Center for American Progress

Guide to Rural and Tribal Capacity-Building Programs
Report

Guide to Rural and Tribal Capacity-Building Programs

Helping Underresourced Communities Take Advantage of Capital Investments

These 10 federal programs are designed to expand capacity and bridge the gap between federal resources and the rural and Tribal communities that need them most.

Part of a Series
In this article
Joe Biden in front of clouds in sky
President Joe Biden discusses investments in conservation and protecting natural resources, and how the Inflation Reduction Act is the largest investment in climate action, near Tusayan, Arizona, on August 8, 2023. (Getty/Jim Watson/AFP)

Introduction and summary

In April 2023, the White House released the “Guidebook to the Inflation Reduction Act’s Clean Energy and Climate Investments in Indian Country.”1 The guidebook details the many grant programs, tax incentives, and loans that the Inflation Reduction Act dedicated to Tribal entities, as well as the many other opportunities for which Tribes are eligible. In addition to the guidebook, federal agency staff provide briefings and webinars on the money that is available to Tribes through the Inflation Reduction Act, the Infrastructure Investment and Jobs Act (IIJA), and the American Rescue Plan Act.2 The resources are historic and potentially transformative.

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Even with this outreach, however, the sheer volume and complexity of the programs, eligibility criteria, and application requirements can be overwhelming. Limited staff, expertise, and resources in rural and Tribal areas make the process of identifying, accessing, and managing federal grants particularly burdensome and difficult to navigate.3 Unresolved gray areas remain, particularly related to how energy, infrastructure, and conservation programs apply to Tribes, as well as what happens if Tribes don’t meet all listed criteria—including having a current audit, a complete feasibility study, or permits—or can’t meet the significant costs of matching funds and/or interconnection tariffs.

The Inflation Reduction Act represents the most significant effort to date to address climate change and promote clean energy. The Inflation Reduction Act includes new funding opportunities, tax credits and rebates, and financing authority for individuals, homeowners, and businesses. For example, the legislation established a $27 billion green bank, allocated $3 billion to address equity and environmental justice concerns, and provided subsidies to consumers who purchase electric vehicles and home appliances. Yet navigating the Inflation Reduction Act’s more than 100 different provisions can be daunting.4 Ensuring that resources reach rural communities and deliver tangible benefits will be critical to the law’s success.

The Biden-Harris administration is aware of communities’ and Tribes’ capacity limitations. Federal agencies implementing Inflation Reduction Act programs are working with new authority, funding, and partnerships to build capacity in Tribal and rural communities so that they can identify, apply for, and manage resources. This report highlights 10 programs that are providing direct funding, staffing, technical assistance, and information to increase the capacity of underresourced communities, improve federal coordination, and build more lasting and meaningful partnerships with Tribal and rural communities:

  1. Rural Partners Network of the U.S. Department of Agriculture
  2. Environmental Justice Thriving Communities Technical Assistance Centers of the U.S. Environmental Protection Agency
  3. Economic Recovery Corps of the U.S. Economic Development Administration
  4. Community benefits plans with the U.S. Department of Energy
  5. Office of Public Participation of the Federal Energy Regulatory Commission
  6. Local Assistance and Tribal Consistency Fund of the U.S. Department of the Treasury
  7. State Energy Program of the U.S. Department of Energy
  8. Treasury Direct Pay provisions
  9. Inflation Reduction Act Environmental and Climate Justice Block Grants
  10. Greenhouse Gas Reduction Fund grant programs

These programs are designed to deliver hands-on direct technical assistance, meaningful stakeholder engagement, and resources that will help Tribes and rural communities access federal resources. Yet they remain limited by geography, underresourced with respect to the scale of need, and untested in practice. More can be done to learn lessons, leverage successes, and expand programs that are working. These are the gaps that the administration and organizations such as the Alliance for Tribal Clean Energy are attempting to bridge, but more federal support is needed if these programs are to be successful in achieving their intent. While this report focuses on these capacity-building programs’ relevance for rural and Tribal communities, the programs would benefit any community trying to navigate federal resources.

Expanded capacity is needed to use Inflation Reduction Act resources

Navigating the Inflation Reduction Act’s energy and climate programs requires robust capacity, including the staffing, expertise, processes, and relationships that communities can leverage to accomplish locally defined goals.5 Without sufficient capacity, taking advantage of these investment opportunities can be daunting; Charlene Johnson, founder and executive director of Plenty Doors Community Development Corporation in Crow Agency, Montana, says she sometimes wants to cry when she hears about all the available resources because she fears that her community is not ready to apply for them.6

Communities may seek to build capacity to accomplish different goals: to provide services, such as affordable housing and child care, to underserved populations; build resilience to natural disasters; or pursue economic development goals. With respect to Inflation Reduction Act programs, the Office of Indian Energy Policy and Programs notes that for some isolated communities, renewable energy offers a reliable and cheap alternative to diesel. For others, community ownership of solar facilities is an exercise of sovereignty and resilience. And for some Tribal governments and Indigenous corporations, utility-scale renewable energy offers a source of revenue and employment.7

Where it exists, capacity allows communities to identify the right funding programs to meet local goals; prepare to receive and apply for money; meaningfully engage community members; design, plan, manage, and execute projects; and report on and share outcomes. Capacity gives communities resources and standing to leverage public and private project investments in their communities for multiple benefits aligned with their needs and priorities.

