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Energy Department to Flex $62 Billion Funding Muscle on Equity

Jan. 28, 2022, 11:00 AM

The Energy Department plans to leverage much of its $62 billion in infrastructure funding to benefit low-income and minority communities, while environmental justice advocates see a need for wholesale changes in funding distribution to get dollars to the intended places.

The department’s standardized language is a key lever to scaling up the Biden administration’s Justice40 goals, Tony Reames, senior adviser on energy justice, told Bloomberg Law. The language is to be issued in funding guidance to state energy offices and tucked into competitive grants.

The Justice40 initiative calls for federal funding to deliver at least 40% of benefits to marginalized communities. Reames is working with about a dozen other agency researchers to better target the agency’s funding by mapping current disparities, he said.

Less than 6% of agency funding—about $2.2 billion of $38.5 billion in spending in fiscal year 2021—were in line with Justice40 priorities, according to the agency’s Energy Justice Dashboard. The database of departmental funding lists seven priority funding areas, including housing, clean energy, job training, transportation, climate change, clean water, and remediating legacy pollution.

The Biden administration is “under some pressure to deliver” on environmental justice, “and I think the Justice40 initiative is a ripe place for the administration to do so,” said Simone Jones, an environmental partner at Sidley Austin LLP.

Referencing the DOE figures, she said, “I completely expect that that 5 to 6% number is going to increase significantly this year and next.”

Identifying Communities

Justice40 allows the department “to identify who are the communities that have not been able to benefit from the energy system of the past,” said Reames, who is on leave from his job as a sustainability professor at the University of Michigan.

The dashboard includes funding decisions made before the administration’s Justice40 initiative, he said.

“This is a new thing,” he said. “So I think just putting that information out there, and people being able to calculate their programs—where are we doing 40% and then set those goals to actually get there—this data reporting and analysis allows that to happen.”

Reames couldn’t say when the guidance would be made available. The department is waiting on comments from states and other stakeholders.

The $62 billion from the $1 trillion infrastructure bill approved in November includes $21.5 billion for clean energy demonstrations and research hubs; $11 billion for power grid resilience to extreme weather and cyberattacks; $7 billion to support a battery supply chain; and $6 billion to aid nuclear plants.

The agency is targeting grid upgrades in minority communities that often experience more outages for longer periods of time, Reames said. Clean energy research could result in the rollout of community solar that directly benefits low-income communities that can struggle to afford the fossil fuel generation next door, he said.

The department could encourage state energy and transportation departments to work together—similar to a recent federal joint initiative—to roll out electric vehicle charging stations near marginalized communities, Reames said. The bill established a workforce board to spur job training in new clean energy sectors.

Recent funding that fell into DOE-defined Justice40 priorities included contracts for nuclear waste cleanup, cooperative agreements for carbon capture and storage research, and grants to states for energy efficiency projects, the department’s dashboard showed.

Video: The Biden Administration has pledged to make environmental justice a priority. Here’s a look at the limited legal options impacted communities have to combat negative environmental impacts.

Battle Over Benefits

The new focus on justice could prompt local challenges—both from groups that want a project and those that don’t, legal experts said.

With maps such as the Energy Department’s dashboard, “environmental groups and the affected communities have some new tools to challenge some of these facilities as they’re going through the review process,” Michael Leslie, a Los Angeles-based partner for King and Spalding LLP working on the firm’s environmental justice team.

Jones, of Sidley, said she expects “inevitable” legal challenges to spring up as a result of distributions based on environmental justice criteria. Ambiguity around what counts as “benefits” could fuel the debate, she said.

For example, environmental justice advocates warned White House officials against considering carbon capture and any projects that sustain fossil fuels as beneficial, Jones said, pointing to recommendations last year by the White House Environmental Justice Advisory Council.

Yet the infrastructure bill contained $12.1 billion for DOE to fund carbon management programs that counted toward environmental justice goals in the agency’s dashboard. That could run into conflict with communities that oppose it, Jones said.

At the same time, lengthy environmental reviews could stall clean projects—creating a “real tension” in environmental justice communities, said Sarah Hunt, president and CEO of the Joseph Rainey Center for Public Policy and a conservative clean energy policy expert.

“Some of these communities that are overburdened by pollution are also historically economically disadvantaged, so you have to find that balance,” Hunt said. “Oftentimes they really do want the jobs, especially if their jobs are pushing us toward that carbon-neutral future.”

‘Shovel-Right’ Projects

Biden is facing “some level of disappointment” among environmental justice advocates that he has not yet delivered all his campaign climate promises, Jones said.

The agency faces steep challenges in funneling federal infrastructure dollars to environmental justice zones—largely defined as communities that are low-income or have large minority populations, or both.

The government contracting apparatus for years excluded minorities and women, said Christina Cummings, vice president of operations for the Partnership for Southern Equity. The Atlanta-based organization advances racial equity issues as part of the Justice40 Accelerator, a coalition stood up to promote more equitable federal investment.

Cummings is taking lessons learned from the 2009 stimulus law that targeted “shovel-ready” projects that ultimately did not lift minority communities. Her group is now advocating for “shovel-right” projects to be carried out by organizations embedded in those communities, she said.

“We want to really reverse-engineer what the process would look like,” Cummings said, in helping front-line communities “build contracting and procurement muscle” by supplying grant-writing expertise and pre-application funding.

To contact the reporter on this story: Daniel Moore at dmoore1@bloombergindustry.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloombergindustry.com; Chuck McCutcheon at cmccutcheon@bloombergindustry.com