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the buses, except that the application may provide 
that buses purchased using funds awarded shall be 
owned, operated, and maintained exclusively by the 
1 or more contracting entities; or 
(3) to a nonprofit school transportation associa-
tion representing private contracting entities, if the 
association has notified and received approval from 
the 1 or more school systems to be served by the 
buses. 
(d) AWARD DEADLINES.— 
(1) IN GENERAL.—Subject to paragraph (2), 
the Administrator shall award a grant made to a 
qualified applicant for a fiscal year— 
(A) in the case of the first fiscal year of 
program implementation, not later than the 
date that is 90 days after the application dead-
line established under subsection (b)(2); and 
(B) in the case of each subsequent fiscal 
year, not later than August 1 of the fiscal year. 
(2) INSUFFICIENT
NUMBER
OF
QUALIFIED 
GRANT
APPLICATIONS.—If the Administrator does 
not receive a sufficient number of qualified grant ap-
plications to meet the requirements of subsection 
(i)(1) for a fiscal year, the Administrator shall 
award a grant made to a qualified applicant under
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subsection (i)(2) not later than September 30 of the 
fiscal year. 
(e) TYPES OF GRANTS.— 
(1) IN GENERAL.—A grant under this section 
shall be used for the replacement of school buses 
manufactured before model year 1991 with alter-
native fuel school buses and ultra-low sulfur diesel 
fuel school buses. 
(2) NO ECONOMIC BENEFIT.—Other than the 
receipt of the grant, a recipient of a grant under this 
section may not receive any economic benefit in con-
nection with the receipt of the grant. 
(3) PRIORITY OF GRANT APPLICATIONS.—The 
Administrator shall give priority to applicants that 
propose to replace school buses manufactured before 
model year 1977. 
(f) CONDITIONS OF GRANT.—A grant provided under 
this section shall include the following conditions: 
(1) SCHOOL BUS FLEET.—All buses acquired 
with funds provided under the grant shall be oper-
ated as part of the school bus fleet for which the 
grant was made for a minimum of 5 years. 
(2) USE OF FUNDS.—Funds provided under the 
grant may only be used—
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(A) to pay the cost, except as provided in 
paragraph (3), of new alternative fuel school 
buses or ultra-low sulfur diesel fuel school 
buses, including State taxes and contract fees 
associated with the acquisition of such buses; 
and 
(B) to provide— 
(i) up to 20 percent of the price of the 
alternative fuel school buses acquired, for 
necessary alternative fuel infrastructure if 
the infrastructure will only be available to 
the grant recipient; and 
(ii) up to 25 percent of the price of 
the alternative fuel school buses acquired, 
for necessary alternative fuel infrastructure 
if the infrastructure will be available to the 
grant recipient and to other bus fleets. 
(3) GRANT RECIPIENT FUNDS.—The grant re-
cipient shall be required to provide at least— 
(A) in the case of a grant recipient de-
scribed in paragraph (1) or (3) of subsection 
(c), the lesser of— 
(i) an amount equal to 15 percent of 
the total cost of each bus received; or 
(ii) $15,000 per bus; and
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(B) in the case of a grant recipient de-
scribed in subsection (c)(2), the lesser of— 
(i) an amount equal to 20 percent of 
the total cost of each bus received; or 
(ii) $20,000 per bus. 
(4) ULTRA-LOW SULFUR DIESEL FUEL.—In the 
case of a grant recipient receiving a grant for ultra- 
low sulfur diesel fuel school buses, the grant recipi-
ent shall be required to provide documentation to 
the satisfaction of the Administrator that diesel fuel 
containing sulfur at not more than 15 parts per mil-
lion is available for carrying out the purposes of the 
grant, and a commitment by the applicant to use 
such fuel in carrying out the purposes of the grant. 
(5) TIMING.—All alternative fuel school buses, 
ultra-low sulfur diesel fuel school buses, or alter-
native fuel infrastructure acquired under a grant 
awarded under this section shall be purchased and 
placed in service as soon as practicable. 
(g) BUSES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), funding under a grant made under this 
section for the acquisition of new alternative fuel 
school buses or ultra-low sulfur diesel fuel school 
buses shall only be used to acquire school buses—
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(A) with a gross vehicle weight of greater 
than 14,000 pounds; 
(B) that are powered by a heavy duty en-
gine; 
(C) in the case of alternative fuel school 
buses manufactured in model years 2004 
through 2006, that emit not more than 1.8 
grams per brake horsepower-hour of non-
methane hydrocarbons and oxides of nitrogen 
and .01 grams per brake horsepower-hour of 
particulate matter; and 
(D) in the case of ultra-low sulfur diesel 
fuel school buses manufactured in model years 
2004 through 2006, that emit not more than 
2.5 grams per brake horsepower-hour of non-
methane hydrocarbons and oxides of nitrogen 
and .01 grams per brake horsepower-hour of 
particulate matter. 
(2) LIMITATIONS.—A bus shall not be acquired 
under this section that emits nonmethane hydro-
carbons, oxides of nitrogen, or particulate matter at 
a rate greater than the best performing technology 
of the same class of ultra-low sulfur diesel fuel 
school buses commercially available at the time the 
grant is made.
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(h) DEPLOYMENT AND DISTRIBUTION.—The Admin-
istrator shall— 
(1) seek, to the maximum extent practicable, to 
achieve nationwide deployment of alternative fuel 
school buses and ultra-low sulfur diesel fuel school 
buses through the program under this section; and 
(2) ensure a broad geographic distribution of 
grant awards, with a goal of no State receiving more 
than 10 percent of the grant funding made available 
under this section for a fiscal year. 
(i) ALLOCATION OF FUNDS.— 
(1) IN GENERAL.—Subject to paragraph (2), of 
the amount of grant funding made available to carry 
out this section for any fiscal year, the Adminis-
trator shall use— 
(A) 70 percent for the acquisition of alter-
native fuel school buses or supporting infra-
structure; and 
(B) 30 percent for the acquisition of ultra- 
low sulfur diesel fuel school buses. 
(2) INSUFFICIENT
NUMBER
OF
QUALIFIED 
GRANT APPLICATIONS.—After the first fiscal year in 
which this program is in effect, if the Administrator 
does not receive a sufficient number of qualified 
grant applications to meet the requirements of sub-