Capacity building can be accomplished in a variety of ways, including:

  • Targeted and flexible funding. These resources can be used flexibly to hire staff, develop competencies and leadership skills, improve processes and efficiency, sustain planning processes, and participate in peer learning networks and partnerships. Targeted—for example, noncompetitive—and flexible capacity grants, sometimes tied to project implementation, offer resources communities can use to achieve goals.
  • Effective engagement and partnerships. Effective engagement begins by providing resources for community members to participate, including training, child care, staffing, and sometimes compensation for time and expertise offered to government agencies. Effective engagement shares transparent and robust information about projects, employs creative and inclusive processes and dialogue, and requires long-term relationships sustained from project planning through end of project life.
  • Standing and leverage. In regulatory, permitting, and economic development policy, “standing” refers to a community’s level of influence expressed through legal status in planning and permitting, voluntary agreements that empower communities to negotiate for local needs and monitor outcomes, or expertise and credibility in public engagement. Standing equalizes power dynamics between agencies, industry, and communities. Reforming permitting processes and attaching requirements to public investments, such as a community benefits plan, delineate clear responsibilities and accountability for all parties and help communities articulate and negotiate local goals.
  • Coordinating federal programs. Federal technical assistance and capacity programs are often narrowly prescribed to specific programs or funding mechanisms. Technical assistance is most often provided to help communities access a particular pool of money or program; it’s a one-time injection for a one-time program that does not provide long-term or transferable benefits. Breaking down the siloed federal assistance landscape requires resources, authority, coordination, and leadership within agencies.

The Federal Interagency Thriving Communities Network: An all-of-government approach

Through the Federal Interagency Thriving Communities Network,8 government agencies are working closely together to better coordinate and deliver technical support and capacity to communities. The network intends to maximize the impact of federal investments in renewable energy, infrastructure, and economic development by helping bridge the gap between federal funding and the areas that need it most.

The network is a critical piece of a new approach to U.S. economic policy best described as a place-based industrial strategy. Industrial strategy uses public subsidies and investments to crowd-in private capital to achieve a public goal—in this case, to reduce carbon emissions and secure domestic supply chains.9 Making industrial policy place based requires that project investments also have a strong geographic dimension that directs investment to communities with “a history of economic distress and systemic disinvestment.”10 Place-based strategy is achieved in two ways: 1) Public money comes with standards, including additional incentives to steer investments into target communities; and 2) The federal government and states take intentional and significant steps to build local capacity in host communities so they can secure local benefits when public and private investments are made within them.

The programs participating in the Federal Interagency Thriving Communities Network are designed in specific ways to build capacity, provide technical assistance, improve community engagement, and better coordinate across federal resources. Participating programs highlighted in this report include the Rural Partners Network, Environmental Justice Thriving Communities Technical Assistance Centers, and the Economic Recovery Corps. Currently, participating programs remain relatively siloed, but the promise of bringing these programs together under the network umbrella is that coordination, learning, and alignment of resources can occur over time.

It is beyond the scope of this report to detail all the funding and programs intended to build community capacity. The selection of programs described in the next section highlights those that demonstrate best practices and includes both programs within the network and programs outside it. All these programs could be expanded in scope and geographic reach, as well as integrated across agencies, to improve their effectiveness and benefit more communities.

10 important capacity and technical assistance programs

The programs highlighted in this section are designed to deliver resources and technical assistance, improve community engagement, extend standing to communities, and better coordinate federal programs to ensure that not only do federal resources reach rural and Tribal communities but also that they deliver tangible benefits when they arrive. These are existing programs, not proposals, that demonstrate principles and practices that can be expanded and extended to serve more communities. Programs are listed in no particular order.

Securing local benefits from new funding opportunities requires expansion of nascent capacity programs

All the federal capacity-building programs listed in this report are currently funded and actively working with communities. However, funding and geographic extent remain constrained, limiting the number of communities that can access resources, partnerships, and tools. Expanding funding, implementing programs in more regions, and coordinating efforts across agencies should be priorities as federal climate and energy resources are distributed in the next several years.

Coordinating different agencies and offices to expand and align capacity-building programs may require new partnerships and institutions. The National Academies of Sciences, Engineering, and Medicine recommends a National Transition Corporation as the best way to simultaneously advance the energy transition and revitalize the U.S. economy.11 A National Transition Corporation could provide the coordination, long-term view, and federal capacity necessary to institute place-based economic development as energy, manufacturing, and infrastructure investments are made to meet climate and economic development goals. Other options include creating a new Cabinet-level Rural Development Agency; establishing a council within the White House to coordinate and deliver programs; or expanding existing programs across all agencies engaged in energy, climate, and rural development work.

USDA Rural Partners Network

The U.S. Department of Agriculture (USDA) Rural Partners Network is an innovative capacity-building program that places USDA Rural Development liaisons in underresourced communities to help them navigate and access rural development programs across multiple federal agencies.12 The value of the Rural Partners Network is in its ability to equip federal staff to meet rural leaders where they are, understand their needs and capacity limitations, and then coordinate and align agency resources to best meet local needs.

