The Biden Administration tied historic federal clean energy funding in the 2021 Infrastructure Investment and Jobs Act Law (IIJA) and the 2022 Inflation Reduction Act (IRA) to a local benefits framework through the Department of Energy’s Community Benefits Plan (CBP) requirements. The Trump Administration’s rapid rescission of CBP requirements, however, has removed the primary federal mechanism linking clean energy deployment to local benefits. Because of this rollback, state legislatures should consider mandating the use of tools such as Community Benefits Agreements (CBAs) and Host-Community Bill Credits (HCBCs) to ensure that communities continue to share in the economic and social benefits of the energy transition.
Federalizing Energy Justice: Mandatory Community Benefit Plans Under the Biden Administration
During the previous administration, President Biden signed the IIJA and IRA into law, appropriating historic amounts of federal funding for climate change mitigation and adaptation initiatives, including clean energy development. Much of this funding was made available via grant and loan programs, which were administered by federal agencies, like the U.S. Department of Energy (DOE). In 2021, the DOE established a first-of-its kind program, under which all applicants for federal grants and loans under the IIJA and IRA were required to develop and submit CBPs.
CBPs are planning documents in which developers detail how a proposed project will deliver benefits—such as local employment, workforce training, or environmental justice benefits— to impacted communities, beyond the core technical goals of the project. While these planning tools are not legally binding, CBPs were mandatory components of DOE funding applications during the Biden Administration. To ensure these plans were not merely perfunctory, the Biden DOE required CBPs to address four goals: (1) community and labor engagement, (2) quality jobs and workforce development, (3) diversity and inclusion, and (4) benefits for disadvantaged communities under the federal Justice40 Initiative. If the DOE approved a funding application, the Agency integrated the terms and conditions of the proposed CBP into the grant / loan award, thus conditioning grant / loan funding on successful CBP implementation.
Initial evidence suggests that CBPs likely had positive social and economic impacts. Data compiled by UC Berkeley Law demonstrates that, across 635 DOE-funded projects, developers entered into more than 250 agreements to support local labor and encourage community oversight. Many expected that more local agreements would be executed in the future, but that now seems unlikely.
The Trumpian Backslide: Executive Order 14151 and DOE Grant Revisions
Shortly after taking office, President Trump issued a slate of executive orders designed to rollback diversity, equity, and inclusion (DEI) and environmental justice initiatives pursued by the Biden Administration. In Executive Order 14151 (“Ending Radical and Wasteful Government DEI Programs and Preferencing”), the Trump Administration ordered federal agencies to terminate all DEI initiatives, including those embedded in DOE’s CBP framework. This order thus dismantled the administrative foundation for CBPs.
In response to Executive Order 14151, the DOE issued internal memoranda instructing program offices to suspend CBP implementation and to amend existing grant and loan agreements to remove CBP provisions. The Agency told recipients that “[c]osts incurred after the date of this letter will not be reimbursed” for CBP-related activities. DOE Grants Officers contacted grantees to renegotiate awards and strip CBP obligations that had required local benefits.
The consequences of this rollback were immediate, eliminating structured mechanisms that had tied federal grants to local job creation and community oversight. Even worse, the DOE later terminated grants and loans for over 200 projects, stymieing new development and inhibiting planned benefits from flowing to communities. The Trump Administration’s actions, therefore, shifted federal energy and infrastructure policy away from community empowerment toward regressive deregulation — undermining a significant justice-oriented reform in federal clean energy funding.
Resisting the Backslide: How States Can Support Community Benefits and Wealth Sharing Programs
Because of this federal backsliding, it is incumbent upon states to reassess and strengthen their community benefit frameworks to ensure that the fruits of the energy transition do not remain concentrated among a handful of developers. To do this, states can legislatively mandate that project developers provide monetary and/or non-monetary benefits— such as local hiring, community oversight, and environmental remediation — to host communities as a condition of development. These mandates can help to advance both procedural and distributive justice, ensuring that local communities are involved in, and benefit from, major infrastructure projects that affect them.
Legislatively-mandated community benefit schemes for clean energy projects generally take one of two different forms: Community Benefits Agreements (CBAs) and Host Community Bill Credits (HCBCs). CBAs are highly tailored agreements between project developers and local governments or local organizations in a host community, under which the developer promises to deliver specific public benefits to the community. HCBCs, conversely, are a highly streamlined approach in which developers apportion bill credits among residential electricity ratepayers that reside in the development’s host community, thus providing direct-to-consumer bill savings.
Though each model provides local benefits, the two approaches differ significantly—both normatively and administratively—in how they integrate energy justice into renewable energy siting. Whether states choose to mandate CBAs, HCBCs, or both, moreover, may substantially impact how these states balance the often-tensional policy goals of transition acceleration and energy justice. Legislators should therefore recognize the distinct benefits and tradeoffs associated with each regime.
a. Community Benefits Agreements
For several decades, localities have used CBAs to secure local benefits from, and build public support for, large-scale developments. A highly procedural approach, CBAs generally involve a multi-step process of convening developers and host communities, including: (1) public education; (2) community negotiation; (3) contract drafting and signing; and (4) implementation and enforcement. Because of this individualized time-investment, proponents argue that CBAs increase local buy-in and project certainty, reducing risk for developers. In addition, CBA negotiations provide developers local knowledge that may improve project outcomes. Furthermore, advocates increasingly contend that CBAs — when viewed as a tool to reduce local opposition to utility-scale renewable energy projects — could be more widely deployed to accelerate the energy transition.
