Energy Bill Passes with Provisions of Interest to the School Bus Industry

In the final days before leaving for summer recess, Congress overwhelmingly passed a comprehensive Energy Policy Act of 2005. The President signed the bill into law on Aug. 8.

The bill was four years in the making and is the first major energy bill in 13 years. Included within the 1700-plus page of text were a number of provisions of interest to the National School Transportation (NSTA) and its members, including a Clean School Bus grant program authorization, a new authorization for diesel retrofits grants for a wide range of diesel vehicles and tax credits for a variety of low emissions or improved fuel economy vehicles.

NSTA has been working on Clean School Bus legislation through a coalition of clean diesel and natural gas engine manufacturers, the makers of improved emissions equipment, public interest organizations and all three major school bus trade associations. While we have been successful in obtaining a total of $17 million over the past three years through annual funding bills, enactment of the Energy Bill has secured the congressional authorization for the program that should make it easier to obtain higher levels of funding in future years. The program provides grants for the replacement or retrofit of school buses to reduce improved emissions using the latest technology vehicles and equipment.

Over the past four years, Congress has included Clean School Bus authorizing legislation in virtually every comprehensive energy bill ta ken up in the House or Senate. However, controversies about other, unrelated issues have doomed final passage of a comprehensive energy bill until now. In fact, our coalition decided this year to also try to include the Clean School Bus legislation in the big highway bill, which was seen as more of a "must pass" bill than the energy bill. In an abundance of riches, Congress passed both bills on the same day with almost identical Clean School Bus legislation in both bills.

Both the Highway and Energy Bills authorize $55 million in each of fiscal years 2006 and 2007 for Clean School bus grants to help pay for up to 50 percent of the cost of new, lower emission buses to replace older buses or 100 percent of the cost of retrofit technologies such as particulate traps or emissions catalysts that can be added to more recently manufactured school buses. EPA will administer the program and will set cost sharing rules based on emissions reductions and how best to achieve a balance between replacement and retrofits.

The version of the bill in the Highway bill differs slightly from the Energy Bill version in that it also authorizes EPA to fund the cost of purchasing biodiesel fuels. NSTA worked hard to ensure that funds available under both provisions can be provided to contractors and trade associations, as well as to local and state school districts or agencies.

Other Provisions

The bill authorizes a total of $25 million over four years for a Fuel Cell School Bus program to develop and demonstrate a fuel cell school bus.

The Diesel Emission Reduction Program authorizes $200 million per year for fiscal years 2007-2012 for a national grant and loan program to reduce diesel emissions, particularly in areas designated as poor air quality areas.

The funding is to be used for a variety of diesel vehicles and equipment, including buses, or to reduce long-duration idling. 70 percent of the funds appropriated are to be distributed by EPA through grants and loans to regional, State, local or tribal agencies or port authorities with jurisdiction over transportation or air quality and nonprofit organizations and institutions that represent or provide services to organizations that own or operate diesel fleets or promote either transportation or air quality. Of these funds, up to 50 percent of the funds could go to fund private fleet projects. 30 percent of funding overall would go in grants or loans to support State administered programs through an allocation formula.

The Engine Tax Incentives that are estimated to cost $874 million over ten years for a variety of clean engine or improved fuel economy vehicles. These include fuel cell, hybrid, clean burn diesel, and "alternative" fueled vehicles such as vehicles running on both liquefied and compressed natural gas, propane, liquefied petroleum gas, hydrogen, or an 85 percent methanol blend. The amount of the credit is based on a variety of factors including vehicle size, increase in vehicle cost and the average fuel efficiency achieved. The maximum per vehicle credit available for each type of vehicle is $44,000 for fuel cells, $12,000 for hybrids, $3,400 for lean burn diesel, and $32,000 for alternative fueled vehicles. These credits do not extend to clean diesel school buses since the low burn diesel language is limited to vehicles of up to 8,500 lbs only.

For more information, visit www.yellowbuses.org.

Reprinted with permission of the National School Transportation Association.