Billions of dollars worth of capital expenditures to build infrastructure enter the federal permitting process annually across key sectors, and energy is key among them. Those expenditures can reach up to $280 billion a year, with projects unable to budge until they go through the permitting process, according to a study by McKinsey & Company.
“These findings combined suggest there is $1.1 trillion to $1.5 trillion of infrastructure capital expenditure currently in federal permitting, costing stakeholders billions of dollars in lost revenue and withholding project benefits, including increased GDP, increased power generation capacity, lower carbon emissions, and opportunities for public transit,” according to the study.
Not only is there a long timeline for project review and approval, but projects also have to survive legal scrutiny from potential lawsuits challenging them.
Why Congress may still miss the window for permitting reform
There’s an appetite in Congress for reforming the permitting process, although it’s unknown whether there’s enough political will — or time — to make notable changes this year.
Reforms were off to a strong start when the U.S. House passed the Standardized Permitting and Expediting Economic Development Act (aka the Speed Act) in December with bipartisan support from nearly a dozen Democrats.
Soon after, the Trump administration paused federal leases for offshore wind farms on the East Coast, clean energy projects generally favored by progressives. This move dampened bipartisan efforts to streamline permitting for other energy producers, but Democrats returned to the table in March after the president signaled a willingness to review stalled applications for renewable energy projects.
Lawmakers on both sides of the aisle are interested in reform, at least for some energy initiatives. The House voted unanimously in early June to reduce barriers to geothermal energy projects, which require pumping fluid deep enough to be heated by the Earth’s crust, then pumped back up and converted into electricity.
With the ball in the Senate’s court, time is running short to pass a bill before the approaching November midterm elections. Not only is the window to pass legislation shrinking as candidates begin turning their attention to election season, but there is the possibility — some dare say, likelihood — that Democrats will win back a majority in the House, if not the Senate as well. Such an outcome in the election would reconfigure leadership in the chambers and potentially push permitting down the list of priorities.
What lawmakers want to change in NEPA and other reviews
Given the unpredictability of Congress, there’s as much certainty over what will make it into a final law as there is in the answers from a Magic 8 ball. However, the Speed Act was designed to narrow the scope of what would trigger a review under the National Environmental Policy Act (NEPA). Specifically, lawmakers want to ensure that receiving federal financing alone will not subject a project to NEPA review, said Rob MacGregor, policy director for the U.S. Senate Committee on Energy and Natural Resources, during a webinar about permitting hosted by the American Enterprise Institute.
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