolidated Appropriations
Act, 2021 for up to $100 million annually through 2024. The
program will continue to award grants and rebates to achieve
diesel emissions reduction.

Credit: 2016 EPA DERA Staff; Jason Wilcox,
Washington, />.('.


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2021 BIPARTISAN INFRASTRUCTURE LAW (BIL)

Title XI: Clean School Buses and Ferries of the Bipartisan Infrastructure Law (BIL), signed in November 2021,
provides $5 billion over five years (FY22-26) for the replacement of existing school buses with clean school
buses and zero-emission school buses. This funding supports communities across the United States, especially
populations that have been historically underserved. Half of the total available funding is dedicated for "zero-
emission school buses", and the other half is dedicated for "clean school buses," which include low- and no-
emission buses. Eligible recipients are state or local government entities, eligible contractors, nonprofit school
transportation associations, and tribes, tribal organizations, or tribally controlled schools. Funding may be
available via competitive grants and rebates to eligible recipients for bus replacement. EPA opened the first
funding opportunity on May 20, 2022.

JUSTICE40

Iustice40 is a whole-of-government effort to ensure that federal agencies work with states and local
communities to make good on President Biden's promise to deliver at least 40% of the overall benefits from
federal investments in climate and clean energy to disadvantaged communities.19 DERA, along with the Ports
Initiative, is one of six programs participating in the Iustice40 pilot across federal agencies. EPA is seeking
input from stakeholders as part of this effort. Benefits from DERA and the Ports Initiative program include
direct diesel emission reductions and associated health benefits from DERA-funded projects and enhanced
capacity for additional diesel emission reductions beyond DERA-funded projects. To maximize benefits in
underserved and disadvantaged communities, DERA will continue to prioritize Iustice40 goals in regular
updates to the DERA funding programs, while building capacity of prospective grantees and promoting
additional emissions reductions in communities with environmental justice concerns. Environmental justice
has been a priority in DERA for many years, and EPA will continue to ensure that funds reach communities
with the most need.

19 https://www.whitehouse.gOv/omb/briefmg-room/2021/07/20/the-path-to-achieving-iustice40/

DERA FIFTH REPORT TO CONGRESS: | Highlights of the Diesel Emissions Reduction Program


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CONCLUSION

From the onset of the Energy Policy Act of 2005 until the recently reauthorized Consolidated Appropriations
Act of 2021, the DERA program's wide-reaching benefits have positively impacted human health, local air
quality, and the global climate. EPA prioritizes diesel emissions reduction projects that provide immediate
health and environmental benefits and target areas of greatest need. The DERA legislation emphasizes
maximizing health benefits, conserving diesel fuel, and serving areas of poor air quality.

As the program looks ahead to the challenges of cleaner goods movement through the nation's supply chain,
reducing black carbon pollution, and assisting disproportionately impacted communities, the DERA program
will continue to prioritize the following statutory and programmatic goals and objectives:

Target areas and
populations with
disproportionate levels of
exposure to diesel exhaust
while maximizing cost-
effectiveness.

Prioritize children's health
with a goal of every child
riding to school in a bus
that meets the latest on-
highway standards.

Target projects that reduce
emissions from engines

involved in goods
movements and freight
and frequently found
operating at ports.

Design each DERA
program opportunity to
fund the most beneficial
projects and maximize
cost-effectiveness.

Continue building
partnerships and sharing
information with key
stakeholders to achieve
program goals.

Aid state and local
governments in the
development of their own
diesel emissions reduction
programs.

Continue to strive to
maximize performance of

emissions reduction
technologies in the field.

Maximize health benefits
from diesel emissions
reduction projects.

Seek sustainable projects
which promote community
driven solutions in those
communities most
impacted by diesel
emissions.

DERA prioritizes environmental justice and emissions reductions in areas receiving disproportionate impacts
from diesel fleets to provide an environment where all people enjoy the same degree of protection from
environmental and health hazards. By concentrating on these objectives, the DERA program will continue to
prioritize the most vulnerable communities and populations while further reducing emissions from diesel
engines in the legacy fleet that cause adverse health impacts.

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APPENDIX: LIST OF DERA

AWARDS

A full list of DERA awarded grants and rebates from fiscal years 2008 to 2020 can be found on the DERA
website at https://www.epa. gov/dera. The specific links for each DERA program award list is provided
below from A.l to A.4.

A.l National Grant Program: https://www.epa.gov/dera/national-dera-awarded-grants

A.2 Tribal Grant Program: https://www.epa.gov/dera/tribal-dera-awarded-grants

A.3 State Grant Program: https://www.epa.gov/dera/state-allocations

A.4 School Bus Rebate Program: https://www.epa.gov/dera/awarded-dera-rebates

For other information about the DERA funding opportunities, please see www.epa.gov/dera.

DERA FIFTH REPORT TO CONGRESS: | Highlights of the Diesel Emissions Reduction Program


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