How Red Tape Adds Trillions to the Cost of Infrastructure Projects
Policy + Politics

How Red Tape Adds Trillions to the Cost of Infrastructure Projects

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Congress has been deadlocked for months over a new transportation bill to funnel tens of billions of dollars into repairing and replacing the country’s crumbling network of highways, bridges and mass transit.

Lawmakers will try again to resolve their differences this fall. But even if they finally succeed in approving the first new major transportation legislation in six years, there is no guarantee that the government and states could actually spending that money in a timely fashion.

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For years, federal, state and local officials have been constrained by government red tape that has had the effect of doubling or even tripling the time it takes to obtain the necessary environmental and other permits to undertake new infrastructure projects. Those delays can greatly add to the overall cost of new highways, bridges, railways and inland water projects.

A new report by Philip K. Howard, an author and founder of Common Good, a non-profit government watchdog, says that rebuilding the country’s declining infrastructure will require a major overhaul of the government’s permitting system to greatly speed up the process and save literally trillions of dollars over the long-run.

The report assumes, based on “ample anecdotal evidence,” that the permitting process can delay major infrastructure projects by six years or longer. It concludes that the unnecessary bureaucracy costs the nation over $3.7 trillion in lost employment and economic gain, inefficiency and unnecessary pollution. The report calls that figure a rough estimate, “intended to provide a general order of magnitude of costs and lost efficiencies from delay.” But the projected total is more than double the $1.7 trillion needed through the end of this decade to modernize and upgrade the crumbling U.S. infrastructure, according to projections of the American Society of Civil Engineers.

The key to rebuilding the country’s decrepit infrastructure is the adoption of a new permitting system that limits to two years the time it takes for the government to sign off on a new project, according to the report. Under the existing system, Howard said, approvals can take a decade or more — causing huge bottlenecks in the review and construction phase and “causing America to lag behind global competitors.”

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“Red tape is not the price of good government; it is the enemy of good government,” the report asserts. “Time is money: America could modernize its infrastructure, at half the cost, while dramatically enhancing environmental benefits, with a two-year approval process.”

President Obama has long urged Congress to support a more robust infrastructure policy to better compete with China and other global competitors, but has acknowledged that excessive government regulations and review processes can add months or even years to a badly needed project.

Obama has said more than once that “There’s no such thing as shovel-ready projects,” according to the report.

A case in point was the government’s trouble-plagued experience in trying to launch transportation projects as part of the 2009 stimulus legislation aimed at jump-starting the economy. In a report issued in February 2014, the White House revealed that little more than $30 billion — or 3.6 percent of the overall $862 billion stimulus — had been actually spent on transportation projects. A big part of the problem was the inordinate amount of time it took to win regulatory approval for the projects.

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The Government Accountability Office has previously reported on excessive government regulation of highway projects. A highway project typically requires a federal environmental review under the National Environmental Policy Act (NEPA) or a state environmental review — or sometimes both.

In its report, which emerged from a May forum that included the National Association of Manufacturers, the Bipartisan Policy Center and law firm Covington & Burling LLP, Common Good calls for a “radically simplified approach” to regulatory oversight, with all reviews and approvals completed within two years. The group’s motto is “Two Years, Not Ten Years.”

According to the report, this goal can be achieved by consolidating decision-making within “a simplified framework with deadlines and clear lines of accountability.” This could be done in part by granting the White House Council on Environmental Quality authority to clearly define limitations of environmental review. “To cut the Gordian knot of multiple permits, the White House needs authority to resolve disputes among bickering agencies,” the report stated.

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It concludes that streamlining the government’s permitting process and pushing ahead with infrastructure improvements would have “transformational” economic and environmental benefits, including the creation of 2 million jobs.

“The upside of rebuilding infrastructure is as rosy as the downside of delay is dire,” the report says. “America can enhance its competitiveness and achieve a greener footprint—with renewable power, modern transmission lines, new water treatment plants and pipes, updated ports, inland waterways, and air traffic control, and elimination of rail and highway bottlenecks.” But getting there requires rebuilding our legal and bureaucratic infrastructure first.