Unlike other federal programs, the Rural Partners Network does not require communities to go through an application process. Instead, the USDA uses public data and assessments—for example, poverty, income and demographic data—to identify eligible communities. The agency correlates eligibility criteria with USDA assistance, locating counties who need support but are not applying for or receiving it. The agency then visits these counties and selects community networks based on local characteristics, needs, and readiness. Once networks are identified, community liaisons are placed within them to identify existing plans and priority projects and match these local needs and strategies with the appropriate federal resources. Liaisons have relationships with staff across 20 partner agencies and regional commissions.13

The deep place-based work of the community liaisons and agency staff is elevated through the Rural Prosperity Interagency Policy Council in the White House to share lessons and translate best practices into improved program implementation and policy guidance.14

The Rural Partners Network is still a pilot program, operating in select communities in 10 states and Puerto Rico, including several Tribal communities in Alaska and Arizona.15 The principles that inform the Rural Partners Network—embedded staff capacity and coordination across multiple agencies—also inform how the federal government can be a more reliable and effective partner in rural and Tribal communities.

EPA Environmental Justice Thriving Communities Technical Assistance Centers

The Environmental Protection Agency, in partnership with the DOE, selected 17 Environmental Justice Thriving Communities Technical Assistance Centers (TCTACs) in April 2023.16 Each new TCTAC is hosted by a university, nongovernmental organization, and/or Tribal government and will receive at least $10 million to assist disadvantaged and underserved communities in accessing funding provided in the IIJA and Inflation Reduction Act.17 The TCTACs respond to a problem affecting certain areas: Communities lack capacity to access federal resources, so major investments bypass these communities, and major projects are often built in ways that harm communities, particularly those that are disadvantaged or underserved and Tribal nations.18 The TCTACs will engage communities in a meaningful way to ensure that federal spending is available to Tribal communities.

Communities also identified a problem in the distribution of certain federal grants: Most of the federal planning and technical assistance grants were going to private sector consultants who delivered a report or wrote a grant for a community but did little to build capacity in communities over time. Worse, the consulting service sector stripped communities of local voice and made them more dependent on outside experts and processes that did a poor job of meeting local needs.19 To resolve this problem, TCTACs begin to move community technical assistance from the private to the public sector, partnering with communities. Instead of delivering a product, TCTACs work closely with communities to deliver training; resources such as pass-through grants; data; and peer networks that build lasting skills, partnerships, and capacity.

TCTACs use a “community development hub” strategy that allows agencies to work with trusted regional entities that have closer and long-standing relationships with local organizations and governments, creating connective tissue and partnerships that better deliver federal resources directly to the communities that need them.20 Many nongovernmental organizations and foundations are already using a similar model, providing funding, training, and data to communities and building learning networks to connect local leaders across regions and nationally. Examples include the Just Transition Fund,21 Headwaters Economics’ community planning assistance,22 and the National Association of Counties’ Building Resilient Economies in Coal Communities program,23 as well as California’s state-of-the-art public engagement and capacity-building program, the Transformative Climate Communities program,24 at the state level.

EDA Economic Recovery Corps

The Economic Development Administration’s (EDA) Economic Recovery Corps25 (ERC) will embed trained fellows in local and regional economic development organizations that work in underresourced communities, giving priority to communities that meet the EDA’s definition of “distress.”26 Fellows will add staff capacity at the local level and build a connected national network of development professionals. Fellows will ensure that work gets done between meetings, that information is shared among stakeholders, and that communities’ questions can be answered in a timely manner. Adding human capital and building peer networks help rural development organizations design, implement, and evaluate community development strategies and projects that meet local needs.

ERC fellows will receive specialized training and work in groups to support distressed communities. The EDA describes the model as a two-way learning process in which fellows help meet the needs of the host communities they are serving and receive specialized training and support, as well as participate in structured networking with peer fellows to learn from their experience and develop the next generation of economic development professionals.27

The ERC is funded with $30 million through the Consolidated Appropriations Act of 2022.28 The program will train more than 65 fellows who will serve three-year terms with host organizations. Partners with the EDA include the National Association of Counties, the National Association of Development Organizations, the Center on Rural Innovation, the National League of Cities, and others.

DOE community benefits plan requirement

The U.S. Department of Energy (DOE) requires project developers applying for Infrastructure Investment and Jobs Act and Inflation Reduction Act programs to submit a community benefits plan that describes specific, actionable, and measurable ways developers will engage with communities likely to be affected by development activities when projects are constructed.

What are community benefits agreements and community benefits plans?

Community benefits agreements (CBAs) are legal agreements between developers and community groups that detail how the developer will provide financial and social benefits, often in exchange for community support of a project.29 The primary purpose of a CBA is to translate capital investment—particularly investment of public capital—into local and regional economic benefits. CBAs can include workforce training and hiring conditions; local purchasing agreements; provision of affordable housing; and investments in economic assets including infrastructure, protected areas and trails, payments into community foundations, or capacity in local institutions that provide community services. CBAs with Indigenous communities often create co-ownership and profit-sharing agreements that make Tribal governments and Tribal members beneficiaries of public and private investment.

