Have we found the regulation that's strangling the U.S. economy?
Idk if these lit review-esque posts do the numbers, but they’re one of my favorite things you do, Noah.
The main reason I pay for this substack is that I have neither the time nor the familiarity with the policy research landscape (despite being a policy and law grad student!) to find all this stuff myself. And I find this form of presenting it much superior to, say, an economist article that quotes all of these authors but doesn’t actually link to their work; this is much more transparent.
And it’s incredibly useful resource for when I decide I want to cite something on the NEPA later on! I’ve gone back and pulled sources from your lit review on immigration and employment multiple times now.
You have got to give it to Noah: he certainly does his research and is able to distill vast material into the essentials.
Some good examples of unintended consequences of well-intentioned but broadly framed public actions.
The Manchin example in particular raises interesting and significant political tactical and strategic implications.
The need for reform is obvious. At this point the only people arguing that NEPA "works," in any sense of the word, are those whose livelihoods and political strategies depend on it. The more important question is what kind of reform we should pursue.
Should we keep the same basic structure, but ensure it is faster and smoother? Or should we fundamentally rethink it from first principles?
I am in the latter camp. The most impactful thing we could do is transition away from a subjective, procedural regulatory scheme and replace it with an objective, output/performance based system. I recognize that to do it right, we also need to change other laws like the clean air act, clean water act, endangered species act, etc. But how much better would our built environment be if we landed on a clear standard that folks could know in advance was compliant, focused on the handful of things that are truly critical to protecting the environment? For example, a system that lets you build whatever you want so long as it meets objective, numeric standards for air and water emissions (with a more subjective, case-by-case option for those that fall just outside the limits). This would be far better than spending years doing studies of every conceivable possible impact in the hopes that you didn't miss something, in order to meet a nebulous and indefinable test like LEDPA.
Many sacred cows would get slaughtered as part of this reform. Many legacy environmental groups would hate it because it deprives them of a weapon they have learned to use successfully. All of that is worth it, because without this kind of reform it will be literally impossible to build for the future. We would lead the world in clean energy, transportation and advanced manufacturing if we did this.
Many things I like. I have managed in DOT, EPA and FDA regulated businesses. I've also been a partner with the USFS on a couple projects. Including EA, EIS, CE and NEPA. Not an expert on NEPA.
A. We terribly underfund the staffing of these
B. BLM and USFS need higher quality people. Pay them more.
C NEPA is the prestep before litigation. It is also collaborative thru the public scoping comments. This is important. Who wants the strip mine or deep mine or quarry or opened up a half mile or less from your house.
D. Litigation takes longer than most NEPA. Litigation is unstoppable. Between Oil, NRA, Sierra, Center for Bilological Diversity etc, lots of money.
America sucks at Collaborative Problem solving.
We lack agreed on metrics and measures for many of these.
NEPA like anything can be improved by
The FERC transmission line approval has ideas to mine.
I see and I want a huge distinction between NEPA
A. Protection of land and water that are impossible to repair or replace are a must
B. Protection of the scenery, view, attractiveness, I have low support for when improved infrastructure, new energy (solar, hydro, wind).
I worked for an EI company in CA very briefly and found a lot of the paperwork redundant or innocuous and the associate I was working for suspiciously pro-development (fortunately he was later fired).
Most of my career was as a landscape contractor in Orange County. Permits are never fun but what I noticed at the local city level since the housing boom started in 2000 was that as more tax money poured into the cities they hired more engineers to create more stringent requirements and more inspectors to enforce them to the he point of ridiculousness. For example I was pouring three concrete steps and they required inspection since they were attached to a remodel for which an "extensive" soils report had already been done. The inspector asked me where my soil report was for the three steps was. The homeowner was there and explained a report had already been done for the remodel. "That was for the remodel I need one for the new steps". The homeowner and I started at each in doomed silence. Fortunately a few minutes later the inspector relented after inspecting my formwork and reinforcing. "I guess it isn't going anywhere".
I think the issue with regulations is a “death by a thousand cuts” problem. I’m not really a libertarian but I see their point. Too many parts of our economy are stifled by regulatory hurdles. A sensible solution would be for every regulation to have an expiration date, causing them to go through a renewal process every ten years or so.
Wow, there’s lots to digest here. Love it.
In the UK there has been and continues to be a big debate around stripping back of regulations post brexit.
A bonfire of regulations was promised but hasn’t yet materialised.
Maybe it’s because when it comes to it one persons red tape is another persons employment rights.
These things are very difficult to do in practice when politics gets in the way.
“Which regulations?” It turns out that “regulation”, as an aggregate phenomenon, is extremely hard to quantify.
- Various FDA regulations around drug approval - "Eroom's Law" is certainly regulatory
- FAA regulations around airlines & flight safety (probably smaller, but still innovation inhibiting)
- NRC and nuclear power, this technology could have allowed a lot of energy-intensive innovation
- Finance and education are difficult to measure, but certainly there is a lot going on
- Copyright and patent law (very underestimated effect on innovation)
- The legal and court system as a whole
I guess you could dismiss many of these critiques as "compared to what?" and you'd be somewhat justified.
The problem is that we'll rarely if ever find out, because entrepreneurs are not allowed or it's extremely hard to even try and experiment with these alternatives.
Happy to have a longer debate on my podcast if you're interested: https://rss.com/podcasts/stranded-technologies-podcast/
Also on Substack: "Congress must work with Sen. Manchin to pass permitting reform.
