Will $2 Trillion in Climate and Infrastructure Investments Go Where It’s Needed Most?

A 50-State Survey of State Policies and Decision Makers to Help Ensure Federal Investments Go to “Disadvantaged Communities” Under Biden’s J40 Initiative

TABLE OF CONTENTS

• Executive Summary

• Existing Federal Guidance on Disadvantaged Communities and J40

• DAC Definitions in Water Infrastructure

• Questions Covered

• Patterns Found in Our Research

• Limitations & Caveats

• State-Level Findings

• Acknowledgments and Additional Resources

With federal funds from the Inflation Reduction Act (IRA), Biden’s Infrastructure Law (BIL) of 2021, and the American Rescue Plan Act (ARPA), the federal government will be releasing over $2 trillion over the next five years to states and local governments to address infrastructure, clean energy, and climate change.  Biden’s J40 Initiative (J40) requires that at least 40% of the benefits of investments in clean energy and water infrastructure go towards disadvantaged communities (DACs) that are marginalized, underserved, and overburdened by pollution, a term that is defined differently at federal, state, and local levels.  It will take careful coordination between all levels of government and communities to meet the J40 targets. 

This report provides an overview of the various definitions and data available for identifying disadvantaged, marginalized, underserved, and overburdened communities within each of the 50 states, including Puerto Rico and Washington, D.C., to help states, local governments, communities, and nonprofit partners implement J40 requirements.  This report also provides an overview of any known existing or proposed state level policies for J40 implementation, and identifies the relevant state-level decision makers and agencies regulating climate, energy, water, and infrastructure to facilitate community engagement and ensure coordination between agencies.  

The information provided herein can be used in a variety of ways. State decision makers and agency leads might use this report to help prioritize federal funding for vulnerable communities and to identify model policies from other states for implementing J40. Local governments and communities can use this report to determine whether they are (or should be) identified as a “disadvantaged community or DAC” for priority funding and to facilitate meaningful community engagement.  Nonprofits and advocates can use this report to identify relevant state-level decision makers and proposed regulations related to environmental justice and equity to determine the best entry points for advocacy.  Finally, federal agencies can use the state-level mapping data to enhance existing federal maps and to identify data gaps.

Implementation of J40 is key to addressing historic inequities in this country.  Sometimes the biggest obstacle to progress is access to information.  A federal investment of this magnitude has the potential to either greatly improve climate policy or lead to even more climate inequities if we do not ensure funding goes to where it is needed most: to the communities of color and low-income communities that have been left behind and are most vulnerable to the impacts of climate change.

Existing Federal Guidance on Disadvantaged Communities and J40

In January 2021, the Biden Administration launched the historic Justice40 Initiative by Executive Order  to address long-standing climate and environmental inequities.  J40 takes an all-of-government approach and requires federal agencies to work with states and local communities to ensure that at least 40% of the benefits from federal climate and clean energy investments go to DACs that are marginalized, underserved, and overburdened by pollution.  J40 is designed to help ensure the investments from the BIL, IRA, and ARPA that are directed towards climate, clean energy and energy efficiency, clean transit, affordable and sustainable housing, training and workforce development, clean water infrastructure, and the remediation of legacy pollution prioritizes vulnerable communities to level the playing field and to address past environmental harms. The Biden Administration issued interim guidance on July 20, 2021 regarding J40 implementation and additional guidance in July and August 2022 identifying the hundreds of programs covered by J40.

Federal agencies, including the Department of Energy (DOE), Department of Transportation (DOT), and the Environmental Protection Agency (EPA), have started to roll out J40 guidance and program-specific guidance that require states and local governments to both identify and prioritize underserved communities within their jurisdictions.  For example, the DOE’s recent guidance regarding the State Energy Program requires states to engage with DACs and to describe specifically how proposed projects will benefit DACs in grant applications.  This process requires states to not only possess knowledge of DACs within their boundaries, but also to undertake meaningful community engagement before project lists are finalized and applications are submitted.

Under the federal guidance, a “community” is defined as: “either a group of individuals living in geographic proximity to one another, or a geographically dispersed set of individuals (such as migrant workers or Native Americans), where either type of group experiences common conditions.”  The guidance directs federal agencies to determine whether a specific community is disadvantaged based on a combination of variables that may include, but are not limited to:

• Low income, high and/or persistent poverty 

• High unemployment and underemployment 

• Racial and ethnic residential segregation, particularly where the segregation stems from discrimination by government entities 

• Linguistic isolation 

• High housing cost burden and substandard housing 

• Distressed neighborhoods

• High transportation cost burden and/or low transportation access

• Disproportionate environmental stressor burden and high cumulative impacts

• Limited water and sanitation access and affordability

• Disproportionate impacts from climate change

• High energy cost burden and low energy access

• Jobs lost through the energy transition

• Access to healthcare

Several federal agencies have created an agency-specific DAC definition, including but not limited to DOE and DOT. The EPA provided technical guidance asking states to define DACs within their jurisdiction to support J40 implementation of the $43 billion of water infrastructure funding in the BIL and has developed. In addition, the EPA just last week launched the EPA Office of Environmental Justice and Civil Rights to help implement J40. The new office will oversee the implementation and delivery of a $3 billion climate and environmental justice block grant program created by the IRA and will ensure EPA’s implementation of other funding programs under the IRA, BIL, and ARPA meet or exceed the President’s Justice40 Initiative.

