By Jonathan F. Donath, Esq.

New Jersey schools have certainly learned the hard lesson that costs associated with using and storing fuel for busing purposes are significant in a number of regards. In the event of a leak or simply the need to remove and replace fuel storage tanks because of age, the environmental and financial impacts can be even more serious. At a minimum, school boards already strapped with limited budgets can be left scrambling to secure the funds to meet these costs and comply with environmental regulations. One means by which schools are seeking to avoid these costs in the future is by exploring upgrades to electrically powered school buses, which follows the burgeoning trend towards electric vehicles, globally. Of course, such upgrades are costly in and of themselves, especially at inception. The good news for some New Jersey schools is that financial relief is on the way which may alleviate the costs of upgrading to electric.

Earlier this month, Governor Phil Murphy signed legislation into law making up to $45 million available to New Jersey School Districts and bus contractors to defray the cost of upgrading to electric school buses in the State. This measure represents an important opportunity for these entities to upgrade much of the State’s school bus fleet and dispense with the long-term costs and environmental disadvantages associated with gas-powered buses. What comes next is the scramble to see which school districts and contractors will successfully obtain the benefits of this funding.

Mechanically, the bill (A1282) aims to provide funding through the New Jersey Department of Environmental Protection (“NJDEP”) over a three-year period. The program will provide $15 million in grants in year one, with “up to” $15 million available in years two and three based upon availability of funds and other factors.  School districts and busing contracts may then utilize funds awarded to them through the program "...to purchase or lease electric school buses and to purchase or lease and install electric school bus charging infrastructure in coordination with any State department, board, bureau, commission, or agency as necessary.”

Critically, what remains to be seen is exactly what will be required of school districts and busing contractors seeking the benefit of this funding and when the application process will begin. The bill only identifies that the funds will be awarded “based on a competitive grant solicitation” and that the NJDEP will select the recipients.

Substantively, the bill provides that successful applicants will be selected from throughout North, Central, and South Jersey. Additionally, at least 50% of the grant recipients will be school districts as opposed to contractors. Grants will be awarded through the program to at least six (6) school districts and contractors combined annually, meaning that at least eighteen (18) districts/contractors will receive funding by the end of the three (3) year program.  Consistent with this administration’s repeatedly stated focus on environmental justice, the selection process will prioritize equity and at least half the funding will be awarded to low income, urban or over-burdened communities “in order to mitigate the disproportionate health impacts of medium – and heavy-duty vehicles on vulnerable populations.”

Another key aspect of this program is that the funds will be awarded in the form of grants. Comparatively, funds for upgrades to electric school buses available through the federal Infrastructure Bill (the application process for which is nearing its conclusion) will be provided in the form of rebates (at least initially). Thus, while school districts and contractors will have to lay out the funds up front and then seek reimbursement under the federal program, it appears the New Jersey State program has the added benefit of providing the funds to successful applicants prior to purchase.

This program is a positive development for New Jersey school districts with already tight budgets and contractors seeking to assist those districts in upgrading their fleets. The fact that funding will be provided in this instance to meet this environmentally based initiative is a welcome departure from many similar scenarios, in which the State’s pursuit of environmental goals often means increased costs without addressing how those costs will be met. Of course, questions regarding the application process remain. Moreover, the fact that, potentially only eighteen (18) applicants will be awarded funds through the program, while New Jersey has approximately 600 school districts alone (in addition to the bus contractors), means that the application process will likely be extremely competitive. We will continue to monitor this situation closely. New Jersey school districts and bus contractors would do well to keep abreast of this situation, so that they will not be foreclosed from potentially obtaining the benefits of this funding. 

For more information, contact Jonathan F. Donath, Esq. at jfd@spsk.com or 973-798-4952.

DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.