Improving Community Benefits Plans Can Optimize Local Outcomes

The process of transforming the energy infrastructure of the United States to meet ambitious climate targets and support a low-carbon economy will attract tens of billions of dollars in private and public investment over the coming decades. This redevelopment of US energy infrastructure will bring extensive opportunities and challenges to communities, particularly communities near oil and gas installations. These frontline communities are more likely than others to also host new large clean energy projects, such as Regional Clean Hydrogen Hubs through US Department of Energy (DOE) efforts and carbon capture and storage facilities. Large capital investments already have been deployed through the Biden-Harris administration’s Inflation Reduction Act and Bipartisan Infrastructure Law. As the sustainable energy transition ushers in a new era of constructing large-scale energy facilities, additional community engagement, planning, and agreement will be needed to ensure that communities benefit from the clean energy transition—particularly the communities that are near existing and new energy investments.

Local residents often are economically dependent on the fossil fuel industry for direct employment; local tax revenues; and spillover demand that supports local restaurants, shops, and other small businesses. However, fossil fuel communities can suffer social and environmental harms from new energy infrastructure. Neighborhoods that are adjacent to oil and gas wells and refineries, for example, have been exposed disproportionately to harmful air and water pollution for decades, resulting in worse public health outcomes. The section of the lower Mississippi River in Louisiana between Baton Rouge and New Orleans has earned the infamous nickname “Cancer Alley” in reference to the more than 200 local fossil fuel installations that are responsible for a quarter of total domestic petrochemical production.

Low-income people of color often constitute a significant proportion of the population in fossil fuel communities. Black Americans are three-quarters more likely than other racial groups, on average, to reside near polluting sites, and more than one million Black residents live less than half a mile from a petrochemical plant. Historically disadvantaged communities have lacked the bargaining power to ensure that developers invest in local economies as part of their projects and to hold industry accountable for pollution and other environmental impacts.

DOE requires CBPs as part of all funding opportunity announcements that come through the Bipartisan Infrastructure Law and the Inflation Reduction Act. These CBPs are designed to achieve four outcomes:

1. Engage communities and labor
2. Invest in America’s workforce
3. Advance diversity, equity, inclusion, and accessibility
4. Implement the Justice40 Initiative

Notably missing from the CBPs is an outcome focused on harm identification, reduction, and mitigation. By focusing only on potential economic benefits and ignoring potential harms to the local community from a project, CBPs only partially meet the needs for community engagement in project planning.

DOE has stated that these CBPs are intentionally flexible, but also specific, actionable, and measurable. The CBP portion of each project proposal accounts for approximately 20 percent of the technical merit review. The hope for CBPs is that they help structure community engagement and ensure input on key project-planning decisions, such as siting and environmental-impacts mitigation, while generating local social, economic, and environmental improvements as co-benefits of the project. From a developer’s perspective, CBPs can improve public support of a project, thereby reducing risks in securing local approvals or other funding.

Surveys have indicated that a majority of residents tend to be unaware of plans to build a major energy infrastructure project in their community, whether it be a hydrogen hub or direct air capture facility, prior to DOE award announcements and public releases. Given that CBPs are a requirement in project applications, this lack of awareness raises questions about which parts of a community get engaged in the CBP development process and why others are left out.

Complementary policy tools enacted at the local level can enhance the efficacy of CBP processes and commitments. The Initiative for Energy Justice provides a comprehensive overview of such tools, including codifying community right-to-refuse or consent-based siting; codifying the principle of free and prior informed consent, especially for Indigenous communities; and establishing democratically governed funds and trusts that can support communities with legal representation or enable community ownership.

Best practices for community benefits planning start with a community-engagement process in which community members inform the menu and prioritization of benefits and can weigh in on whether a new facility represents an unacceptable level of harm. Community consultations can be conducted through multiple channels, including surveys, town hall meetings, public workshops, and webinars involving local organizations that hold trust with the community.

Transparency and Enforceability

Another challenge for CBPs lies in the inherent flexibility that DOE describes as a benefit of these documents. CBPs are considered flexible because they are not legally binding—and therefore are challenging to enforce.

