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Permitting Risk Remains Key Barrier to Infrastructure Investment

By Andy Winkler

Thursday, March 24, 2016

Delays in the environmental review and permitting process—which can increase costs and uncertainty—are a fundamental barrier to private investment in and speedy delivery of needed infrastructure projects. Over the years, various efforts have focused on speeding up project delivery, including the Fixing America’s Surface Transportation (FAST) Act passed in December, and have garnered support across the political spectrum. Speaking at the Bipartisan Policy Center, a panel of experts shared their thoughts on these efforts and future opportunities to modernize, streamline, and accelerate environmental review and permitting. From their perspectives, here’s what we can do to facilitate the investments in infrastructure crucial to keeping the American economy competitive and growing:

Promote consensus-building processes and transparency

In the discussion, Christopher Hodgkins, CEO of the Miami Access Tunnel, provided a ground-level view of what this process means and what it takes to move an important project through it. His conclusion: “When everyone’s on board, things can happen.” His remarks emphasized the importance of outreach meetings with the public and consensus-building among contractors, the public, and all relevant agencies from all levels of government to getting the tunnel project built. Susan Binder, senior associate at Cambridge Systematics and a long-time government official, similarly pointed to the importance of figuring out what is needed to move a project along, defining the terms and timetable for the permitting and review process early in project development, and doing so in a collaborative way on either a project-by-project or, even better, a programmatic basis.

Recognize the opportunity cost of lengthy approvals

Common Good’s Founder and Chair Philip Howard emphasized how tackling this issue would have a transformative effect on the U.S. economy, particularly the need to address two conceptual flaws in the current process. The first of these flaws is failing to recognize the opportunity cost of lengthy project approvals.

In the report, Two Years Not Ten Years, Common Good showed that a six-year delay in starting construction on public projects costs the U.S. over $3.7 trillion, taking into account the inefficiencies and pollution from aging structures. Environmental impact statements are now much longer, more thorough, and more complex than they were in the early years of the National Environmental Policy Act (NEPA). While project sponsors know that it costs more and takes more time to prepare these extensive documents, the other associated costs that Howard highlighted go unrecognized. If there were a better understanding of the costs of delay, perhaps there also would exist a greater sense of urgency about the need to get projects done more quickly.

Prioritize benchmarking and performance measures

Along with the overlooked opportunity costs of a delayed or lengthy permitting and review process, there is also a lack of data on when and how projects are delayed and other fundamental benchmarking and performance measures, according to Deron Lovaas, senior policy advisor at the National Resource Defense Council. Was it completed on time? Was it on budget? Did the project produce the expected benefits? These simple questions are often impossible to answer. While environmental review and permitting may be part of the problem, the clear dearth of data on the issue and failure to incorporate results-based accountability into infrastructure investments make it difficult to know what solutions will work. The Government Accountability Office similarly noted in 2014 that agency practices on tracking the number, type, and cost of NEPA-required analyses vary widely.

Empower key decision-makers

A second conceptual flaw that Philip Howard pointed to in the U.S. is not a lack of understanding, but a failure to delineate clear decision-making authority. He explained, “We have to come to grips with the fact that doing anything requires someone to make a decision.”

“The FAST Act blinks when it gets there,” Howard said, adding that recent changes create more processes instead of empowering key decision-makers to move projects forward. Susan Binder pointed out that having a lead agency only works when it takes its role seriously and facilitates the necessary collaboration. She too found fault with congressional efforts to address environmental review and permitting, citing a tendency to choose low-hanging fruit and pass reform efforts in piecemeal fashion. For Howard, there are two simple solutions.

Solution #1: Empower the Council on Environmental Quality (CEQ) to really make decisions.
Solution #2: Empower the Office of Management and Budget (OMB) to actually resolve disputes.

Learn from high-profile, accelerated projects

Panelists noted several past and current efforts to reduce permitting holdups for high-priority projects, including a task force and executive order during the Bush administration focused on identifying and overcoming bottlenecks for a group of important infrastructure projects. Title XLI of the FAST Act builds on recent Obama administration efforts that emphasize “covered projects,” more expensive or high priority infrastructure projects that are tracked by the online Permitting Dashboard and are now subject to provisions that may accelerate their permitting and review processes. The panelists generally agreed that there is an opportunity to learn from these efforts—where are the sticking points, what moves the needle—before a more fundamental overhaul, while also making sure projects with the biggest economic impacts are treated with greater urgency.

Explore opportunities outside of Congress

While some of these opportunities are ripe for congressional action, many of the panelists’ suggestions to improve environmental review and permitting fall outside the purview of Congress:

  • Christopher Hodgkins emphasized the importance of transparency with the public, assessment of a community’s needs and wants, and consensus-building all on the project level.
  • Susan Binder suggested a need to move away from “bulletproof” environmental impact statements and toward greater practical or experiential understanding among senior level officials about NEPA.
  • Deron Lovaas detailed how Congress has made several attempts in just the past few years to improve this process without giving reforms time to work or thoroughly assess what needs further improvement.
  • And while Philip Howard expressed a real need for pressure points from Congress, he also spoke favorably of independent task forces or commissions—third parties that can take a closer look not only at environmental review and permitting but the merits of specific projects in general to reduce waste.

Ultimately America’s growing infrastructure funding gap must be addressed. One way to help meet the need is to encourage private capital to enter the space. Permitting risk is a key barrier, but addressing the issue has a history of bipartisan support and no shortage of policy opportunities.

KEYWORDS: FIXING AMERICA'S SURFACE TRANSPORTATION ACT