Last month, Senator Joe Manchin (D-WV) released the Energy Independence and Security Act of 2022, a comprehensive permitting reform text meant to be included in the government funding bill. The proposal faced bipartisan opposition, with Senate Republicans still tiffed with Manchin’s decision to support the ironically named “Inflation Reduction Act” and progressives opposing the measure due to environmental concerns. This joint pushback almost guaranteed Manchin’s proposal would not have the 60 votes needed to pass, dooming the effort.
However, politics aside, it is still important to assess the merits of permitting reform and its potential effects. The fact is that it has become too difficult to build projects in the United States due to current permitting processes, significantly harming the country’s energy and infrastructure capabilities. Given rising energy costs and the current supply chain crisis, it is clear that permitting reform is needed at every level of government.
Current Permitting Process
The current permitting process is burdensome, often stalling projects for years and, in some cases, decades. Perhaps one of the most well-known representations of the current problems with the permitting process is the National Environmental Policy Act (NEPA). The NEPA requires federal agencies to provide environmental impact statements for any action that could potentially have a significant effect on the environment before the action can gain federal clearance. While this may seem like a reasonable policy, it actually is an immense hurdle.
The NEPA process acts more as a punishment than a genuine environmental precaution. Environmental Assessments (EA) and Environmental Impact Statements (EIS) can be thousands of pages long and take years to complete. For example, between 2010 and 2018, the average completion time for the NEPA review process for 185 Department of Transportation (DOT) projects was seven years. These waiting times have severe consequences, resulting in increased costs and stalled projects. Additionally, the NEPA process prevents necessary projects from being developed in the first place due to opportunity costs – it makes more sense to invest somewhere else with a higher return than a project waiting to start.
Furthermore, federal agencies can be sued by almost any entity for not complying with NEPA, oftentimes resulting in injunctions for projects while suits get worked out in courts. This creates uncertainties for developers and construction companies since no one can predict a lawsuit that would halt projects. The NEPA has been used to delay energy and infrastructure projects all across the country, but it is just a microcosm of a wider scale problem with the country’s permitting process. Regulatory processes at the federal, state, and local levels throw up similar roadblocks; and at a time when the country needs more energy production, the current level of red-tape makes energy production extraordinarily difficult.
On the federal level, policymakers can take many actions to reform permitting processes. Any attempt at permitting reform needs to fulfill four main goals: (1) Avoid duplication in the documentation of environmental review processes (2) Establish a single review process for all agencies to assess a project (3) Set reasonable timeframes and clear requirements for environmental reviews and (4) Establish a reasonable timeframe for any legal challenges.
There are also specific opportunities for improvement when it comes to existing permitting laws. For example, the NEPA could use statutory clarification to limit environmental reviews to projects subjected to Federal control and responsibility. This would mean a federal agency’s review would be limited to parts of projects involving federal land rather than the project in entirety. Other Environmental regulations, such as those under the Clean Water Act (CWA), Clean Air Act (CAA), and Endangered Species Act, could use changes to limit review timeframes and define unclear standards.
Senator Manchin’s proposal is a decent start, but it does not go nearly far enough to address the problems with the current permitting processes. The proposal does attempt to limit the timeframe of reviews as well as speed up existing projects under review. However, Manchin’s bill does not actually reform the central problem, which is the litigation processes of permitting reviews. While the bill does include a 150-day statute of limitations for court challenges, all entities would have to do to get around this is to file challenges earlier than usual (suggesting that the statute of limitations is a purely cosmetic change). If Manchin’s bill were to become law, the problems that emerge from legal challenges to projects would still continue.
Another proposal that has been put forward is the Simplify Timelines and Assure Regulatory Transparency (START) Act. Introduced by Senator Shelly Moore Capito (R-WV), the bill would prohibit retroactive vetoes of permits, set time limits on the permitting review process, and give states the right to develop energy resources on federal land. The bill also seeks to provide litigation certainty on the timing of judicial challenges to energy project approvals. The START Act is more ambitious than Senator Manchin’s proposal, but still lacks the full-scale changes that are needed in the litigation process under current regulations. However, the bill would serve as a good starting point in any future permitting reform negotiations in Congress.
In the future, it is important that policymakers come together to resolve the problems in permitting processes under all levels of government. During a time of multiple crises around the world, permitting reform will help America fulfill its energy and infrastructure needs. Although permitting and other regulatory reforms are not the only thing that must be done, it would go a long way towards achieving these goals.