The process by which CBAs are negotiated is as important as the ultimate content of the agreement. CBAs are most effective when power dynamics between developers, government funders and regulators, and communities are equalized. This can be accomplished by making CBAs mandatory and enforceable; funding and training communities to build capacity to engage effectively; assigning clear responsibility and accountability to all parties; and creating a process for grievance and dispute resolution. To be effective, CBAs need to be specific to community benefit, not impact mitigation, and tied to a project, not any particular owner.30

A community benefits plan (CBP) is an agreement between the U.S. Department of Energy and a developer who receives a grant award or loan from the department. A CBP details tangible and measurable steps the developer will take to engage with the community in which a project will be located in order to deliver benefits.

The DOE does not require a formalized CBA. Rather, the agency requires applicants to submit a community benefits plan that details how the applicant will work with communities after a federal grant or loan is awarded.31 Short application timelines and uncertainty about winning a federal grant mean the developer does not have the time or authority to make meaningful commitments before securing a grant or loan. The CBP articulates a framework for engagement and measurable outcomes that will occur after federal resources are secured.

For example, when evaluating project applications for the recently awarded Battery Materials Processing and Battery Manufacturing grants, the DOE valued the inclusion of a community benefits plan—called an Equity Plan in this first IIJA grant program—at 20 percent of the total score by which projects are evaluated.32 CBPs must define actionable and measurable strategies to achieve four aligned policy priorities, including meaningful community engagement; well-paying and union-eligible jobs; addressing diversity, equity, and inclusion; and implementing the Justice40 initiative. Of the 21 successful applicants, 13 included a community benefits plan. Several of these successful applicants have taken advantage of the flexible and iterative nature of the plan by proposing to use some of the first phase of grant funding to hire community organizers to facilitate deeper engagement with historically marginalized communities and help implement diversity, equity, and inclusion and Justice40 plans after the grant is awarded.33

Community benefits plans are required for all DOE grant and loan programs, including the Regional Clean Hydrogen Hubs program; the Energy Improvements in Rural or Remote Areas program; and the Loan Programs Office’s clean energy, energy innovation, and Tribal energy financing programs. The Loan Programs Office requires a CBP because proactive and meaningful engagement with communities and labor significantly mitigates local opposition and potential project delays or cancellation, meaning developers are more likely to repay loans.34 The U.S. Department of the Interior is also recommending that community benefits be incorporated into any mining reform policy that Congress develops.35

The Bureau of Ocean Energy Management (BOEM) incentivizes—but does not require—a CBA when it leases offshore ocean areas for wind development.36 The highest bidder at a competitive auction—the private company that offers the largest bonus payment for an offshore wind lease—wins the opportunity to develop the lease. The BOEM uses a multiple-factor bidding auction format that includes credits of up to 20 percent for approved workforce training programs and development of a U.S. domestic supply chain for the floating offshore wind energy industry, as well as 10 percent for CBAs with user groups and communities expected to be affected by the lessee’s potential offshore wind development. The credit counts toward the value of the winning bonus bid; essentially, the company keeps the value of the credit and uses those funds to pay for the provisions in an approved CBA.37

The BOEM’s approach has several advantages over the DOE’s approach: CBAs must be reviewed and approved by a third-party panel, appointed by the BOEM, in order for the developer to qualify for the credit, and the CBA has an implied value equal to the value of the credit, which can provide some certainty for all parties in the negotiations.38 If a lessee qualifies for and receives the CBA credit but ultimately fails to follow through with an approved CBA, the lessee must repay the value of the credit to the federal government with interest.39 Because the BOEM only incentivizes CBAs, they are seldom used. For example, in the most recent Pacific lease sales, no winning bidders included a CBA in their bid.40

The DOE’s CBA toolkit provides resources for communities interested in advocating for a CBA—and for getting CBAs included in regulations.41

FERC Office of Public Participation

The Federal Energy Regulatory Commission (FERC), within the U.S. Department of Energy, has a primary role of regulating interstate energy transmission. Tribal governments, Indigenous corporations, and nonprofit organizations pursuing utility-scale renewable energy projects must win approval from FERC to construct and connect energy projects to the electricity grid, which presents an administrative barrier; FERC’s processes and rules can slow or block energy projects proposed by Tribal and rural governments and nongovernmental organizations, as these entities often have fewer resources with which to complete approval processes.42

In recognition of this problem, the DOE established in 2022 an Office of Public Participation within FERC to help the public, including Tribal communities, gain access to and better navigate commission proceedings.43 The Office of Public Participation is pursuing direct engagement with Tribes to identify barriers and challenges they face in permitting and connecting renewable energy projects to the power grid so that these barriers may be lowered or removed, while maintaining the integrity of the grid and energy markets. The office may conduct direct outreach and education; respond to requests for technical assistance from constituents; and recommend changes to existing agency processes to make them more responsive to public input, as well as more inclusive, fairer, and easier to navigate. Intermediary institutions such as the Alliance for Tribal Clean Energy are also working to build the expertise, resources, and partnerships available to Tribal governments to navigate FERC’s rules and processes, as well as working to lower barriers to access by reforming FERC’s procedures.44

