June 26, 2024
By Marisa Sotolongo
Community Benefits Agreements (CBAs) and Community Benefits Plans (CBPs) have become a hot topic among energy justice practitioners and policy advocates, as tools to ensure that underserved and overburdened communities receive some of the benefits from the recent substantial federal investments in clean energy and climate infrastructure. IEJ’s latest white paper, released in June 2024, explores these tools in depth as part of our new policy area, “Community Benefits and Governance,” developed during our strategic planning process. Our work in this area focuses on ensuring that communities experience material benefits from the energy system and have decision-making authority over energy infrastructure. Policy interventions that account for, track, and allocate benefits, such as CBAs and CBPs, can advance energy justice by redistributing these benefits to environmental justice communities. IEJ’s work in this policy area intentionally weaves together benefits and governance, in order to advocate for policy solutions that advance both material redistribution of benefits and decision-making power in the energy system. In this blog post, we give a brief overview of CBAs and CBPs and offer recommendations to advance energy justice through community benefits policies.
Community Benefits Agreements (CBAs) are contracts negotiated by a developer and a community-based coalition that confers benefits to the people residing near a project.
Community Benefits Plans (CBPs) are planning tools developers are required to submit for certain federal funds that outline plans to confer benefits to populations affected by a project.
CBAs and CBPs are used to ensure that underserved and overburdened communities receive some of the benefits from the recent substantial federal investments in clean energy and climate infrastructure. Benefits can include, for example: monetary payments, pollution remediation, infrastructure investment, jobs programs, and health improvements. Stakeholders may have different reasons for engaging with or promoting a community benefits process, depending on their goal. These different reasons can include:
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- Increasing community engagement and input in the early planning stages of a project, thereby increasing community-based planning capacities
- Redistributing monetary and other benefits of infrastructure investments to disadvantaged and environmental justice (EJ) communities in a restorative justice framework, to make up for past harm
- Giving communities a concrete mechanism for holding developers and local government accountable for promises made during negotiations around permitting and tax incentives for development
- Reducing community opposition to clean energy projects and streamlining development of these projects to achieve climate goals
- Building labor organizing power and ensuring workforce development and apprenticeship programs
Community Benefits Agreements are enforceable contracts between the developer of a project and a coalition of community-based organizations that include negotiated benefits for the community in exchange for support for the project. The goal is to provide benefits for the community in order to mitigate negative impacts of the project. CBAs (or similar enforceable agreements, such as Good Neighbor Agreements or Host Community Agreements) have been used in many different types of projects, including building a soccer stadium in Nashville, expanding and updating the LAX airport, a facility for manufacturing electric transit buses in Alabama and California, and utility-scale infrastructure projects in New England. To mitigate the negative impacts of these projects (including rent hikes, gentrification, non-local job sourcing, and increased traffic and pollution), communities began negotiating for workforce and housing benefits agreements, labor agreements, and occasionally, environmental monitoring or funding of community programs. Sometimes, in exchange for benefits, community organizations and coalitions pledge to support (or at least not work against) the project moving forward, effectively giving the development project community permission to operate.
At the federal level, Community Benefits Plans are a part of the application requirement for the Department of Energy for all funding and loan applications through the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL). Applicants are required to submit a CBP, which details information on the project location(s), the communities that are geographically near the proposed project location(s), and the communities that will be part of the proposed project’s supply or waste life cycle. The CBP requires applicants to detail community engagement work that has occurred already, and plans for future engagement work, including the intended outcomes of engagement, objectives related to job quality, commitment to CBAs or other agreements, and commitment to the Justice40 Initiative.
At their best, CBAs have the potential to fill a gap that exists in energy policy. Usually, utility-scale energy projects generate benefits (profits) for shareholders if the project is owned by a private entity (such as an investor-owned utility or private development company); other benefits, such as increased reliability and resilience, lower bills, or fewer GHG emissions are shared equally among all customers of a utility or all people globally. Communities in the immediate vicinity of utility-scale energy projects will generally not receive specific benefits from the project without a policy in place like a CBA; they will have to deal with the immediate impacts of the project, such as increased traffic and construction, aesthetic concerns, effects on biodiversity, wildlife, and water quality, or pollution impacts (upstream, at the site, or downstream). CBAs can fill this niche and ensure that benefits are flowing to communities that would otherwise not benefit directly from a project. They can also ensure that communities affected by legacy pollution impacts are able to negotiate for benefits that can meet the goals of restorative justice efforts.
