A First Look at the EPA's Clean Ports Program

The U.S. Environmental Protection Agency's (EPA) Clean Ports Program is a $3 billion program established by the Inflation Reduction Act (IRA) to fund zero-emission (ZE) port equipment and technology, as well as assist U.S. ports in developing climate action plans to reduce air pollutants. As part of the EPA's broader Ports Initiative, the program is created to work with the port industry to improve the environmental and public health impacts of U.S. ports and retain jobs and competitiveness.

The EPA projects that the Clean Ports Program's funding opportunity will be available for application though a notice of funding opportunity (NOFO) released around February 2024 and due around May 2024.

Webinar Summary

During an EPA webinar on Oct. 31, 2023, various members of the Clean Ports Program team outlined the design elements and priorities of the two sub-programs: Climate and Air Quality Planning and ZE Technology Deployment. Staff explained that applicants may be better suited for Planning grants if they have not previously done any planning work and are not ready for technology grants, while those who have done planning and know what technology is right for their port may be better suited for the ZE Technology Deployment grants. However, they emphasized that those interested may apply to both, and they anticipate many will.

The EPA stressed its focus on ZE technologies and related fueling infrastructure operating at ports, including drayage trucks, switcher locomotives, cargo-handling equipment, harbor craft and shore power for ocean-going vessels. They expressed a desire to see current technology operating at ports, such as internal combustion engines and diesel engines, move to ZE technologies with the capacity to serve the same purpose. Above all, every panelist emphasized the EPA's desire to see meaningful community engagement across grant applications, encouraging prospective applicants to begin community engagement work now.

The Clean Ports Program's anticipated timeline is as follows:

• release of NOFO around February 2024
• NOFO closes around May 2024
• applicants are selected around September 2024
• grants are awarded around December 2024

Clean Ports Program Design and Timing

The $3 billion allocated for grants will be distributed across two sub-programs, Climate and Air Quality Planning and ZE Technology Deployment. Up to 10 percent, or $300 million, will go to the former, and roughly 90 percent, or more than $2.6 billion, will go to the latter. Finally, overall, 25 percent, or $750 million, will be spent in nonattainment areas.

For both programs, eligible recipients include: 1) port authorities, 2) state, regional, local or tribal agencies with jurisdiction over a port authority or port, 3) air pollution control agencies and 4) private entities that apply in partnership with one of the three previous entities and own, operate or use facilities, cargo-handling equipment, transportation equipment or a related technology of a port. Additionally, the EPA encourages partnerships of noneligible applicants with eligible entities.

The Clean Ports Program will be structured as a singular grant funding opportunity with two sub-programs, in which applicants can apply for one or both. If an applicant applies to both sub-programs, the two applications will be evaluated separately.

The Clean Ports Program is specifically encouraging large-scale projects, aiming to fund a small number of high impact projects. The EPA noted the ZE Technology Projects will be awarded as much as $500 million per grant, and the Planning Projects as much as $3 million per grant. However, the Clean Ports Program additionally aims to ensure geographic diversity and therefore will also provide support for smaller projects. The EPA is considering set-asides and other provisions for small water ports and tribal areas.

The Clean Ports Program will award priority points for proposals that satisfy criteria in categories, including: 1) community engagement and environmental justice, 2) Justice 40 and nonattainment areas, and 3) workforce and labor. First, the EPA is specifically looking for demonstrated meaningful community engagement activities before application, during the project and after completion, and noted funds from the Planning Project sub-program can be used to support stakeholder collaboration and communication. Second, the EPA is looking for projects in defined disadvantaged communities with nonattainment or air toxics concerns. Finally, the EPA will prioritize projects that will prepare the workforce to operate new equipment and prevent the replacement of workers because of new technologies. The EPA noted that Planning Project funds can be used for workforce planning, and ZE Technology Project technology management expenses can be used for workforce training. However, the EPA only intends to fund equipment with human operators onboard.

