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School Bus Replacement Program

DEQ's diesel school bus replacement program 

In January 2018, the Oregon Department of Environmental Quality selected school districts to receive grant funding to support the replacement or retrofit of specific buses within their district's fleet using a randomized selection process. DEQ notified the districts of their eligibility and made several attempts to recruit those districts to participate in this grant program. In order to meet the legislative directive, DEQ awarded districts who had not previously participated in the program. 

Under the diesel grant program, school districts have the option to install diesel particulate filters or to scrap and replace buses in their fleet. Buses selected for replacement must have at least three years of remaining useful life, have operated in Oregon in the past year and will continue to operate in Oregon for at least the three years following. The assistance amount offered is up to 100 percent of costs to purchase and install exhaust controls, or up to $50,000 or 30 percent of replacement costs, whichever is less, to purchase an Oregon minimum standard bus to replace the bus that is scrapped. 

DEQ prioritized grants to districts, who haven't previously participated in the program, on a first come-first served basis until the program goal of 450 diesel powered school buses are met. 

The State of Oregon is eligible to receive at least $72.9 million as a beneficiary of the VW partial consent decree to support eligible pollution mitigation projects outlined in Appendix D of the decree. The Oregon Legislature authorized DEQ to accept funds from the settlement into the Clean Diesel Engine Fund (ORS 468A.801). DEQ is authorized to fund school bus projects that reduce harmful diesel emissions in the first phase of the ten-year period.

On May 17, 2017, Volkswagen Group of America settled with the United States for violations of the Clean Air Act. The settlement awarded funds to States to mitigate the increased air pollution resulting from VW's diesel vehicles. Oregon received settlement funds, and on August 15, 2017, the Oregon Legislature directed DEQ to support the retrofit or replacement of at least 450 school buses statewide with these funds, within the scope of the VW Mitigation Trust.

The plan for Oregon is to treat 450 diesel powered school buses with strategies like exhaust control retrofitting or bus replacement. DEQ expects to complete about one quarter of the buses per year. School districts were selected to participate with 2005, 2006, and 2007 vehicle model year buses. School districts with buses in these model years, as necessary to reach the 450 bus target, have been contacted to determine their interest and capability to participate. DEQ contacted districts based on a random draw of numbers assigned to districts with buses within this contingent. This approach will help manage administrative costs and minimize the replacement bubble as these buses eventually age out of the fleet 10-15 years in the future.

Legal documents

​In December 2017, Oregon DEQ posted the proposal for an environmental mitigation plan for public comment and review. The proposed plan has three main goals:

  • Maximize benefits for vulnerable populations;
  • Prioritize pollution reduction in areas of the state with the highest emissions of nitrogen oxides and particulate matter from diesel engines; and
  • Maximize pollution reduction cost effectiveness.

The plan was published for public review and comment with public hearings in January 2018. The summary pf public comments and responses to comment are posted below.

​On Jan. 24, 2016, the United States and the State of California filed a lawsuit against Volkswagen alleging it had manufactured diesel cars with systems intended to defeat emissions tests. These systems allowed vehicles manufactured with 2.0 and 3.0 liter diesel engines to emit nitrogen oxide (NOx) pollution at levels that significantly exceeded the amounts allowed under the Clean Air Act.

On Oct. 25, 2016, a federal court approved a partial settlement of the lawsuit relating to 2.0 liter diesel cars. Later, on Dec. 20, 2016, the United States lodged a second partial settlement addressing vehicles with the 3.0 liter engines. An additional settlement has been filed resolving a criminal case but is not relevant to the terms of the settlement discussed here.

This portion of the settlement consists of three major parts: relief for owners and lessees of the Volkswagen and Audi brand noncompliant vehicles; a commitment by Volkswagen to spend $2 billion on various actions to promote the use of zero emission vehicles; and establishing an environmental mitigation fund to offset the impact from these vehicles’ excess emissions.

The mitigation fund will consist of $2.925 billion to be distributed among states based on the proportion of VW diesel vehicles registered in each jurisdiction. Under this formula Oregon is expected to receive about seventy three million dollars.

The settlement decree lists the specific actions states can for which states can use money from the mitigation fund. These actions focus on reducing NOx pollution from primarily diesel-powered trucks and buses. The types of approved actions include, generally, replacing older diesel-powered trucks, buses, industrial vehicles and other powered equipment with new, lower emissions equipment.


Please contact us at 503-229-5159 or email Oregon Clean Diesel Initiative and Grants if you have any questions or need assistance.


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