Medium- and Heavy-Duty Vehicle Grant Program

The Medium- and Heavy-Duty Vehicle Grant Program is administered by the Tennessee Department of Environment and Conservation through its Office of Energy Programs as part of the Volkswagen Diesel Settlement Environmental Mitigation Trust. This trust was established following federal enforcement actions against Volkswagen for emissions violations, resulting in a multibillion-dollar settlement intended to mitigate excess nitrogen oxide emissions. Tennessee, as a beneficiary of this trust, receives allocated funding to support projects that reduce emissions from diesel-powered vehicles. This grant program represents one of the state’s competitive solicitations to deploy those funds in alignment with its environmental mitigation plan. The program’s primary objective is to reduce nitrogen oxide emissions by replacing or repowering older medium- and heavy-duty diesel vehicles with cleaner alternatives. Eligible replacement options include all-electric vehicles, compressed natural gas, propane, and hybrid technologies. The program supports a range of vehicle types, including freight trucks, transit buses, shuttle buses, and school buses, provided they meet defined gross vehicle weight rating classifications between Class 4 and Class 8. In addition to vehicle replacements, the program allows funding for associated electric vehicle infrastructure, such as charging stations, when applicable to all-electric projects. Funding is provided on a reimbursement basis and is subject to specific caps depending on the type of project. Applicants may request up to 3,000,000 dollars for all-electric or mixed-fuel projects and up to 1,500,000 dollars for alternate fueled projects only. Cost share requirements are variable and depend on applicant type and project characteristics, with funding covering between 25 percent and 90 percent of eligible project costs. Eligible costs include vehicle purchase, repower expenses, and infrastructure installation, while costs unrelated to vehicle function or incurred prior to contract execution are not eligible. Projects must be completed within 24 months of contract execution, and recipients must maintain operations and reporting for a five-year period following deployment. Eligible applicants include both government and non-government entities with a physical presence in Tennessee. Government applicants may include state and local agencies, school districts, and special districts, while non-government applicants include private companies and other organizations operating eligible fleets. Applicants must demonstrate intent to maintain operations within Tennessee for at least five years and must ensure that funded vehicles operate within the state for the majority of their use. Additional eligibility requirements include compliance with environmental regulations, Title VI civil rights requirements, and scrappage procedures for replaced vehicles. The application process requires submission through the Tennessee Department of Environment and Conservation’s online grants management system. Applicants must provide detailed technical and operational information, including vehicle specifications, emissions reduction estimates, cost breakdowns, and documentation of infrastructure availability. Supporting materials include vendor quotes, financial commitment letters for cost share contributions, and emissions modeling outputs using a specified calculator. The application also requires detailed project narratives describing operational use, community benefits, and potential impacts on air quality and public health. Applications are evaluated competitively based on multiple criteria, including expected emissions reductions, cost-effectiveness, geographic impact, and benefits to disadvantaged or high-burden communities. Additional evaluation considerations include whether projects operate in nonattainment or economically distressed areas, the extent of community benefits, and the contribution to transportation system resilience. According to the evaluation criteria outlined in the application manual, completeness and accuracy of submitted information are critical, and incomplete applications may be deemed ineligible for funding. The application deadline was June 13, with submissions required by 4:00 PM Central Time through the online portal. Awards were expected to be announced in the third quarter of the same year, with grant contracting occurring in the fourth quarter. Following award, recipients must execute a grant contract and adhere to reporting requirements, including quarterly progress updates and annual performance reports for five years. The program is part of an ongoing series of solicitations under the Volkswagen settlement, indicating that future funding rounds may be anticipated.

Ensure emissions reduction calculations are accurate and well-documented; prioritize projects in nonattainment or distressed areas; submit complete and detailed applications to avoid disqualification