Perfect Permitting

We're up against a moment in American history when our cumulative impacts to climate stability, biodiversity, and clean water have gone from the periphery of our attention to the absolute center.? Environmental impacts are no longer at the kids table when business decisions are made, because a company's environmental performance is a core part of its ability to do business.? And government is encouraging certain types of development including new solar, wind, and transmission, new fabs for domestic chip manufacturing, big restoration projects that require yellow equipment, and so on.? NEPA review is now triggered on some 100,000 actions a year, and that number is growing over time[i].? If permitting doesn't affect you now, it might well tomorrow.

It's a good time to ask: does the permitting system exist to stop unwanted impacts or to give permission for economic activity to move forward?? Perhaps it's obvious that the answer is 'both', but the question calls attention to a constant tension in the permitting process.? The new NEPA rule tries to help both economy and environment; the economy, by creating deadlines and page limits for environmental review of 'crucial' projects, and the environment, by adding requirements for projects to address both greenhouse gas emissions and 'adaptation and resilience' measures.

The new rule also adds a requirement to "encourage measures to avoid or reduce disproportionate effects on communities" who have borne an unfair burden from pollution but who also, of course, need the benefits of new development that will speed the energy transition, replace lead pipes, and protect ecosystem function.? It's hard to get such a rule right, much less perfect.? We need to have a system for regulating business that allows at least some rapid changes on the landscape to grow even more rapidly.? What on earth would that look like?

Let's imagine.? The perfect environmental permitting system would allow economic activity without damaging or degrading the environment at all.? It would analyze impacts efficiently, engage with project developers to avoid and minimize them as much as possible, and prohibit damage to well-defined protected and essential features that cannot be mitigated.? In other words it would allow investment, and projects on the ground, to know what they are not allowed to to do without ambiguity or delay.

This kind of system would also allow businesses and developers to know what they are allowed to do, and to do it.? It would be a business-like system that would allow the American economy to compete at the highest level, and it would speed the transition to clean energy, green building, carbon neutral transportation, critically needed housing, conversion of now-useless office buildings...? and so many of the other changes that need to happen now.

But in order to allow unavoidable impacts that remain after good planning and design reduces them as much as possible, this perfect system would have to publish mitigation requirements and make sure they were complied with.? Whether the problem is air pollution, urban sprawl, threats to endangered species habitat, or water consumption, scientifically verifiable action that fully mitigates remaining impacts should be the goal of the perfect permitting system.

By publishing mitigation requirements on websites, and making it clear that achieving these requirements would eliminate liability for unavoidable impacts, government agencies could set extremely high standards for environmental performance.? In fact, they could greatly increase the standards that business and development are held to today and still create tremendous benefits for the American economy.

A system with clear mitigation requirements that could be known in advance by project developers and investors would reduce uncertainty and save time to such an extent that much larger expenditures on actually reducing impacts and mitigating them would be well worth the cost.

This system could be so much better than the wildly unpredictable delays, and the crazy careening from left to right with each change of federal administration that agencies impose today.? As Marty Durbin, the Senior Vice President for Policy at the U.S. Chamber of Commerce says in a recent NY Times article, "It's not about the specific regulation or the specific candidate.? We've got to have more long-term certainty about how business is going to be regulated." (How Abrupt U-Turns Are Defining U.S. Environmental Regulations, NY Times, April 26, 2024)

The NY Times article talks about manufacturing and the effect of whipsawing fuel economy standards or all-electric fleet mandates on auto makers.? It also talks about energy production, as alternating administrations encourage and then admonish coal and oil production.? But the problem of unpredictable timeframes and shifting expectations from regulators can be found in every corner of the economy.

Whether you're thinking about high speed rail projects, new transmission lines needed to connect solar farms, liquified natural gas to send to Europe, or just housing to alleviate homelessness, new construction must move ahead.

We need, then, to radically improve the way we regulate environmental impacts, and the regulatory process that shifts with the political winds.? And we won't be able to achieve this, or really even envision it clearly, if government regulatory agencies and regulated businesses are in complete opposition to each other.? But the good news is that these forces are more aligned than they have been in the past, as more and more companies make climate and biodiversity committments and feel the challenge of living up to them.? Government regulation of public goods is simply better for business than every individual business having to make up it's own goals and then trying to live up to them in annual sustainability reports.

A final thought on the perfect permitting system: even as a thought experiment, fully mitigating environmental impacts does not work for all types of impacts.? The Clean Water Act mitigation banking program has grappled with, learned from, and refined, the standards required to 'fully mitigate' impacts to aquatic ecosystems.? Less developed but truly exciting efforts at improving mitigation standards are underway in the Endangered Species Act, the Natural Resource Damage provisions of the Oil Pollution Act and Superfund clean ups, and at the Bureau of Land Management (as I wrote about last week, link here.)?

But as we've learned from efforts to incorporate mercury into SOX and NOX trading programs, ozone depleting CFC's, or other toxics from 'forever chemicals' dating all the way back to DDT, some things cannot be mitigated.? While some types of damage to ecosystems from development can and must be mitigated by restoration in the right place, others - like toxic chemicals that are long lasting and cumulative - need to be eliminated all the way to zero.

Is this conception of a perfect permitting system a fantasy that we'll never realize?? Perhaps.? But I do think it's worth more time and effort to at least think about what a perfect permitting system would be instead of focusing, as we do, on the flaws and frustrations of the existing system.

If we could have 100% of what we wanted, what would it be?? I think the goals imagined by regulators, environmental advocates, investors, developers, scientists, and yes, even politicians would have a lot of overlap. There's a deal waiting to be done that would trade savings in time and improvement in certainty for higher standards.? More expensive reduction and mitigation requirements would be worth it if the regulatory process provided more predictability for business and development.

[i] Personal communication, Tim Male, Environmental Policy Innovation Center, May 1, 2024.