(1) The Department of Environmental Quality shall use the moneys in the Clean Diesel Engine Fund to award:

(a) Grants and loans to the owners and operators of motor vehicles powered by diesel engines, and equipment powered by nonroad diesel engines, for up to 25 percent of the certified costs of qualifying replacements as described in ORS § 468A.797 and 468A.799;

(b) Grants and loans to the owners and operators of diesel engines for up to 100 percent of the certified costs of qualifying retrofits as described in ORS § 468A.797 and 468A.799;

(c) Grants and loans to the owners and operators of nonroad diesel engines for up to 25 percent of the certified costs of qualifying repowers as described in ORS § 468A.797 and 468A.799; and

(d) Grants to the owners of Oregon diesel truck engines to scrap those engines.

(2) The Environmental Quality Commission by rule may set grant or loan award rates at a percentage that is greater than a percentage allowed under subsection (1) of this section, provided that the grant or loan assistance will not exceed the cost-effectiveness threshold, if the higher percentage award rate would:

(a) Benefit sensitive populations or areas with elevated concentrations of diesel particulate matter; or

(b) Otherwise increase participation by those categories of owners or operators.

(3) In determining the amount of a grant or loan under this section, the department must reduce the incremental cost of a qualifying replacement, repower or retrofit by the value of any existing financial incentive that directly reduces the cost of the qualifying replacement, repower or retrofit, including tax credits, other grants or loans, or any other public financial assistance.

(4) The department may certify third parties to perform qualifying replacements, repowers and retrofits and may contract with third parties to perform such services for the certified costs of qualifying replacements, repowers and retrofits. The department may also contract with institutions of higher education or other public bodies as defined by ORS § 174.109 to train and certify third parties to perform qualifying replacements, repowers and retrofits.

(5) The department may not award a grant or loan for a replacement, repower or retrofit under subsection (1) of this section unless the grant or loan applicant demonstrates to the department’s satisfaction that the resulting equivalent motor vehicle, equivalent equipment, repowered nonroad diesel engine or retrofitted diesel engine will undergo at least 50 percent of its use in Oregon, as measured by miles driven or hours operated, for the three years following the replacement, repower or retrofit.

(6) The department may not award a grant to scrap an Oregon diesel truck engine under subsection (1)(d) of this section unless the engine was manufactured prior to 1994 and the engine is in operating condition at the time of the grant application or, if repairs are needed, the owner demonstrates to the department’s satisfaction that the engine can be repaired to an operating condition for less than its commercial scrap value. The commission shall adopt rules for a maximum grant awarded under subsection (1)(d) of this section for an engine in a heavy-duty truck and for an engine in a medium-duty truck. A grant awarded under subsection (1)(d) of this section may not be combined with any other tax credits, grants or loans, or any other public financial assistance, to scrap an Oregon diesel truck engine.

(7) Subject to and consistent with federal law, any moneys received from the federal government that are deposited in the Clean Diesel Engine Fund under ORS § 468A.801 (2)(b) must be used for initiatives to reduce emissions from diesel engines. Subsections (1) to (6) of this section and ORS § 468A.797 and 468A.799 do not apply to use of moneys in the fund received from the federal government.

(8) Any moneys received by the State of Oregon pursuant to a voluntary written agreement or a settlement approved in an administrative or judicial proceeding that are deposited in the Clean Diesel Engine Fund must be used by the department for activities consistent with the terms and conditions of the agreement or settlement. Subsections (1) to (6) of this section and ORS § 468A.797 and 468A.799 do not apply to the use of moneys in the fund received pursuant to this subsection.

(9) Except as provided in subsection (8) of this section, the department may use the moneys in the Clean Diesel Engine Fund to pay expenses of the department in administering the program described in ORS § 468A.795 to 468A.807. [2007 c.855 § 10; 2013 c.44 § 1; 2017 c.742 § 8; 2019 c.645 § 21]