Fleet Management

Red Tape’s Huge Impact on Cost of Infrastructure Projects

September 11, 2015

By David Cullen

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Image: Common Good
Image: Common Good

Delays caused by securing approval for infrastructure projects cost the U.S. more than twice what it would cost to fix the infrastructure itself, according to a new report released by Common Good, a nonpartisan government-reform coalition.

The group said that those approvals can take a decade or longer to get and even a six-year delay in starting construction on public projects costs over $3.7 trillion-- or more than double the $1.7 trillion needed through the end of this decade to modernize the country’s overall infrastructure.

The report, Two Years, Not Ten Years: Redesigning Infrastructure Approvals, proposes “a dramatic reduction of red tape so that infrastructure can be approved in two years or less.”

Common Good said this can be achieved by “consolidating decisions within a simplified framework with deadlines and clear lines of accountability.”

The group noted, for example, that it thinks the White House Council on Environmental Quality should have authority to draw lines on the scope of environmental review. “To cut the Gordian knot of multiple permits, the White House needs authority to resolve disputes among bickering agencies.”

Securing federal funding for infrastructure projects is simply not enough to get the job done, the group argued. “Even fully funded projects have trouble moving forward. In 2009, America had the money (over $800 billion in the economic stimulus package) but few permits. In its five-year report on the stimulus, released in February 2014, the White House revealed that a grand total of $30 billion (3.6 percent of the stimulus) had been spent on transportation infrastructure. In the current legal quagmire, not even the President has authority to approve needed projects.”

In analyzing the costs of delay, the report includes the direct costs (legal, administrative, and overhead), the “opportunity costs of lost efficiencies” during the years of delay, and the environmental costs of antiquated infrastructure during the delay. These costs are estimated for electricity transmission, power generation, inland waterways, water, rail, and roads and bridges.

The report proposes these four major policy changes “to rebuild America’s infrastructure on an efficient and timely basis”:

  • Public comment should be solicited before formal plans are finalized as well as throughout the process. Input should be informal, not a matter of formal hearings and “building the record.” This change would help broaden public discussion and make government decisions more accountable.
  • The scope and adequacy of environmental review should be determined by a designated environmental official. Review should focus on material issues of impact and possible alternatives, not endless details. Net overall impact should be the most important finding. Environmental review should generally be completed in no more than a year, and should not be longer than 300 pages, as set forth in current regulations. The report proposes that the White House CEQ assume this responsibility.
  • It is also important to eliminate the fear of litigation that leads project proponents to practice a kind of “defensive medicine” that transforms environmental impact statements into multi-thousand page documents. Needed changes would: (1) require all claims challenging a project to be brought within 90 days of issuance of federal permits; (2) require credible allegations that the review is so inadequate as to be arbitrary or, for permits, that the project violates substantive law; and (3) require that impact be measured against the overall benefit of a project.
  • Multiple permitting should be replaced by a “one-stop shop.” If America wants new infrastructure on a timely basis, approvals must be consolidated. The new framework should preempt state law for interstate projects (similar to the Federal Energy Regulatory Commission’s authority over new gas pipelines), and give the White House authority to designate a single agency to balance regulatory concerns and issue permits for an interstate project.

“The upside of rebuilding infrastructure is as rosy as the downside of delay is dire,” said the report’s author, Philip K. Howard, Chair of Common Good. “America can enhance its competitiveness, achieve a greener footprint, and create upwards of two million jobs.

“Americans clearly want infrastructure improvement – not further waste and inefficiency,” he added. “The question is: Will the federal government make it happen?”

The full report is available online.

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