Stranded assets

Whereas the cost of bringing the United States’ core infrastructure assets up to minimum modern operating standards over the next five years comes with an estimated price tag of $1.7 trillion, according to the American Society of Civil Engineers (ASCE), a new report by non-partisan government reform coalition, Common Good, indicates that the cost of project delays could be as high as $3.7 trillion.

The 34-page report, entitled Two Years Not Ten Years: Redesigning Infrastructure Approvals and authored by Philip K. Howard, a New York-based lawyer who is also the author of The Rule of Nobody and chair of Common Good, indicates that a dramatic overhaul of the infrastructure approvals process – and particularly the pre-development environmental review process – in the US is needed in order to minimise costs and maximise benefits of infrastructure development.

The analysis concludes that a six-year delay in starting construction on public infrastructure projects costs the nation more than $3.7 trillion when considering the costs of the prolonged operating inefficiencies and “unnecessary pollution” produced by aging systems.

“No one deliberately designed America’s infrastructure approvals system. It is an accident of legal accretion over the past 50 years,” says the report. “Environmental review was supposed to highlight major issues, in 300 pages or less for complex projects, so that officials could make an informed decision. As practiced today, environmental review often harms the environment. America’s antiquated power grid, for example, wastes the equivalent of 200 coal-burning power plants.”

The cost of six-year project delays in the electricity transmission sector alone will cost taxpayers roughly $819 billion, according to Common Good’s calculations. Breaking this number down even further, it estimates $25 billion per year in electricity losses, about $28 billion per year in environmental losses, $75 billion per year in disruption costs, and just under $9 billion per year in direct increased costs due to permitting delays.

The cost of delays in the power generation sector was estimated at $760 billion. Road and bridge projects could rack up $427.8 billion in delay costs, and rail projects could suffer $1.22 trillion in additional investment requirements. For inland waterways projects, the delay cost estimate was $227.4 billion, and for other water projects the cost was estimated at just under $134 billion.

Four major recommendations put forward in the report include the earlier initiation and de-formalisation of public comment procedures; the designation of an environmental official to determine scope and adequacy requirements for environmental review; the addition of new requirements that aid in avoiding the “defensive medicine” approach to building Environmental Impact Statements (EIS), such as requiring all challenges to be issued within a set time frame and measurement of accepted challenges against overall environmental benefit of the completed project; and the replacement of multiple permitting through the creation of a “one-stop shop” to oversee all environmental reviews on a project-by-project basis.

At the heart of the report’s recommendations is a call that comes from an earlier book authored by Howard, The Death of Common Sense, in which he indicates that American government relies too much on the coddling nature of its legal code to settle matters of dispute rather than entrusting elected and appointed officials to do their jobs.  

“Today, permitting decisions are balkanised among dozens of different departments, at different levels of government. Environmental review has become a litigation quagmire, as supporters and opponents argue over thousands of pages of details,” it states. “To rebuild its infrastructure, America must first rebuild its legal infrastructure so that vital projects can move forward.”

“Responsible officials must be given the authority to make decisions,” reads the report’s conclusion. “Those decisions can be checked by other officials, but there must be a clear hierarchy of authority, not a bureaucratic scrum.”