Treasury Local Assistance and Tribal Consistency Fund

The Treasury Department’s Local Assistance and Tribal Consistency Fund resolves a basic failure in the way local and Tribal governments receive fiscal benefits directly related to the use of federal natural resources and public lands.45 Historically, public investments in energy infrastructure, natural resource extraction, and other industrial projects have operated using a key assumption: Investments in infrastructure and industrial facilities deliver long-term benefits to the communities where they are located. There is scant evidence supporting this assertion but much to counter it. Coal-dependent communities, for example, face a wrenching and uncertain transition after decades of mining and generating power for the United States.46 Similarly, communities in the Pacific Northwest that grew around the timber industry became overly specialized and dependent on revenue from timber sales on federal public lands and faced acute fiscal crisis when harvest levels declined.47

A common challenge is the failure to manage public revenue from nonrenewable resources appropriately.48 Uncertain and volatile revenue is used to replace more stable sources of revenue and to pay for annual operating budgets, creating dependence. Instead, nonrenewable revenue should be saved and invested in ways that provide permanent and stable payments to communities.

To be transformational, project investments—such as grants, loans, and incentives targeted at developers—in rural and Tribal communities must align with key principles of equitable place-based development. Public revenue that supports essential services is often the most important benefit from energy extraction in infrastructure, and ensuring that revenue is predictable and aligned with local goals and strategies is an essential component of place-based economic development practices.49

Tribal governments, in particular, lack basic taxation and revenue authority and capacity. Tribal lands are held in trust by the U.S. Department of the Interior, meaning trust lands cannot be taxed to fund local services. Resources that are available to Tribal governments often come from casino and tourism businesses and from natural resource extraction, including fossil fuels. These revenues are volatile and can be affected by decisions made by federal and state governments. Dependence on natural resource revenue, in particular, can weaken the resilience of rural Tribal governments over time.50

The American Rescue Plan Act made $1.5 billion and $500 million available through the Local Assistance and Tribal Consistency Fund to eligible local and Tribal governments, respectively, over two years. Payments from the fund help address the acute revenue impacts associated with the COVID-19 pandemic and recession as well as longer-term uncertainty associated with revenue sharing payments made from federal natural resource management and infrastructure leasing on public lands. The fund payments are noncompetitive, guaranteeing predictable, stable payments that communities can use flexibly to plan annual budgets, make long-term investments, and build capacity. Importantly, payments from the fund expand opportunities to manage natural resources for a variety of benefits, not only uses that maximize receipts in the current year.51 The fund is only authorized for two years. Ensuring that local and Tribal governments receive permanent and dedicated funding from the fund could be accomplished by endowing the fund with a Treasury loan that would be repaid with revenue from energy leasing on public lands.52

DOE State Energy Program

As much as 90 percent of the funds appropriated by the Infrastructure Investment and Jobs Act will be administered by nonfederal entities, including states.53 Some state offices have limited capacity to target funds to communities where they are most effective at meeting climate goals and where investments are needed most to advance environmental justice and economic development goals. The Department of Energy’s State Energy Program allocates $500 million in noncompetitive block grants and technical assistance to energy offices in U.S. states and territories to build their capacity to administer energy programs in their regions.54

Bolstering states’ capacity to administer federal resources can also help states deliver resources to communities that may have difficulty identifying, applying for, and managing state grants without assistance.55 State capacity can be used to improve engagement with local governments and assist with applications, necessary studies, and data requirements, as well as planning processes.

Treasury Direct Pay provisions

Energy and climate policies enacted in the Inflation Reduction Act rely almost entirely on incentives—as opposed to taxes or regulations—to drive results. Reliance on tax incentives can be problematic for Tribal governments, which do not have the same taxation and revenue autonomy and capacity as U.S. state and local governments or private businesses. As discussed earlier in this report, Tribal lands are held in trust by the Department of the Interior, meaning trust lands cannot be taxed or used as collateral for loans. Many services, including affordable housing, health care, education, and public safety, are provided by the Bureau of Indian Affairs and other agencies, not by Tribal governments directly.56

All of this means that Tribes often cannot claim direct incentives and credits in the same way that state and local governments do because they do not have tax liability against which incentives and credits can be claimed. The Inflation Reduction Act sets up workarounds, including Direct Pay and transferrable credits.57 These policies allow Tribes to access incentives when no tax liability exists.

Direct Pay allows Tribal governments to receive an IRS payment instead of a tax credit. For example, if a Tribal government directly builds and owns a qualifying renewable energy project, such as solar or wind, the government will receive a payment from the IRS after the project is completed for an amount equivalent to the tax credit available to a private developer. Direct Pay is effectively a refund for project costs specifically for entities that may not have tax liabilities.58

Direct Pay requires that Tribes finance and construct projects first. This can be done by borrowing money, such as through a bank or other financial institution, to complete projects. Once the project is completed, the Tribal government can use Direct Pay to pay down the loan. Some Tribes may have difficulty financing projects if they do not have assets, as trust lands cannot be used as collateral, or they may lack access to banking for other reasons. Borrowing costs can reduce the value of Direct Pay credits that only come after a project is financed and constructed.59

Alternatively, Tribes can partner with a private developer to build the project. Inflation Reduction Act provisions allow Tribes to use Direct Pay to buy out the developer after the project is completed or to transfer tax deductions to another entity, such as a project developer. In this case, a transferable tax deduction lowers the cost of contracting for project development.60 However, the Tribe may not receive the full benefit of the tax credit because tax deductions are not as valuable as tax credits.

