(a) The commission shall establish and administer the Texas hydrogen infrastructure, vehicle, and equipment grant program to encourage the adoption of hydrogen infrastructure, vehicles, and equipment. Under the program, the commission shall provide funding for eligible projects to offset the incremental cost of projects that reduce emissions of oxides of nitrogen from high-emitting sources in nonattainment areas and affected counties of this state. The commission shall determine the eligibility of projects.
(b) Projects that may be considered for a grant under the program include:
(1) implementation of hydrogen infrastructure projects;
(2) purchase or lease of on-road or non-road hydrogen vehicles or equipment;
(3) replacement of on-road or non-road heavy-duty vehicles or equipment with newer on-road or non-road hydrogen vehicles or equipment; and
(4) the repower or conversion of on-road or non-road heavy-duty vehicles or equipment with a powertrain that runs on or is powered by hydrogen.

(c) A project listed in Subsection (b) is not eligible if it is required by any state or federal law, rule or regulation, memorandum of agreement, or other legally binding document. This subsection does not apply to:
(1) an otherwise qualified project, regardless of the fact that the state implementation plan assumes that the change in vehicles, equipment, or operations will occur, if on the date the grant is awarded the change is not required by any state or federal law, rule or regulation, memorandum of agreement, or other legally binding document; or
(2) the purchase of a hydrogen vehicle or equipment or facility required only by local law or regulation or by corporate or controlling board policy of a public or private entity.
(d) The commission shall prioritize the awarding of grants under this subchapter in the following order:
(1) projects to replace on-road heavy-duty vehicles with newer on-road hydrogen vehicles;
(2) projects to purchase, lease, repower, or convert on-road heavy-duty vehicles with a powertrain that runs on or is powered by hydrogen;
(3) projects to implement hydrogen refueling infrastructure that will be accessible and available to the public at times designated by the grant contract;
(4) projects to replace non-road heavy-duty vehicles with newer non-road hydrogen vehicles; and
(5) projects to purchase, lease, repower, or convert non-road heavy-duty vehicles with a powertrain that runs on or is powered by hydrogen.
(e) Subject to Subsection (d), in awarding grants under this subchapter, the commission shall give preference to the most cost-effective projects that will result in the greatest reduction in emissions of oxides of nitrogen.
(f) The commission shall establish additional eligibility and prioritization criteria as needed to implement the program.