The United States Environmental Protection Agency is preparing to overhaul the $5 billion Clean School Bus Program created under former President Joe Biden, redirecting $2.3 billion in remaining funds toward what officials describe as more reliable American energy sources.

EPA officials are expected to announce the launch of a formal Request for Information (RFI), initiating a regulatory process that will gather feedback from school administrators, fleet operators, manufacturers, and fuel producers before additional grants are distributed later this year.

Under the revised framework, the agency is considering expanding eligible fuel sources beyond fully electric vehicles to include biofuels, compressed natural gas, liquefied natural gas, and hydrogen. Officials say the changes are intended to align the program with statutory requirements under the Bipartisan Infrastructure Law while improving reliability for school districts.

“Today, EPA takes the next step to set the program straight,” EPA Administrator Lee Zeldin said. “Americans can rest assured that moving forward, the program will be safe, effective, and use reliable forms of American energy.”

The Clean School Bus Program was designed to replace aging diesel buses with zero-emission alternatives. Although the 2021 law permitted rebates for multiple fuel types, EPA officials note that approximately 90% of awarded funds went toward fully electric models.

The program has faced criticism following a 2023 inspector general audit that found vulnerabilities to “potential fraud, waste, and abuse,” resulting in the rescission of $38 million in ineligible rebate requests.

In addition, electric bus manufacturer Lion Electric filed for bankruptcy in 2024 after receiving roughly $160 million in taxpayer funding through the program. Manufacturing delays have reportedly stalled dozens of bus orders nationwide.

To date, about $2.7 billion has been awarded to more than 1,100 school districts for over 8,200 electric buses. In New York City, more than $61 million was allocated to produce 180 electric buses for five districts, with per-unit costs estimated between $295,000 and $395,000. Statewide, New York districts received $210 million and procured 150 buses, according to prior reporting.

Zeldin criticized the program’s management under the previous administration, calling it an example of wasteful spending. He said the current EPA will prioritize fiscal oversight and energy reliability as it reforms the initiative.