The Inflation Reduction Act also funds two significant rebate programs for the electrification of homes or the adoption of energy-efficient home appliances or heating and cooling systems. Under Sections 50121 and 50122 of the law, Tribal governments are eligible to receive funding to provide these rebates to their communities if their members would not otherwise be able to access tax credits. Only 3 percent of funds received under these programs may be used for administrative expenses or capacity building, making the use of other capacity-building programs paramount.

The Environmental and Climate Justice and Energy Efficiency and Conservation Block Grants

The Environmental and Climate Justice Block Grants funded by the Inflation Reduction Act are designed to leverage communities’ ability to apply for and implement the $2.8 billion available for projects in the same programs.61 The Energy Efficiency and Conservation Block Grant Program, also funded by the Inflation Reduction Act, is administered by the Department of Energy’s Office of State and Community Energy Programs and will make $430 million available to state, local, and Tribal governments through a formula-based allocation rather than a competitive process.62

Funds through these two programs may be used for activities that can build capacity, even though the term “capacity building” doesn’t appear in the enabling statutes. For example, a state, a local government, or a community-based nongovernmental organization could use funds for planning and program analysis, convening stakeholders, or pursuing other priorities with the flexibility that the programs provide. Energy Efficiency and Conservation Block Grants can be used on any activity that increases energy efficiency and conservation, including the development and implementation of an energy efficiency and conservation strategy.

The U.S. Environmental Protection Agency has set up a new Office of Environmental Justice and External Civil Rights,63 with more than 200 staff in 10 U.S. regions, to administer the Environmental and Climate Justice Block Grants. These community capacity-building centers help address disproportionate environmental and public health burdens related to pollution and climate change by increasing access to federal resources that help meet local needs.

Greenhouse Gas Reduction Fund grant programs

The Inflation Reduction Act established the Greenhouse Gas Reduction Fund (GHGRF), which makes $27 billion available through several programs to reduce greenhouse gas emissions and local pollution, including from energy projects, and to deliver benefits to low-income and disadvantaged communities, including communities of color.64 Guidance signals that qualified projects may include technical assistance and capacity building—such as outreach and education, planning, and support to design community ownership arrangements—to implement activities to reduce greenhouse gases and local pollution.65

In particular, the General Assistance and Low-Income and Disadvantaged Communities Grant Program allocates at least $8 billion to between 2 and 15 nonprofit organizations that will facilitate and deliver technical assistance and capacity-building resources to communities.66 Tribal nonprofit organizations, Native community development financial institutions,67 and Tribal corporations are eligible to apply for grants. Grantees will deliver technical assistance and capacity-building resources to create and strengthen networks of community-based organizations, small businesses, financial institutions, and individual workers in order to reduce greenhouse gas emissions and other pollutants.68

The Climate Pollution Reduction Grants program within the GHGRF includes $250 million for noncompetitive planning grants and $4.6 billion for competitive implementation grants.69 Linking planning grants directly to implementation is important to address the real challenges many communities face in moving from planning to implementation.

Related capacity grant programs include the Bureau of Indian Affairs Branch of Tribal Climate Resilience’s Annual Awards Program, which offers competitive grants to build Tribal resilience and capacity.70 Funding is limited but can provide dedicated capacity-building funding for training and workshops, adaptation planning, travel support, internships, youth engagement, and capacity building.

Conclusion

The Inflation Reduction Act is the most substantial step that the federal government has taken so far to tackle climate change and boost the transition away from fossil fuels to clean energy. It expands or creates more than 100 financial opportunities for businesses, governments, and individuals, including tax provisions, grants, and loans.

The resources made available through the Inflation Reduction Act and other federal programs provide a historic opportunity for Tribal and rural communities to pursue energy sovereignty, address public infrastructure deficiencies, and pursue economic development goals. Indeed, crucial to the act’s success is not only that these resources reach Tribal and rural communities but also that they produce tangible results. Ensuring positive outcomes will require intentional and resourced capacity-building programs targeted at the communities that need them most. Funding for capacity building is at much higher levels than in the past, and agencies are working creatively and collaboratively to engage more effectively with Tribal and rural communities that have existing resources. These efforts should be applauded, evaluated, and expanded.