However, there are potential downsides to advancing policy that requires CBAs or CBPs. These policies create a predictable environment for CBA negotiations and could dilute the power of grassroots-initiated negotiating processes. Some local governments have adopted model CBA language, which provides a template for how the negotiations between a developer and community coalition should go; others have created community benefits ordinances, which usually include a template, and are adopted into a municipal charter as a requirement for development projects. These requirements have generally led to non-binding agreements, excluded grassroots groups from the negotiation process, treated community benefits as a box-ticking exercise, and created community benefits ceilings instead of starting points.¹ Some states have enacted legislation requiring CBAs or benefits agreements between a local government and the developer (host community agreements, or HCAs) for solar, wind, and storage projects.² In creating a predictable environment for CBAs, expediting the development process tends to be prioritized over maximizing community benefits and engagement.
Community benefits policies are not a silver bullet solution to energy injustice; based on the project, CBAs can even contribute to locking in and streamlining the development of non-renewable energy projects, such as oil refineries, hydrogen projects, gas-fired power plants, radioactive waste disposal sites, and nuclear plants. In addition, CBA and CBP requirements have not necessarily advanced community governance and self-determination, another key pillar of energy justice. Community-centered planning processes and the right to refusal of projects are cornerstones for a justice-centered approach to community benefits policies. This is especially necessary for Indigenous communities and peoples, as well as environmental justice communities who are still owed restorative justice, not more pollution.
Many policymakers and advocates are engaging in community benefits policy processes, whether negotiating CBAs at the local level for an energy generation or transmission project, considering state legislation requiring CBAs or similar agreements, or engaging with a developer subject to the DOE’s CBP requirements. IEJ offers four recommendations for how to increase energy justice in these community benefits policies:
1. Establish transparency and accountability mechanisms in CBPs: Energy justice requires that marginalized communities participate meaningfully in the policymaking process—not only during CBA negotiations, but in the process of deciding whether the projects are funded and sited in the first place, and in developer creation of CBPs.
2. Center disadvantaged communities in CBAs: The public sector should recognize that HCAs may not fulfill benefits reallocation goals for disadvantaged communities based on the characteristics of the host community, and should require additional benefits reallocation mechanisms to advance substantive, procedural, and restorative energy justice.
3. Create benefits reallocation mechanisms for large-scale projects: Large-scale project developers should be required to ensure that marginalized communities are benefitting from the development and operation of the projects through first-source hiring programs, revenue sharing, community program funding, community or public ownership requirements, and other state-initiated mechanisms.
4. Share co-benefit methodologies across states: Policymakers involved in benefits reallocation policy should look to the local, state, and federal levels for examples of how investments and co-benefits are measured and tracked across different policies. Ensuring that the investments and co-benefits in a policy or CBA are measurable and trackable increases likelihood that these policies/agreements can be enforced.
More detailed discussion of these policy recommendations, as well as research findings from analysis of energy project development CBAs, can be found in the white paper. Community benefit policies have the potential to advance energy justice when communities are able to lead the negotiation process as decision-makers. Coupling community benefits policies with other tools, which could include codifying community right-to-refuse or consent-based siting; the principle of free and prior informed consent (FPIC) especially for Indigenous communities; establishing democratically-governed funds and trusts; and community or public ownership of the energy infrastructure being built,³ will ensure that we achieve a holistic form of energy justice. Otherwise, institutionalizing benefits reallocation in policy risks simply reproducing the same inequitable structures, the same distribution of benefits and harms, of our current energy system.
Endnotes
- Nicholas Belongie and Robert Mark Silverman, “Model CBAs and Community Benefits Ordinances as Tools for Negotiating Equitable Development: Three Critical Cases,” Journal of Community Practice 26, no. 3 (July 3, 2018): 308–27, https://doi.org/10.1080/10705422.2018.1476427.
- “California Assembly Bill No. 205,” Cal. P.R.C. § 25545 (2022), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB205; “Michigan Act No. 233,” MI Public Acts of 2023 § (2023), https://legislature.mi.gov/Bills/Bill?ObjectName=2023-HB-5120; “New Jersey Economic Recovery Act of 2020,” NJ Stat. § 34:1B-332 § (2020), https://www.njeda.gov/economicrecoveryact/.
- Denise Fairchild and Al Weinrub, Energy Democracy: Advancing Equity in Clean Energy Solutions, 2017; Jennie C. Stephens, “Energy Democracy: Redistributing Power to the People Through Renewable Transformation,” Environment: Science and Policy for Sustainable Development 61, no. 2 (March 4, 2019): 4–13, https://doi.org/10.1080/00139157.2019.1564212.