NRPLUS MEMBER ARTICLE L ast week President Trump accomplished one of his most important goals: to reform the broken system of federal approvals for major infrastructure projects such as highways, pipelines, and ecological restorations. Once fully implemented, his reforms could spark a historic modernization of America’s inadequate and aging infrastructure.
The system of permits and environmental reviews under the National Environmental Policy Act, or NEPA, requires such extensive paperwork and technical study that the cost of obtaining permits can easily exceed those of construction. Its delays, burdens, and uncertainties cost the United States a significant fraction of its entire economic output every year — in the trillions every decade.
Even worse, the delays and outcomes are so unpredictable that losses are staggering, and it is a wonder so many investors are willing to risk it at all. Many don’t. But those who succeed charge premiums to cover their costs, which fall substantially on working families. The hydra-headed and arbitrary regulatory scheme turns agencies full of the world’s best lawyers into a source of uncertainty and risk more typical of developing nations. Americans don’t realize how many infrastructure projects never happen because of these outrageous levels of risk, and how clean and modern our infrastructure could be.
According to NEPA, before a federal agency takes any action that could significantly affect the environment, such as granting a permit for a pipeline, it must prepare an extensive assessment of those impacts. Permits from half a dozen agencies might be required, and their processes are totally separate — despite a web of interdependencies. Each project practically requires the developer to organize an interagency process from scratch. Since NEPA’s passage in 1971, federal agencies and courts have expanded its burdens and risks at every step, far beyond what the statute requires.
President Trump’s first major step in addressing this was the “One Federal Decision” executive order issued on August 15, 2017. It empowered the White House Council on Environmental Quality (CEQ) and Office of Management and Budget (OMB) to create a synchronized system under a timetable for authorization decisions, reducing burdens and delays while increasing discipline and accountability. CEQ moved first to establish a unified “One Federal Decision” process through an interagency memorandum of understanding.
Last week CEQ took another major step, a major revision of its Carter-era NEPA regulations, the most significant reform yet. Under the new rule, environmental studies that average 4.7 years are limited to two years for the most important projects, and environmental-impact statements that currently run thousands of pages are limited to just 300 pages. The rule helps clarify which alternatives and impacts should be studied, and in how much detail. Currently, any environmental-advocacy group can stop a major project by pointing to some detail that the agency did not consider, even if it would not have affected the agency’s decision.
The new rule is sure to be challenged, but the system is being implemented and is gaining adherents. It helps everybody, including the many renewable-energy projects launched by the prior administration. And it will speed environmentally beneficial projects while also creating the jobs and the wealth on which environmental protection depends.
Implementing the system requires greater agency staff resources, at least initially. But once the system is up and running, it could unleash a wave of capital formation and crucial infrastructure development.
And not a moment too soon, as China steadily becomes a dominant global power, propelled in part by their incredibly modern new infrastructure. The whole free world depends on America’s technological edge for defense against totalitarian systems such as China’s. Maintaining that competitive advantage requires modern infrastructure.
Trump’s modernization program is crucial to America’s future. It needs to be fully implemented, as soon as possible.
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