Diesel Emissions Reduction Act

In 2005, the U.S. Congress passed the Diesel Emissions Reduction Act (DERA) as an amendment to the Energy Policy Act. It authorized the Environmental Protection Agency (EPA) to administer a national and state-level grant and loan program to promote emissions reductions from legacy diesel engines. DERA was designed to reduce diesel emissions from existing diesel fleets that did not meet the federal emission standards at that time. The EPA is responsible for overseeing and distributing the DERA funds to states, who administer the program. For more information visit the EPA website at Clean Diesel and DERA Funding.

Open for Applications: NMED Clean Diesel Program Grant Funding

Important Notice: Applications are currently being reviewed on a rolling basis. To secure funding, entities are encouraged to submit their completed application packets as soon as possible while 2026 funds last. 

NMED provides grant funding through the New Mexico Clean Diesel Program, for projects that reduce harmful heavy-duty diesel emissions. This program is funded by EPA through DERA. NMED is soliciting proposals for DERA projects that effectively reduce these emissions from heavy-duty diesel-fueled vehicles and equipment.

• Video Walkthrough: March 18, 2026 Workshop Recording (1 hour, 1 minute) – Use this recording for a step-by-step guide on navigating the 2026 application process and requirements.
  
• Video Archive: January 9, 2023 Workshop recording (1 hour, 14 minutes) – Archive reference covering the foundational background of the DERA grant structure.
  
• Diesel Emissions Reduction Act Workshop slide deck – Downloadable presentation slides containing visual breakdowns of fleet eligibility and scrapping rules.

Who may apply?

Any public or private entity or nonprofit organization, based in New Mexico, in existence for at least three consecutive years, and whose vehicles/equipment are registered, (or have an International Registration Plan if applicable) in the State of New Mexico.

What projects are eligible?

Eligible projects include, but are not limited to: idle reduction technologies, aerodynamic technologies, and the retrofit or replacement of diesel vehicles and equipment throughout the state. Eligible diesel vehicles, engines and equipment may include: buses (school and Class 5+ transit); Class 5 – Class 8 heavy-duty highway vehicles (e.g. refuse, commercial transportation); marine engines; locomotives; and nonroad engines, equipment, or vehicles such as those used in construction, handling of cargo (including at ports and airports), agriculture, mining, or energy production (including stationary generators and pumps). The existing vehicle, engine, or equipment must be fully operational. The replacement vehicle, engine or equipment should resemble the replacement in form and function. The participating fleet owner must currently own and operate the existing vehicle or equipment and have owned and operated the vehicle during the two years prior to upgrade. The existing vehicle, engine, or equipment must have at least three years of remaining life at the time of upgrade. Remaining life is the fleet owner’s estimate of the number of years until the unit would have been retired from service if the unit were not being upgraded or scrapped because of the grant funding. Funding cannot be used for the purchase of vehicles, engines, or equipment to expand a fleet.

The vehicle, engine or equipment being replaced must be scrapped or rendered permanently disabled within 90 days of being replaced. Equipment and vehicle components that are not part of the engine or chassis may be salvaged from the unit being replaced (e.g., plow blades, shovels, seats, tires, etc.). The replaced vehicle must be scrapped by drilling a three-by-three-inch hole in the engine block and disabling the chassis by cutting through the frame rails on each side. A scrappage statement signed by the vehicle owner and the dismantler is required. A sample scrappage statement can be downloaded.

The grant funds will be used for the purchase and installation of EPA or California Air Resources Board (CARB) verified/certified technologies or vehicle, engine or equipment replacement utilizing a zero-tailpipe emissions power source, in accordance with DERA funding guidelines.

Both the EPA verified technologies list for clean diesel and CARB verified technology list are available. Engine replacements utilizing all-electric technology (i.e., zero emission) do not require EPA or CARB certification. New vehicles or engines must be certified to meet the most current EPA emissions standards for on-road diesel vehicles. While projects from the entire state will be accepted, special consideration will be given to projects located in or adjacent to those counties with levels of ozone at or above 95% of the National Ambient Air Quality Standard (NAAQS) for ozone. This currently includes Bernalillo, Doña Ana, Eddy, Lea, Sandoval, San Juan, and Valencia counties.

