The Oregon Department of Environmental Quality has been provideding more than $40 million (approximately $8 million per year) in grant funding every year, starting in 2021. Revenue for this program is provided by the Environmental Mitigation Trust Fund, subject to the settlement agreement between the United States and Volkswagen Group of America, Inc. In 2019, the Oregon Legislature authorized the creation of a grant program supporting businesses, governments and equipment owners in replacing older and more polluting diesel engines with new, cleaner technologies and exhaust control retrofits. These grants will be distributed to awardees as a reimbursement of eligible project costs incurred during the project period.

Oregon DEQ received legislative direction from HB 2007 establishing the grant program and guiding the rules for awarding funding to eligible projects in Oregon. Among other priorities, these statues and rules prioritize funding for projects seeking to comply with HB 2007's vehicle phase out deadlines in Multnomah, Washington, and Clackamas counties. As a result, many of the grant awards are concentrated in this area of the state, where diesel pollution is the most severe.

In most years, the Environmental Protection Agency allocates federal Diesel Emissions Reduction Act grants to eligible states for diesel emissions reduction projects. Starting in 2023, Oregon DEQ began allocating available federal DERA State Grant dollars through the annual diesel grant process. This allows diesel equipment owners to access additional funds through a single application process. EPA published federal guidance for this program in 2023 and 2024. Should funding become available from EPA again, DEQ will award DERA grant dollars for applications that comply with current requirements, available in EPA's Program Guide. For 2025 and beyond, DEQ will update the agency website with new information, federal DERA program guidance, and funding availability as it is published by EPA.

In 2025, DEQ had approximately $4.8 million in additional funding from the federal Climate Equity and Resilience Through Action grant for a new Clean Truck Program to fund the replacement of diesel medium and heavy duty vehicles with zero-emissions vehicles. DEQ hopes to reopen that program in 2027 to support businesses, governments, and equipment owners in replacing older, polluting diesel engines with zero-emissions vehicles.

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