DOE seeks to overcome the lack of enforceability by contractually obligating certain components of CBPs. However, the process is not transparent about how success is measured for the project and its CBP, how community members are engaged in determining what ultimately is written into DOE project plans, and how DOE makes decisions about funding for projects that do not meet the metrics of their CBPs. Without specific commitments that include quantifiable goals and timelines, public oversight, and accountability, equitable outcomes will be difficult to achieve.

Community Benefits Agreements (CBAs) are legally binding agreements that are publicly negotiated and aim to minimize negative impacts from development projects. CBAs improve upon the mechanisms of CBPs by creating a legally binding, mutually beneficial agreement between developers and residents. As legally binding agreements, CBAs in many cases give local leaders and community groups the power to challenge developers and halt construction or operations if residents believe that contractors are not upholding the established commitments to limit negative outcomes like pollution. CBAs thus can build long-term trust among communities that will then support and help accelerate the clean energy transformation.

Considering Design and Metrics for Community Benefits Agreements

Facilitating engagement and input from communities takes considerable time. Funders or government entities that require CBAs for project approval need to allow time for applicants to construct a representative community coalition, capacity building on the community side, and developers to understand and build trust with the community. Rushing this process could result in a CBA that is less representative and likely less beneficial for the overall community.

Critically, CBAs work best when the community participants represent the area’s demographics. Effective community engagement involves extensive outreach and consultation in multiple sectors of the population. Ultimately, the development of a community-supported CBA may benefit from the formation of a local coalition that collectively bargains for community benefits and economic empowerment as part of the development agreement.

CBAs can include three categories of measures: risk mitigation and hazard management, enhanced public infrastructure, and community benefits related to economic outcomes and social services. CBAs often include monetary and nonmonetary contributions to the community that can be supplemented with overall tax revenue. However, relying on tax revenue instead of specific project commitments can be risky, as taxes can be contingent on a project’s success and development timeline.

Infrastructure, Risk Mitigation, and Hazard Management

CBA provisions can include measures to address and mitigate community concerns for safety and health risks associated with a development. For example, provisions might include installation of air-quality monitors with data available to the public; funding for third-party review and inspection of the facility; or other examples related to waste management, water quality, pipelines, and transportation infrastructure. The provisions would go alongside a detailed plan for what the developer will do in case agreed-upon expectations are not met.

Infrastructure upgrades, for example, should be evaluated to understand whether the proposed improvement and capacity expansion will serve only the development, or if it will provide a broader benefit to the community. Upgrades that benefit only the development, and which do not provide any expansion of benefits or services to community members, should be explicitly stated as such.

Community Benefits 

In general, agreements for harm reduction should accompany agreements for local benefits that meet the principles of additionality, which means providing community benefits that are additional to what already exists or would exist with available public and private investment in the community, as opposed to replacing a community benefit that would be removed through the project’s development with something of similar value.

Survey respondents polled by the nonprofit Data for Progress show substantial support for the mandatory use of CBAs for energy and industrial infrastructure projects, in addition to the construction of new housing, sports, and business centers (Figure 1).

CBPs and CBAs represent valuable tools that help prevent environmental harms in frontline communities which otherwise could result from new energy infrastructure projects; these tools also can deliver meaningful benefits to communities that host new, large-scale, clean-energy infrastructure. The nonbinding nature of CBPs, and nontransparent nature of CBP implementation by DOE, makes this mechanism an imperfect solution for sharing project benefits among developers and community residents. The DOE CBP process could be improved by borrowing from the CBA model, wherein communities and developers are parties to a public, legally binding, specific agreement that centers community members in the crafting of benefits plans and enables the transparency, accountability, and enforcement of commitments for mitigating harm and delivering benefits.

CBAs have been implemented successfully across the United States to date. Resources for effectively developing CBAs, which also could apply to modified CBPs and be supported by DOE, are available at the All-In Cities initiative by the research institute PolicyLink. A related database and policy guide also have been constructed by the Sabin Center for Climate Change Law. States such as California have a long track record of successful CBAs, with examples that include the construction of a major Los Angeles sports arena in 2001 and the expansion of Los Angeles International Airport in 2005. These CBAs can serve as benchmarks for negotiations in energy-infrastructure developments, so communities and developers can avoid recreating the wheel. For further reading, papers published by ReImagine Appalachia and the World Resources Institute provide additional insights into best practices for developing CBPs and CBAs.