Several states have adopted legislation which mandate CBAs for renewable energy and other types of projects. Pursuant to HB 5120 in Michigan, for example, owners of energy facilities of 50 MW of capacity or more must negotiate a CBA with host communities and must pay $2,000 per MW of capacity to the host community. Under AB 205 in California, applicants seeking California Energy Commission certification for renewable energy facilities of 50 MW of capacity or more must enter into “one or more legally binding and enforceable agreements with, or that benefit, a coalition of one or more community-based organizations.” By requiring developers to enter into CBAs with host communities, states can ensure that impacted communities receive substantial benefits from the projects they host.
As more host communities adopt CBAs, however, several issues persist. CBAs often lack clear enforcement mechanisms, typically because of poor planning and drafting. In addition, communities may face challenges monitoring developers’ actions and may be unaware of non-compliance with the terms of a CBA. Even if non-compliance becomes apparent, communities may lack the capacity or resources necessary to address this breach. Power imbalances between developers and host communities may also result in a lack of transparency and the “institutionalization” of CBAs, threatening the underlying flexibility that makes CBAs an attractive policy option.
Some critics harbor deeper, more philosophical objections to the use of CBAs in the context of renewable energy development. Developer-sympathetic critics argue that CBAs risk enabling extortionate opposition to renewable energy projects. Certainly, local stakeholders offer valuable input and express valid concerns about proposed projects; however, evidence suggests that much opposition to renewable energy development is animated by misinformation. If misguided or unreasonable opposition groups co-opt good-faith negotiations, CBAs may simply embolden climate NIMBYs who resultantly displace meaningful engagement.
Critics also contend that by tethering several ancillary conditions to project development, CBAs make project development unnecessarily cumbersome. This “everything-bagel” approach to renewable energy development could over-condition and over-proceduralize permitting — miring the development of renewable energy facilities and delaying the energy transition. More critically, by vesting local governments or local organizations with the authority to determine how benefits are allocated, especially when monetary benefits could otherwise be conferred directly to local ratepayers as a bill credit, critics may argue that CBAs perpetuate an unwieldy and unnecessary form of local paternalism.
State legislators should carefully evaluate these tradeoffs and, where they do mandate CBAs, take steps to ensure that benefits are maximized and risks minimized. For example, states should consider pathways to improve the enforceability of CBAs by providing localities with resources for monitoring or mandating minimum penalties for developer non-compliance.
b. Host-Community Bill Credits
HCBCs do away with much of the local engagement and procedure associated with negotiating CBAs. HCBCs are thus administratively simpler: (1) the developer of a renewable energy project annually pays a per megawatt fee to a host community; (2) the fee is apportioned among residential ratepayers that reside within that host community; and (3) the apportioned fee is credited directly to residential ratepayers’ bills. This approach, although not identical, shares many similarities with existing models for “Community Solar,” through which program subscribers are provided bill credits for community-scale renewable energy projects. HCBCs, furthermore, emphasize the economic justice dimensions of the energy justice movement — in effect, using the energy transition as a vehicle for modest wealth transfer.
Presently, New York is the only state that legislatively mandates that developers provide direct-to-consumer bill credits to host communities of utility-scale renewable energy projects. Pursuant to the Accelerated Renewable Energy Growth and Community Benefit Act (“Accelerate Act”), the New York State Public Service Commission created a “host community benefit program,” under which owners of renewable energy facilities of 25MW of capacity or more must pay $500/MW for solar or $1,000/MW for wind to host communities annually for ten years post-development. The host community must equally distribute these funds among all residential ratepayers residing in the municipality. Though the Commission had broad authority to implement a more flexible program, it concluded that bill credits would be “the most direct way to apply a tangible benefit.”
The advantages of the HCBC approach are intuitive. Unlike CBAs, bill credits require minimal community engagement, thus streamlining the development process. Without these procedural costs, advocates can more convincingly argue that developers should offer more generous credits. During an energy-affordability crisis, moreover, bill credits could serve as an efficient and politically popular way to deliver community benefits from utility-scale renewable-energy projects.
However, without local engagement, communities directly impacted by renewable development will lack the opportunity to work with developers to mitigate local impacts from utility-scale renewable energy development. Indeed, environmental justice-focused critics of the bill credit model, such as the City of New York, contended that local benefit allocation “should be left to the governing body of the municipality with input from members of the community and community-based organizations that are familiar with … the needs … in that community.” More fundamentally, some of these critics contended that true “community benefits” should accrue to the public at large, making HCBCs—which flow to individual ratepayers—an insufficient mechanism.
If states choose to mandate HCBCs, legislators should advocate for generous credits, with the caveat that mandatory payments should not be so high as to substantially deter market interest in renewable energy development. To improve distributive equity, legislators should also consider allocating credits in a way that provides more benefit to low-income ratepayers or those most impacted by projects. Finally, states should consider alternative legislative mechanisms to support local engagement, even if they do not require full CBAs.
Conclusion
In a post-CBP federal landscape, states should take steps to imbue energy justice into their own development policies. CBAs and HCBCs offer two pathways to protect local interests in renewable energy development. However, each model carries tradeoffs between procedural rigor, administrative simplicity, and distributive equity. Therefore, state legislators should carefully weigh these considerations to ensure they are effectively balancing the need for transition acceleration and energy justice.
Andrew Kieffer is a Fellow with the Renewable Energy Legal Defense Initiative at the Sabin Center for Climate Change Law at Columbia Law School.
Great Job Andrew Kieffer & the Team @ Climate Law Blog Source link for sharing this story.
