Note: This article was published in RealClear Markets on October 12, 2022
Thanks to efforts by Senators Joe Manchin (D-WV) and Shelley Moore Capito (R-WV), Congress is giving permitting reform the attention it deserves. Fixing the nation’s broken permitting process must be an urgent priority. After all, if you can’t build things, productivity stops, jobs are lost, and people suffer.
For a variety of reasons, Sen. Manchin’s permitting reform bill came up short. But that’s not unusual; passing significant legislation takes time. Sen. Capito introduced her own highly compelling bill last month. Republicans and Democrats should follow their lead and pass meaningful, bipartisan improvements to the permitting process.
If done right, Congress can foster economic growth, strengthen environmental protection, and enhance America’s global competitiveness.
A new bill must be guided by three basic principles: 1) We must reduce the excessive litigation that causes costly delays and, in some cases, kills projects outright; 2) We must push needless bureaucracy out of the way; and 3) We must substantively update permitting laws passed in the 1970s to fit the needs of the 21st Century economy.
Litigation is first for a reason: it’s the biggest problem. According to The Permitting Institute, a non-partisan group of former officials from the Federal Permitting Improvement Steering Council (FPISC), lawsuits are delaying the deployment of more than $1 trillion in energy projects (renewable and conventional) commenced in the last four years.
A good deal of lawsuits stem from the National Environmental Policy Act (NEPA), a statute signed into law in 1970 that requires federal agencies to issue “detailed statements” on the environmental impacts of their actions, such as granting permits.
In the landmark case interpreting NEPA’s requirements, a federal judge predicted, “These cases are only the beginning of what promises to become a flood of new litigation.” He was right. The White House Council on Environmental Quality (CEQ), which implements NEPA, found that, based on data from 2001 to 2013, there are approximately 115 challenges to NEPA decisions in court per year.
NEPA’s “environmental impact statements” (EISs) can be hundreds, or even thousands, of pages and take years to complete. Remember President Obama’s American Reinvestment and Recovery Act (ARRA), also known as the “stimulus bill”? It didn’t work, in good part because of NEPA and other bureaucratic impediments.
These delays and obstacles are extremely costly. FPISC analyzed 69 major projects and found that bureaucratic delays cost developers $100 billion. On average, 20-30% of total project funding is wasted on unnecessary red tape.
The problem, however, extends beyond NEPA. Developers encounter multiple agencies implementing an array of statutes passed over five decades ago, each of which have unique, and sometimes conflicting, requirements.
Consider a recent report from the Brookings Institution, which analyzed the web of federal permits required for an offshore wind farm. Building one requires reviews under, among others, the Clean Air Act, Clean Water Act (CWA), Endangered Species Act (ESA), Marine Mammal Protection Act, National Marine Sanctuaries Act, National Forest Management Act, and Bald and Gold Eagle Protection Act.
So what is to be done? Start with some straightforward, practical steps to make incremental progress.
First, the default in the system should be “yes” for every project. Generally speaking, reviews should take no more than one year. Once the deadline hits, it’s pens down, meaning federal review stops. To ensure project owners and operators follow the law, require regular audits during construction.
Second, stop the endless litigation train. There’s no reason projects should be mired in court over NEPA, which is a procedural statute. Lawmakers should either prevent judicial review outright or give plaintiffs one shot to make their case.
The same should hold for actual permits and authorizations. Again, courts can tell agencies how they got it wrong, agencies can comply with the courts’ directives, and then litigation should end. To do this, it’s necessary to change the standard of judicial review, so that courts can’t stop projects based on trivial errors that have no real impacts.
Finally, it’s time to amend federal permitting laws for the 21st Century. Start with NEPA, CWA, and ESA. For example, NEPA documents should be no more than 100 pages (no exceptions), they should analyze only direct impacts from a project, and consider one reasonable, economically- and technically-feasible alternative to the project proposal. Congress must also end the insanity of legal conflict over what constitutes “waters of the United States,” under the CWA. Clearly delineate that such waters are those for interstate navigation and adjacent wetlands. As for ESA, give agencies one month to do so-called species “consultations.” Senators Manchin and Capito have done the right thing by attempting to fix this massive problem. Their efforts are not in vain; Republicans and Democrats can build on them. And if any or all of the above reforms are passed, we can make real, bipartisan progress for America. Gentry Collins is the Chief Executive Officer of the American Free Enterprise Chamber of Commerce and Alex Vargo serves as the group’s Vice President of Policy.