The Petroleum Industry Act (PIA) 2021 is a landmark legislation reforming Nigeria’s oil and gas industry with expectations of increased transparency, regulatory certainty, and community development through schemes such as the Host Communities Development Trust (HCDT). However, the implementation of the PIA has attracted significant controversy regarding the 3% contribution for host communities’ development from oil companies’ annual operating expenditure a level considerably reduced from the previous drafts’ 10% equity participation. The paper interrogated the PIA in relation to environmental justice and community development in the Niger Delta and how stakeholders are responding to the legislation. The paper found that there is discontent within host communities and civil society organizations, and that these stakeholders believe that investing 3% is insufficient to redress past harms caused by decades of oil extraction, and physical and environmental disinvestment. A comparative analysis of countries like Ghana, Canada, and Norway best practice revealed a major divide in Nigeria’s institutional and policy inadequacies. The paper concluded that while the PIA has made some reforms, its under-funded provisions, lack of enforcement, and limited, lack-of community engagement makes it incapable of achieving inclusive development and sustainable peace. The paper recommended that the PIA be further amended to hold public and private oil operators accountable to environmental remediation and community engagement, so as not to start more harmful practice of exclusion and externalized environmental violence rather than tackling the historical trends of exclusion and environmental injustice presently destabilizing the Niger Delta region. The paper is relevant as it offers a new vista to the ongoing conversation for a more sustainable oil and gas prospecting/host environment.