In addition to the CEJST Map, several federal agencies have provided additional DAC definitions and mapping guidance for their particular agency’s jurisdiction. 

Federal agencies working on J40 mapping tools consistently request detailed information from states and local governments, which are better positioned to provide localized information.  This report provides an overview of the available state-level information for DACs that can be used by federal agencies to improve their mapping data.  

DAC definitions in Water Infrastructure

Long before J40 was established, states were required to consider both affordability and criteria for underserved communities in the water context.  Both the Clean Water Act and the Safe Drinking Water Act (SDWA) include provisions to prioritize water infrastructure funding for communities in need. 

Specifically, the SDWA was amended in 1996 to establish the Drinking Water State Revolving Fund (DWSRF) program to assist water systems with financing the costs of infrastructure upgrades and to address public health needs. Section 1452(b) of the SDWA requires that each state prepare an annual Intended Use Plan (IUP) to identify the proposed use of funds. Section 1452(d)(3) defines the term “disadvantaged community” in the drinking water context to mean the service area of a public water system that meets affordability criteria established by each state. The BIL amended the SDWA to provide an even greater subsidy for disadvantaged communities through loan principal forgiveness, grants, and negative interest loans.

Similarly, Section 603(i) of the Clean Water Act (CWA) details how a state Clean Water State Revolving Fund (CWSRF) program may provide additional subsidies for communities in need and requires each state to establish affordability criteria for the program. Under the CWA, affordability criteria should be based on income and unemployment data, population trends, and other data determined relevant by the State. While several states have yet to directly address equity in climate or energy, they have established DAC definitions and affordability in the water context to secure additional funding.

For all of these reasons, it is critical for federal agencies, states, local governments, and communities to have a clear understanding of the existing state-level definitions and available mapping data for DACs and vulnerable communities to meaningfully implement J40 and to ensure that the over $2 trillion goes where it is needed most.  

Questions Covered

To facilitate J40 implementation, this report describes existing state-level DAC or similar definitions in the climate, equity, and water context found in state law, regulation, guidance, or policy, as well as any relevant DAC mapping tools in active use or development.  To ensure meaningful community engagement and assist coalition partners with advocacy efforts, this report also identifies the state-level decision makers and agencies regulating equity, climate, infrastructure, energy, and water.  Note that this report does identify state energy office contacts because that information is already available by NASEO.  Finally, the report identifies states that have enacted or are considering laws, policy, or guidance related to the implementation of J40 to provide model policies to consider and to highlight the existing gaps in policy.

For additional details regarding our approach to the legal research and methods, click here.

Patterns Found in Our Research

Out of all of the states, only 13 states have an active map identifying DACs (or similar definitions) within their jurisdiction, while 5 states have maps that are currently in development.  

However, even in states that have not established an active J40 DAC map, many have collective relevant data on median household income, race, ethnicity, and health factors that can be used to help identify DACs.  For states with an existing DAC definition and/or mapping tool, 23 of them consider race a criteria in designating underserved communities, which remains a hotly contested issue and one critical to addressing environmental racism.

Regarding state-level guidance for implementing J40, 9 states have existing or proposed guidance directly related to J40 implementation and 19 states have J40-related guidance regarding equity funding for vulnerable communities; however, we note that a lot of the existing guidance relates to the states’ National Electric Vehicle plan, which was required by the Federal Highway Administration in July of this year.

With respect to state-decision makers, we note that while the White House asked all states to identify a specific infrastructure manager or coordinator for BIL and J40 implementation, only 28 states have publicly identified such a manager or manager teams.  For states without a public-facing infrastructure manager, it will be more difficult for community leaders to meaningfully engage on infrastructure and funding decisions, which runs counter to the goals of J40.  

Limitations and Caveats

The area of equity funding law is rapidly evolving.  This report provides data researched as of September 30, 2022, but we anticipate that new and proposed regulations will continue to be released by states as more federal funding programs are announced and as the CEJST Map is revised.  This report will be updated monthly as new information becomes available. 

State-Level Findings

To view state-level findings, please click on one of the state names listed below. If you have a proposed update to the findings in your state, please click here.

Acknowledgments and Additional Resources

This work is licensed under CC BY-NC 4.0.

Footnotes