The democratically-controlled Congress has until year-end to rein in the unending delay tactics of opponents to wind, solar, and transmission project construction. Compromise is needed to get a bill." https://cleantechadoption.substack.com/p/congress-must-work-with-sen-manchin
As a non American nepa does not interest me very much, but I still appreciate this post a lot, since it shows noah doing a proper amount of research on all the hot takes that he writes
The above article touches on NEPA but also adversarial American unions (overtime, anti automation), and the principle- agent problem of using outside consultants to supplement lack of agency’s expertise when picking projects
Thanks for the shout-out Noah!
I spent 9 years on the planning commission of a 150K person city in CA. While we didn't deal with NEPA, the CA ENvironmental Quality Act (CEQA) is very similar. I can confirm everything written here.
When I read Environmental Impact Reports (our version of an EIS) for development projects, of the 150 pages, there might be 3-4 that actually mattered. Literally, the entire rest of the document was boilerplate, reused on every project or spliced in on projects that it was applicable to. Building on red-tail-hawk habitat? Here's 12 pages to cover that! Have a seasonal wetland? Here's 21 pages to cover that! (A "seasonal wetland" is a swamp to anyone except an EIR preparer.) The entire document was this way. All of this is ostensibly to provide policymakers (us on the Planning Commission) with the information to make an informed decision. But it doesn't do that, as anything actually significant gets swallowed by the surrounding noise of fake "unmitigable impacts" like "construction noise", "potential soil runoff", "tree removal", etc... If I could either spend 3 hours wading through an EIR or 3 hours walking the site, the latter would be far more useful.
This could be solved by raising the threshold of what qualifies as a "significant impact", but if you propose that people come down on you like a ton of bricks accusing you of wanting to poison the water table and clear cut pristine forests. Thus, CEQA (and NEPA on the federal level) is the tool of choice to kill projects. That might not be terrible if it actually did anything for the environment, but all it does is provide employment for a bunch of otherwise useless environmentalist majors and lawyers who kill thousands of trees spitting out reams of useless paper.
I would go further personally, abolish the EPA completely and make Congress pass laws to protect specific species and set habitat boundaries explicitly. Critical habitat rulings are effectively takings, and there is no field in which elected official involvement and accountability is more important than the taking of private property. Allowing civil service bureaucrats to effectively rule someone's property unusable is a reprehensible abrogation of elected responsibility.
Experts who understand the constraints of renewables have long pointed out that, because they require so much space, people may not accept them at the level required to power an advanced economy. They were right. No-one wants these intrusive installations and the associated transmissions lines near where they live. Trying to change the laws so that people cannot block what is, in effect, industrialisation of their local environment is one solution. I doubt this will happen in any democratic society, especially the USA. If you want to reduce fossil fuels the more realistic option is nuclear power, which requires even less space than fossil fuels.
Exhaustive! NEPA and/or the underlying morass of rules certainly sounds like a big problem!
I'm surprised you've found that "which regulations?" is a successful rebuttal to people complaining about regulation. I wonder what sort of libertarians you've been talking to and where you find them, if they can't immediately rattle off examples. They can't be all that dedicated to their politics if not! I'm middle aged and have been in middling roles in a few different companies in the software business - i.e. pretty average - but I could name at least 4 or 5 examples of business-strangling regulations that I've directly encountered during my career.
Now admittedly there are caveats to this: the most troublesome regulations tend to come from Europe or China (in the case of China they are often more like impassible barriers than laws). My experience was that US law seems to be of higher quality on average. Despite all the bellyaching about Congress, from the perspective of a foreigner the partisan fighting seems to yield better outcomes than in the rest of the world, where politics is more homogenous. So it's possible that US libertarians find it harder to name specific examples because they've already done a good enough job of beating them back, so it's more of a general principle than a pressing immediate problem (though the crushing difficulty of building things suggests maybe not).
The Goldschlag & Tabarrok paper you cite presents its word counting approach as superior to just counting pages. My experience from compliance projects is that the cost of regulations won't be easily measured with either approach, but page count would still be better. Don't know anything about building codes but at least with the regs I'm familiar with (across a couple of different industries) the cost is driven primarily by vagueness and contradiction, not raw word count. A single ambiguous paragraph can easily cause whole businesses or products to be abandoned or yield billions in fines. The poster child for this problem is GDPR but the EU's new DSA is going to be the same or worse. The UK's stalled attempt to regulate "legal but harmful" content is another good example of this mentality in action. You aren't going to find many of their demand words in those rules but the cost of compliance in both up-front effort/legal fees and inevitable fines when courts or regulators disagree is nonetheless astronomical.
I think Gordon nails it:
"Gordon notes that many other countries have NEPA-like laws but manage to build big environmental infrastructure projects efficiently and quickly nonetheless. He claims that understaffing of the civil service and lack of coordination between agencies is more to blame than the structure of NEPA itself."
Understaffing -- the result of relentless pressure, mostly from Republicans, to reduce or even eliminate entirely funding for Executive Branch agencies -- is a crippling problem in nearly every one on those agencies. And as the Republicans know only to0 well, the more an understaffed agency is unable to to function effectively, the easier it is to mobilize popular (idiot) sentiment against that agency, and thus to justify cutting its funding even more. I think many federal agencies are now locked in a death spiral that only strengthens the case for radically curtailing them, or eliminating them altogether. For the Republican Party, this death spiral is a feature, not a bug.