Environmental permitting poses timely challenges as our nation’s infrastructural and domestic production needs are at historic highs. The Department of Energy (DOE) has highlighted the vast need to expand regional transmission lines and interregional transfer capacity by at least 47,000 gigawatt-miles (GW-mi) of high voltage lines by 2035.[1] Additionally, ambitious carbon capture investments incentivized through the Inflation Reduction Act (IRA) will require staggering amounts of new pipeline infrastructure estimated between 70,000 to 96,000 miles above our existing 3,100-mile network CO2 pipelines.[2] The Infrastructure Investment and Jobs Act (IIJA) authorized six billion dollars in federal funding for domestic production of critical minerals like lithium and cobalt essential to the decarbonisation of energy in the US through renewable energy and storage investments.[3] Critical mineral production, transmission line development, and pipeline infrastructure investments all require federal and state environmental permits.

Inefficient environmental permitting processes hinder economic activity, derail investment, and sacrifice job creation. Firms plan for permitting reviews in their comprehensive project planning. However, when a permit is delayed for an unpredictable period of time. the applicant (e.g. a manufacturing firm seeking to expand) bears direct costs and “opportunity cost.” For each day that this firm must wait beyond its planned timeframe, the firm cannot generate new revenue and potentially has the additional direct costs of application modifications, public meetings, and stakeholder interest meetings. If the permitting delays are too long, the firm may even abandon the project.

Consequently, the local community must wait for the jobs associated with both the initial project (e.g. construction workers) and, ultimately, the manufacturing activity at the facility (e.g. operators and managerial staff). Firms are naturally seek to maximize the rate of return on their investments and will select locations with lower permitting review times that accelerate the time a firm’s investments generate net income. The firm, therefore, may decide it prefers to invest in a different state or country with less permitting uncertainty. States and countries that have relatively faster permitting review times will appeal to firms considering expanding or shifting its U.S. investments.

Policy Navigation Group (PNG) has developed analytic tools to study these impacts through studies on the National Environmental Policy Act (NEPA) and the Clean Air Act’s (CAA) permitting programs. Recently, we had the opportunity to apply these techniques to Minnesota’s environmental permitting. The Minnesota Chamber Foundation (“Foundation”), a nonpartisan research organization, invited PNG to participate in a collaborative deep-dive alongside Barr Engineering and Squire Patton Boggs to understand Minnesota’s permitting experience relative to other states.[4] In the recently released report, we looked at air permitting data for a specific set of industry sectors and states over a study period of 2017-2022 and found that permitting review times in the state are up to six times longer than in other states. Minnesota’s review times are longer across different business sectors including (1) industries for which Minnesota has a competitive economic advantage, (2) key industries for Minnesota’s competitiveness, and, (3) other significant manufacturing sectors in the state.

Minnesota could gain as much as $910 million in annual economic output if it reduced permitting times to match “peer states” (i.e., nearby states that place comparable importance on environmental considerations).Minnesotans would enjoy up to 3,400 additional full-time jobs and between $60-$200 million annually in increased household income.

The impacts are experienced by communities across the state. As the Foundation’s Executive Director, Jennifer Byers, put it: “In (northeastern Minnesota), it’s a big issue in the paper industry and the timber industry and the mining industry. Across Minnesota, in agriculture and food production, manufacturing, biopharma, it’s an issue for them, too.”[5]

Permitting reform to shorten review times is not antithetical to environmental protection either. The goal of protecting the natural environment can co-exist with streamlining solutions that emphasize review efficiency, minimize red tape, and ensure adequate agency staffing. PNG applauds the timely work being done by the Foundation and are pleased to have contributed to the sustained effort to reform environmental permitting processes in the state. In our experience, benchmarking and understanding states’ unique permitting systems and the opportunity costs associated with their implementation are vital to designing policies that both speed permitting reviews and satisfy environmental protection requirements. With so much infrastructure and manufacturing planned, quantifying the opportunity costs associated with existing permitting regulations informs policy discussions for different permitting reform policies.

[1] https://www.utilitydive.com/news/doe-study-transmission-clean-energy/646589/

[2] https://www.bloomberg.com/graphics/2023-green-revolution-needs-96000-miles-of-new-pipeline/

[3] https://www.wri.org/insights/critical-minerals-us-climate-goals

[4] https://www.mnchamber.com/minnesota-chamber-foundation/streamlining-minnesotas-environmental-permitting-process-essential

[5] https://www.echopress.com/opinion/editorials/a-guest-editorial-slow-permitting-costing-minnesota-millions