The Clean Ports Program will include all water ports, as well as large dry ports. The EPA is defining marine and inland water ports similarly to the Diesel Emissions Reduction Act (DERA) "port" definition as "places alongside navigable water (e.g., oceans, rivers, or lakes) with facilities for the loading and unloading of passengers or cargo from ships, ferries, and other commercial vessels." Notably, this includes facilities supporting noncommercial tribal fishing operations. The EPA is defining dry ports as "intermodal truck-rail facilities (not on a water body) where goods are transferred between rail cars and trucks via shipping containers, truck trailers, or as bulk cargo at an appropriately high rate." The EPA is working with the Federal Highway Administration (FHWA) to align their threshold for what qualifies as a large dry port.

Climate and Air Quality Planning Sub-Program

The EPA outlined five design elements of the Climate and Air Quality Planning sub-program from which applicants can seek funding for some or all of the eligible activities:

1. Emissions Inventory and Accounting Practices: Develop or update port-wide, terminal-specific and/or sector-based inventories, and conduct core data collection and processing activities or (for more advanced ports) in-depth activity data collection (required).
2. Publish Summary Results of Planning Activities (required)
3. Resiliency Measure Identification: Assess climate change vulnerabilities and identify priority measures to protect port equipment, energy systems, operations and nearby communities from climate impacts.
4. Stakeholder Collaboration and Communication, with a Focus on Near-Port Communities: Create and support a formal process to get input from communities and other stakeholders on climate/air quality planning activities, including by engaging with near-port communities during the project (required), as well as conduct local workforce planning analysis.
5. Strategy Analysis and Goal-Setting: Develop or update a comprehensive document outlining emissions reduction goals and strategies, assess cost and feasibility of diesel emissions reduction strategies, including in-depth ZE technology assessments, and assess emissions reductions from a package of diesel emissions reduction strategies.

Planning sub-program grants will be capped at $2 million to $3 million per grant. Grants of up to $2 million are available to applicants interested in conducting all categories of activities or exploring one or two in depth. Grants exceeding $2 million will be available to applicants with prior experience with climate and air quality planning and managing federal grants. Moreover, those proposals would need to include multiple planning elements, a multi-sector, port-wide scope and/or multiple port areas, an in-depth ZE technology feasibility assessment and a demonstrated commitment to continue planning efforts beyond the project period. The funding floor per grant will be set at $100,000. Programs will have a duration of up to three years.

Grant proposals will not require cost-sharing, but applicants with leveraged funds will be prioritized. However, this will only be a small percentage of the overall score.

ZE Technology Deployment Sub-Program

The EPA outlined three design elements of the ZE Technology Deployment sub-program:

1. Technology Commercial Readiness: The EPA is aiming to fund technology with a few records of implementation, as well technology which has been extensively implemented. They are looking for technology at a Technology Readiness Level (TRL) of 8 or 9.
2. BABA Guidance/Criteria: The EPA is looking for proposals that include domestic production of equipment and infrastructure.
3. Scrappage: The EPA plans to award priority points for, but not require, scrappage.

The EPA specified that ZE equipment funded by the ZE Technology sub-program must be located onsite, dedicated to port(s) or have a primary purpose of serving port(s). The EPA is considering establishing the following annual thresholds for equipment use at port(s): 75 percent to 90 percent of annual hours for cargo-handling equipment, locomotives and harbor craft, and roughly 100 truck visits per year for drayage trucks.

The EPA further noted that while ZE fueling infrastructure may be utilized by equipment not purchased as part the grant, it must serve equipment purchased as part of the grant such that projects proposing only infrastructure without accompanying equipment are ineligible, with the exception of vessel shore power. Moreover, fueling infrastructure must be located at a port, with the exception of infrastructure serving drayage trucks and locomotives.

ZE Technology sub-program proposals will have a general funding floor of $10 million, but a $2 million floor for small water ports and tribal areas. There will be a $500 million funding cap per grant, and projects will have a maximum duration of four years.

ZE Technology sub-program proposals must include 10 percent to 20 percent cost sharing, with a potential exception for certain applicants or project types such as tribal lands and drayage trucks.

Conclusion

For more information on funding opportunities or how the Clean Ports Program may impact your business, contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.