Endnotes

  1. The White House, “Biden-Harris Administration Releases Inflation Reduction Act Guidebook for Tribes,” Press release, April 4, 2023, available at https://www.whitehouse.gov/briefing-room/statements-releases/2023/04/04/biden-harris-administration-releases-inflation-reduction-act-guidebook-for-tribes/.
  2. U.S. Department of Energy Office of Indian Energy Policy and Programs, “2023 Tribal Energy Webinar Series: Federal Funding for Tribes,” available at https://www.energy.gov/indianenergy/2023-tribal-energy-webinar-series-federal-funding-tribes (last accessed October 2023).
  3. Michael G. Zimmerman and Tony G. Reames, “Where the wind blows: Exploring barriers and opportunities to renewable energy development on United States tribal lands,” Energy Research & Social Science 72 (2021): 101874.
  4. Inflation Reduction Act of 2022, Public Law 169, 117th Cong., 1st sess. (August 16, 2022), available at https://www.congress.gov/bill/117th-congress/house-bill/5376/text/rh.
  5. Robert J. Chaskin, “Defining Community Capacity: A Framework and Implications from a Comprehensive Community Initiative” (Chicago: The Chapin Hall Center for Children at the University of Chicago, 1999), available at https://www.lisc.org/media/filer_public/27/0f/270f0aa3-a66d-4f57-ad8c-f733584dca64/08102018_resource_defining_community_capacity.pdf.
  6. Charlene Johnson, “Perspectives from Community Practitioners,” Panel presentation at “Accessing Federal Funding for Rural and Tribal Community Development and Conservation: Barriers, Opportunities, and Innovative Approaches Virtual Workshop,” April 6, 2023, hosted by Center for American Progress, Rural Voices for Conservation Coalition, and Resources Legacy Fund.
  7. U.S. Department of Energy, “Tribal Energy: Powering Self-Determination,” available at https://www.energy.gov/podcasts/direct-current-energygov-podcast/tribal-energy-powering-self-determination (last accessed October 2023).
  8. U.S. Department of Transportation, “Federal Interagency Thriving Communities Network,” available at https://www.transportation.gov/federal-interagency-thriving-communities-network (last accessed October 2023).
  9. Mark Muro, “Biden’s big bet on place-based industrial policy,” Brookings Institution, March 6, 2023, available at https://www.brookings.edu/articles/bidens-big-bet-on-place-based-industrial-policy/.
  10. U.S. Department of Transportation, “Federal Interagency Thriving Communities Network.”
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  14. U.S. Department of Agriculture Rural Development, “Rural Partners Network: Building Stronger Futures Together” (Washington: 2022), available at https://www.rural.gov/sites/default/files/2022-09/508_RD_FS_RuralPartnersNetwork.pdf.
  15. U.S. Department of Agriculture, “Biden-Harris Administration Expands Rural Partners Network to Four More States and Puerto Rico,” Press release, November 3, 2022, available at https://www.usda.gov/media/press-releases/2022/11/03/biden-harris-administration-expands-rural-partners-network-four#:~:text=The%20Rural%20Prosperity%20Interagency%20Policy,through%20RPN%20for%20policy%20consideration.
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  17. Ibid.
  18. Devin Deaton, “Better Results: What does it take to build capacity in rural and Native nations communities?”, Aspen Institute, May 19, 2022, available at https://www.aspeninstitute.org/blog-posts/better-rural-capacity-building/.
  19. Mariana Mazzucato and Rosie Collington, The Big Con: How the Consulting Industry Weakens Our Businesses, Infantilizes Our Governments, and Warps Our Economies (New York: Penguin Press, 2023).
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  28. Consolidated Appropriations Act, 2022, Public Law 103, 117th Cong., 2nd sess. (March 15, 2022), available at https://www.govinfo.gov/app/details/PLAW-117publ103.
  29. Jackson C. Rose and Julia H. Haggerty, “Community Benefit Agreement and Funds: A summary of key literature and case studies” (Bozeman, MT: Montana State University, 2019), available at https://static1.squarespace.com/static/5490f581e4b040d63fb03c5f/t/5ca4b8c8104c7b0d3418db30/1554299081198/CBAreport_Final+.pdf.
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  33. Mark Haggerty and Anastasios Chryssikopoulos, “Leveraging Renewable Energy Investments for Rural Development: The DOE Community Benefits Plans” (Washington: Center for American Progress, 2023), available at https://www.americanprogress.org/article/leveraging-renewable-energy-investments-for-rural-development/.
  34. U.S. Department of Energy, “About Community Benefits Plans.”
  35. U.S. Department of Interior Interagency Working Group on Mining Laws, Regulations, and Permitting, “Recommendations to Improve Mining on Public Lands” (Washington: 2023), p. 112, available at https://www.doi.gov/sites/doi.gov/files/mriwg-report-final-508.pdf.
  36. U.S. Bureau of Ocean Energy Management, “Pacific Wind Lease Sale 1 (PACW-1) for Commercial Leasing for Wind Power on the Outer Continental Shelf in California—Final Sale Notice,” Federal Register 87 (203) (2022): 64093–64110, available at https://www.federalregister.gov/documents/2022/10/21/2022-22871/pacific-wind-lease-sale-1-pacw-1-for-commercial-leasing-for-wind-power-on-the-outer-continental.
  37. U.S. Bureau of Ocean Energy Management, “Atlantic Wind Lease Sale 4 (ATLW4) Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore Massachusetts — Proposed Sale Notice,” Federal Register 79 (117) (2014), available at https://www.boem.gov/sites/default/files/regulations/Federal-Register-Notices/2014/79-FR-34771.pdf; U.S. Bureau of Ocean Energy Management, “Pacific Wind Lease Sale 1 (PACW-1) Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore Massachusetts — Final Sale Notice,” Federal Register 87 (203) (2022), available at https://www.govinfo.gov/content/pkg/FR-2022-10-21/pdf/2022-22871.pdf.
  38. Ibid.
  39. Ibid.
  40. The White House, “Biden-Harris Administration Announces Winners of California Offshore Wind Energy Auction,” Press release, December 7, 2022, available at https://www.doi.gov/pressreleases/biden-harris-administration-announces-winners-california-offshore-wind-energy-auction.
  41. U.S. Department of Energy, “Community Benefit Agreement (CBA) Toolkit,” available at https://www.energy.gov/diversity/community-benefit-agreement-cba-toolkit (last accessed October 2023).
  42. Claire Wayner and others, “Going the Distance on Interconnection Queue Reform,” Rocky Mountain Institute, August 2, 2023, available at https://rmi.org/going-the-distance-on-interconnection-queue-reform/.
  43. Federal Energy Regulatory Commission, “Office of Public Participation,” available at https://www.ferc.gov/OPP (last accessed October 2023).
  44. Alliance for Tribal Clean Energy, “Home,” available at https://tribalcleanenergy.org/ (last accessed October 2023).
  45. U.S. Department of the Treasury, “Local and Tribal Consistency Fund,” available at https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/local-assistance-and-tribal-consistency-fund (last accessed October 2023).
  46. K.F. Roemer and J.H. Haggerty, “The energy transition as fiscal rupture: Public services and resilience pathways in a coal company town,” Energy Research & Social Science 91 (2022): 102752.
  47. Mark Haggerty, “Rethinking the Fiscal Relationship Between Public Lands and Public Land Counties: County Payments 4.0,” Humboldt Journal of Social Relations 40 (2018): 116–136, available at https://digitalcommons.humboldt.edu/hjsr/vol1/iss40/12/.
  48. Mark N. Haggerty and Julia H. Haggerty, “Rethinking Fiscal Policy for Inclusive Rural Development,” in Andrew Dumont and Daniel Paul Davis, eds., Investing in Rural Prosperity (St. Louis: Federal Reserve Bank of St. Louis, 2021), available at https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed/files/pdfs/community-development/investing-rural/chapters/chapter31.pdf.
  49. Ibid.
  50. Mark Haggerty, “Fiscal Policy is Failing Rural America” (Bozeman, MT: Headwaters Economics, 2020), available at https://headwaterseconomics.org/tax-policy/fiscal-policy-failing-rural-america/.
  51. U.S. Department of the Treasury, “Guidance for the Local Assistance and Tribal Consistency Fund” (Washington: U.S. Department of the Treasury, 2023), available at https://home.treasury.gov/system/files/136/Local-Assistance-Tribal-Consistency-Fund-Guidance_202302.pdf.
  52. Mark Haggerty and Nicole Gentile, “Quitting Fossil Fuels and Reviving Rural America” (Washington: Center for American Progress, 2022), https://www.americanprogress.org/article/quitting-fossil-fuels-and-reviving-rural-america/.
  53. The White House, “Fact Sheet: The Biden-⁠Harris Administration Announces Action Plan to Accelerate Infrastructure,” Press release, October 13, 2022, available at https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/13/fact-sheet-the-biden-harris-administration-announces-action-plan-to-accelerate-infrastructure/.
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  56. U.S. Commission on Civil Rights, “A Quiet Crisis: Federal Funding and Unmet Needs in Indian Country” (Washington: 2003) available at https://www.usccr.gov/files/pubs/na0703/na0204.pdf.
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  58. Rachel Chang, “Maximizing the Benefits of Direct Pay for Clean Energy Tax Credits” (Washington: Center for American Progress, 2023), available at https://www.americanprogress.org/article/maximizing-the-benefits-of-direct-pay-for-clean-energy-tax-credits/.
  59. Matthew Gregg, “Separate but unequal: How tribes, unlike states, face major hurdles to access the most basic public finance tools,” Brookings Institution, December 3, 2021, available at https://www.brookings.edu/articles/separate-but-unequal-how-tribes-unlike-states-face-major-hurdles-to-access-the-most-basic-public-finance-tools/.
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Mark Haggerty

