Permitting Reform Needed At Every Level Of Government

It is way too difficult to build things in America, and politicians from both parties know it. In return for Senator Joe Manchin’s (WV) support of the poorly named Inflation Reduction Act, Senate Majority Leader Chuck Schumer (NY) promised Manchin a vote on a federal permitting reform bill by the end of September. Meanwhile, Manchin’s West Virginia counterpart, Senator Shelley Moore Capito (WV) has her own permitting reform bill that is supported by nearly all the other Republican senators.

It is unclear whether either of these bills will become law, but what is clear is that permitting reform at every level of government is desperately needed.

The National Environmental Policy Act, or NEPA, is one of the most well-known permitting hurdles badly in need of reform. NEPA requires federal agencies to produce environmental impact statements for actions that are likely to have a significant environmental impact before those actions can receive federal environmental clearance.

The NEPA process is the punishment. Environmental Assessments (EA) or the longer Environmental Impact Statements (EIS) can be several thousand pages long and take years to complete, as shown in the figure below.

This raises costs since projects are typically not allowed to move forward until the analyses are finished. Meanwhile, loans must be paid and materials must be stored. There is also the opportunity cost—money invested in a project waiting to break ground could be invested somewhere else earning a bigger return.

Agencies can also be sued anonymously by anyone for not complying with NEPA, which often results in injunctions for projects while the courts sort things out. This creates a tremendous amount of uncertainty for developers and construction companies since it is hard to predict a lawsuit that could halt a project in its tracks.

NEPA can also prevent other regulatory changes. In 2019, The U.S. Forest Service tried to change its own rules regarding NEPA regulations to help it get through a backlog of more than 5,000 special use permits regarding logging and various utility projects. A coalition of environmental groups sued under NEPA to prevent the Forest Service from making any changes, ensuring that permit applications will continue to languish.

NEPA has been used to delay solar, wind, geothermal and other energy projects throughout the country. But its reach extends far beyond energy projects. NEPA complaints or lawsuits have obstructed highways, dams, access roads to recreation areas, a lagoon dredging, new utility lines, harbor expansions, a new high-altitude telescope, new railroad stations, and other projects.

Reforms that limit the length, time, and scope of EAs and EISs would be a good starting point for reforming NEPA. President Trump did some of that, but President Biden revoked Trump’s reforms shortly after taking office. Biden should reconsider, or better yet, Congress should update NEPA via legislative action.

NEPA and other federal laws get most of the attention, but states have similar laws and erect similar barriers. Take a recent case in Maine regarding a lithium deposit, which is a key input in batteries.

The owners of the land want to develop the lithium mine, which is estimated to contain 11 million tons of ore valued at $1.5 billion at current prices. From President Biden’s and other Democrats’ perspectives, this should be a great project: They constantly argue that America needs to transition to electricity and battery power, and Biden is obsessed with “Made in America” policies that protect his union supporters. A huge new American mine that produces a needed element for the electricity transition is a clear winner.

Maine officials are not so sure, though. They cite the state’s 2017 Metallic Mineral Mining Act, considered one of the strictest in the country, to argue that spodumene, which is the mineral that contains the lithium, is a metallic mineral and thus subject to incredibly restrictive regulations. They reached this conclusion even though several geologists and mineralogists noted that mining lithium is more like quarrying limestone, which is already common in Maine, and does not pose the same environmental risks as mining metallic minerals like silver or lead. This more restrictive interpretation of the law has put the project in limbo.

This is just one anecdote, but situations like this are all too common. Federal mining applications and approvals have been dropping for a decade. The amount of resistance mines face from government officials and environmentalists is inconsistent with their supposed goal of producing more American-made batteries.

And how much more mining do we need? A lot. In a recent article in City Journal, Mark P. Mills noted that for Europe to store the energy equivalent of two months’ worth of natural gas in batteries “would require building $40 trillion worth of batteries, which would take all the world’s battery factories combined about 400 years to produce.” That many batteries requires huge amounts of lithium, nickel, cobalt, copper, and other minerals, all of which need to be extracted from the ground. Without more U.S. mines, we will be forced to import minerals from autocratic countries such as China or forget about battery power altogether.

We need permitting reform because we need more energy production. We need more natural gas, more nuclear, more solar, more geothermal, more oil, and more wind. America’s current level of red-tape and our convoluted permitting process makes all energy production frustratingly and unnecessarily difficult.

Cheap energy is the lifeblood of the modern economy. Without it, living standards would collapse. Germany is nationalizing utility companies in a last-ditch effort to avert an energy crisis and save its economy. Six of ten British factories are worried about going under due to the same soaring energy costs Germany is dealing with. If they shut down, consumers will face higher prices and more people will be out of work.

America is in a better position than Europe. We produce much of our own energy domestically and are even a net exporter of natural gas. For the most part, we do not rely on autocracies like Russia for energy—yet. But as the battery example shows us, we could easily find ourselves relying on China or similar countries if we refuse to build more mines and increase energy production. Permitting and other regulatory reforms are not a panacea, but they are a necessary step toward a future of energy abundance.