Applications can be submitted by emailing the documents below to DERA@env.nm.gov.

• New Mexico Clean Diesel Program Application Instructions – Step-by-step requirements, submission rules, and formatting directions for your application packet. 
  
• New Mexico Clean Diesel Program Guidance Document – Comprehensive guidelines regarding eligibility, technology requirements, funding limits, and scrapping rules. 
  
• New Mexico Clean Diesel Program Application – The core application document that must be filled out, signed, and submitted via email. 

Submission Instructions: Once you have completed the forms and gathered the required appendices listed below, submit your application by emailing all documents to DERA@env.nm.gov. 

Appendices to be submitted along with application:

1. Appendix A- Documentation Verifying the Operating Time in New Mexico. – Upload documentation showing that the equipment operates within the state at least 75% of the time (not necessary if your vehicle never operates outside New Mexico). 
2. Appendix B- Map of the Project Locations (for fleets that travel statewide). – Attach a map detailing your route or project locations if your fleet travels statewide. 
3. Appendix C- Vehicle Information Sheet. – A mandatory worksheet detailing the specifications of your existing and replacement vehicles. 
4. Appendix D- Fleet Replacement Schedule. – Provide an outline or explanation of your company’s standard procedure and timeline for vehicle replacement. 
5. Appendix E- Use of Funding Restrictions Form. – A mandatory compliance form outlining how the grant funds can and cannot be allocated. 
6. Appendix F- Diesel Emission Quantifier (DEQ) Report. – Provide a copy of the report generated from the USEPA DEQ tool, including the completed Total Lifetime Results and Cost Effectiveness table. 
7. Appendix G – Provide a detailed description of the impacted community’s demographics. You must attach a screen print of each webpage used from the United States Census Bureau. 
8. Appendix H- Map of the Locations of Affected Facilities. (See above) – Attach a map displaying the locations of daycares, schools, or medical facilities relative to your project area. 
9. Appendix I- Map Showing the Proximity to Federal Class I Areas.  New Mexico has nine mandatory Federal Class I Areas. Please visit the NMED Regional Haze Planning website and [https://www.env.nm.gov/wp-content/uploads/sites/2/2017/01/NM_ClassIAreas_Map.pdf] for information.

There are four different pools of funding within DERA. The four different funding pools are:

• State Allocations
• Clean Diesel National Grants
• Clean Diesel Tribal Grants
• School Bus Replacement and Retrofit Rebates

State Allocated DERA Funding

The State allocation program divides non-competitive funding among all 50 states. The states are responsible for implementing and overseeing funding. Funding must be used to develop grant or low-cost revolving loan programs to fund clean diesel projects.

New Mexico Projects

What Is a Retrofit?

Typically, a diesel retrofit involves the installation of an emission control device to reduce emissions from engine exhaust and the installation of equipment to reduce engine idling.

Why Retrofit?

Installing retrofit equipment has significant public health benefits. The installation of diesel emission reduction equipment will have immediate and lasting results in protecting New Mexico residents, children, and other sensitive populations from harmful emissions including fine particles, ozone and air toxics that can exacerbate asthma and other respiratory symptoms.

Measured benefits from reducing diesel exhaust emissions include:

• Fewer incidences and reduced severity of illnesses such as asthma and other chronic respiratory illness
• Fewer lost school days and work days
• Fewer hospital visits due to respiratory illness
• Reduced cancer risks for occupational levels of exposure and from ordinary outdoor air exposure

Volkswagen Settlement

The Environment Department is the lead agency in New Mexico for the Volkswagen Environmental Mitigation Trust Agreement. Please go to the Volkswagen Settlement website for additional information.

Please email DERA@env.nm.gov for additional information regarding potential funding for qualified projects.