Senior Fellow, Energy and Environment

Center For American Progress

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Chéri Smith

President & CEO

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Conservation Policy

We work to protect our lands, waters, ocean, and wildlife to address the linked climate and biodiversity crises. This work helps to ensure that all people can access and benefit from nature and that conservation and climate investments build a resilient, just, and inclusive economy.

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Photo shows a street sign in front of an open field with golden grass, a tree, and white wind turbines against a dusty blue sky

The Biden-Harris administration has ushered in a profound change in direction for climate, conservation, and economic policy. Three groundbreaking pieces of legislation—the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act—deliver historic investments through incentives and subsidies for private industry to address the climate and biodiversity crises and secure supply chains. Many of these investments will occur in rural and Tribal communities, which often lack staff, expertise, public infrastructure, and a workforce to ensure public and private investments deliver local benefits.

The Biden-Harris administration is aware of communities’ capacity limitations. Where it exists, capacity allows communities to identify the right funding programs to meet local goals; prepare to receive and apply for money; meaningfully engage community members; design, plan, manage, and execute projects; and report on and share outcomes. Capacity gives communities resources and standing to leverage public and private project investments locally for multiple benefits aligned with their needs and priorities.

The reports in this series highlight new and expanded federal programs that are providing direct funding, staffing, technical assistance, and information to increase the capacity of underresourced communities, improve federal coordination, and build more lasting and meaningful partnerships with Tribal and rural communities.

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