This essay and the longer paper it is based on, “Getting Infrastructure Built: The Law and Economics of Permitting,” were written for the Law of Abundance project at the Johns Hopkins University Center for Economy and Society.
Building infrastructure in the U.S., like train routes and electrical transmission, is astonishingly slow and expensive. The U.S. is about two-and-a-half times as expensive as other OECD countries at building urban transit. The cost of building a mile of Interstate highway tripled between the 1960s and the 1980s. It takes about a decade to build electrical transmission lines–if they get built at all. These high costs and slow speeds matter for many reasons. Infrastructure is key for economic growth. It is essential for economic mobility—one of the top predictors for the extent of economic mobility in a place is the ease of getting to work. And it will likely be impossible to achieve sufficient greenhouse gas emissions reductions without building renewable electricity transmission and generation at a rate far higher than today’s.
One important contributor to the cost and sluggishness of U.S. infrastructure construction is our permitting regime. Getting government approvals can be long and arduous. First a project is planned—but knowing that there is a risk of subsequent litigation, projects are often designed more expensively to head off that risk. Then projects go through environmental review, which now take 4 ¾ years, an increase from about 3 ¼ years in the late 1990s. Their average page length is now 1,700 pages, an increase from about 400 pages in the late 1970s. Once the environmental review is complete, projects often face litigation. The median litigation duration for lawsuits that succeed is two years, and the median even when they fail is a year. Over that time, projects typically cannot proceed. If the lawsuit succeeds, there often must be another cycle of environmental review. So there are strong incentives to build projects in ways that can avoid this litigation. In fact, the cost of permitting isn’t so much the cost of the extra analysis and paperwork itself—estimates are that those are modest—but rather the ways in which the infrastructure is built in more expensive ways (e.g., on pylons or underground to be less obtrusive) to mitigate impacts and litigation risk.
And all of that is just for major projects under the National Environmental Policy Act. Other local, state, and federal statutes often apply.
How can permitting be improved?
Why do we have rigorous permitting regimes in the first place? There are tradeoffs in the intensity of the procedures involved in permitting, which can range from the lax process used for 1950s-era highways, which resulted in bulldozed neighborhoods with little consultation, and the scrupulous rigor of today, with strict government procedures, lengthy documents, and frequent litigation. The NEPA permitting regime has helped largely stop the practice of destroying urban neighborhoods without bothering to consult residents, but with the side effect of chronically slowing new construction. The optimal level of scrutiny is challenging to specify because of the diversity of values at stake. But, at a high level, the key tradeoff is between getting needed infrastructure built at reasonable speed and cost and having sufficiently broad public input to protect the environment and social values.
Reform is challenging because the American permitting regime is consistent with a larger pattern of “adversarial legalism” in the United States, in which authority is diffuse and disputes are often resolved by litigation. For example, compared to European countries with over a million people, the U.S. has more lawyers per capita than all but Italy. But none of this is to say that reform is not possible. Indeed, given the distance that policy has drifted over the past half-century as courts have made significant interventions without much revision from Congress, it is possible that there are substantial gains to be had. This is especially so because the U.S. does not have particularly good environmental performance in international comparison (it’s at the 25th percentile among OECD countries as measured by the Yale Center for Environmental Law & Policy’s Environmental Performance Index)—and it is now the case that, to improve environmental outcomes, we often need to build more (often renewable energy or transit) rather than less.
To consider how to reform permitting, consider two dimensions: the power of the executive to decide and the capacity of the executive to plan. The U.S. permitting regime—federal, state, and local—features low executive branch power, partly because of powerful judicial review, and low planning capacity, partly because of relatively weak internal staffing and the split responsibilities in our federal system.
Reforms of the power of the executive to decide come in four varieties, some appropriate as legislation in the short-term, some more aspirational:
1) Shifting legal power away from project opponents, for example by making it harder to stop projects pending the outcome of litigation or making it harder for judges to invalidate an environmental review;
2) Facilitating popular decision-making (for example, by allowing cash payments to help those harmed by projects) or effective negotiation between the government and the community (for example, by making negotiations among designated parties binding);
3) Allowing more tailoring of the rules depending on the substance of the environmental or economic impacts, such as limiting the scope to challenge projects that are high-priority and time-sensitive; and
4) Selective centralization of authority, such as for interstate transmission, where it is very challenging to get permits from many different authorities.
Reformers should also consider reforms that considerably expand the capacity of government to effectively plan, including:
1) Streamlined processes, such as increased coordination within the government and more “programmatic reviews,” which develop plans for large areas at once;
2) Improved and standardized public participation, which proactively solicits feedback from the full range of impacted parties and does so early in the process, making it less likely that people will become opponents and in any case helping make up for potential losses in outlets from the first set of reforms; and
3) More planning staff to speed up approvals (and improve participation) and better data on timelines and outcomes.
Rather than prioritizing one or the other of these two streams of reform, the U.S. should move along both dimensions together—a complementary “green bargain” that would improve broadly representative front-end participation but reduce back-end litigation. That is, a higher-capacity executive branch could be better-equipped to responsibly wield more power. Such a set of reforms could result in improvements overall in efficiency (faster construction and lower costs), the environment (lower greenhouse gas emissions), and democracy (improved public participation, especially by disadvantaged groups, and outcomes more reflective of public preferences).