The Environmental Permitting Process is Broken: Time for Change

“I’ve been fortunate to work for quality clients and companies that have not asked me to do anything unethical or immoral,” said Bob White, Environmental Consultant at Limnoterra, Inc. in Pittsboro, North Carolina. “But that’s not the case for the majority of companies in the industry.”

Indeed.

A lack of transparency in the environmental consulting field has often created bloated schedules and exorbitant fees with little accountability.
“I provide honest services at an honest price,” White said. “But there are companies out there that are absolutely money grubbers.”

Developers' common complaints included missed deadlines, miscommunication, misrepresentation, and cost overruns — often without explanation. At times, companies fail to deliver at all.

With the ever-growing concerns surrounding the escalating climate crisis, more greenfield land development than ever before, and all the new legislature for infrastructure, the line to obtain environmental permits is growing longer and longer. The manual, in-person fieldwork done behind a veil of secrecy is considered a “necessary evil” by land developers frustrated by the broken process.

Examples of Environmental Consulting Malpractice

J&H Holding Company and Watermark hired Impact Environmental Remediation (IER) and its principal, Anthony Kloss, as an environmental consultant for two projects in New York. The work included preparing and submitting a site characterization report. Watermark said it spent more than $150,000, and the study was never completed.

In a subsequent lawsuit, Watermark alleged IER failed to comply with the schedule, submit monthly progress reports as required, or complete the project. When Watermark was forced to retain a second environmental consulting firm to address the deficiencies, the lawsuit says IER did not provide any information to help remediate the situation.

A district court judge awarded Watermark $146,090 in damages plus interest. While Watermark could recover some of the project’s costs, what they couldn’t recover was the time lost.

In development, time is money. And land developers everywhere know that environmental consultants, even when they do what they say, will waste a whole lot of their time.

James, an environmental engineer, working with land development consulting companies, asked his last name not to be used because he fears repercussions. He said he’s not surprised when things get overlooked and blamed on the client. “The developers are paying the bill, and you’re consistently feeling pressure to favor developers,” he said.

James said much of the information he used in reports was regurgitated from previous reports. Despite cutting and pasting, clients were charged an hourly rate for “research” that had been previously done for other clients.

Developers we talked to compared environmental consulting to the legal profession. One of the biggest complaints about law firms is overbilling practices. Hours may be billed at a partner rate when junior associates actually did the work. Multiple clients may be billed for the same hour. There’s little transparency and almost no way for clients to know.

The same can be said of some environmental consultants and engineering firms.

Environmental Consulting Practices that Lead to Inflated Bills

Insiders tell us that several practices can lead to inflated bills, including block billing, reconstructed billing, minimum time increments, time correcting mistakes, and what’s called “value billing.”

Block billing occurs when multiple tasks are lumped together in a single time entry. While this may be appropriate in some cases, it also makes it difficult for clients to discern how much time was spent on individual components.
With reconstructed billing, work is not recorded when it’s done but calculated after the fact. Did the research phase really take six hours, or was that a guess based on typical workloads?

Some companies have minimum time increments. Let’s say a particular database search takes five minutes. If there are minimal billing increments in place of 15 minutes, this can pad the bill. So can stretching billable hours by combining workloads.

“When you’re doing research, you often have a stack of folders, and you’re trying to get through them as quickly as possible without missing anything,” said James. “When you’re in one database, you might search for several clients to speed things up rather than hop back and forth between searches in different sources. I’ve seen cases where each of the clients got billed for the time it took to handle multiple searches.”

Value billing is a nefarious practice that refers not to the time it takes to complete a job but is based on the value the person doing the job assigns to it. In this case, the research might only take a few hours, but the person doing it feels worth several more hours than what they put in. In other cases, similar work on another project might already be done, leading to a value assigned to work that had already been completed.

Most developers are left with little choice but to trust and just pay the bill. They are unable to move forward on projects until the studies are done. Yet, with building projects booming in communities across the country, environmental consulting firms are in high demand. Firms can set the terms on timeframes and costs.

“The developer is somewhat held hostage,” said White. “They can’t negotiate because they don’t understand the scientific perspective or how to navigate the local, state, or federal regulations. This leaves them vulnerable to what the consultant wants to charge and however long it’s going to take.”

It's Not Just About the Money

Delays in Getting Environmental Consulting Information Can Be Even More Painful for Land Developers

"The challenge can be that the process can take a while,” Otto Singler of Zydeco Development said. “Everybody is stretched thin because you have so many projects and companies moving here. It can be tough to get reports back quickly.”

We heard similar stories from nearly every developer we talked to. Even with new consulting firms entering the market, it’s often a challenge to find someone to take on new projects on a reasonable timetable unless they have a long-standing relationship.

Nationwide, there is a shortage of firms and qualified engineers. The Bureau of Labor Statistics (BLS) shows that 52,300 environmental engineers and environmental permit consultants were working in the U.S. in 2020, the most recent survey period where data is available. BLS forecasts growth of 4% through the year 2030.

Supply, however, isn’t keeping up with demand in many areas. A study by Manpower reports that such positions are among the most difficult to fill. Despite the attention to environmental issues over the past two decades, colleges and universities are not producing enough graduates to meet the demand.

That leaves developers in the lurch, especially during the site selection phase of projects. This costs time and money.

“As a developer, we do a series of reviews as part of the process,” said Jeremy Jones at Redrock Residential. “Each review is costly. You don’t want to spend money to continue to buy reviews if the economics aren’t in place.”

Jones said there are times when, in a competitive market, you might be chasing 100 sites, so pursuit costs add up quickly. While most sites get ruled out, the time and fees to conduct the studies can increase. Even the first phase, a desktop review, can result in project delays.

An environmental desktop report or critical issues analysis is generally one of the first steps in assessing a property’s viability. Developers want to ensure no obvious environmental concerns that could make site development prohibitively expensive.

A desktop report acts as a first-blush report to determine the potential for environmental liability at the site from known data. For example, contamination from a previous owner or neighboring parcels upstream from a site. A desktop review generally includes evaluating government records, GIS data, regulatory records, historical site records, and public documents.

“You can think of it (an environmental desktop review) as a high-level review to clear out some of the big questions,” Jones said. “When you get the right answers, it allows you to move forward.”

While developers want answers quickly to rule sites in or out, many environmental engineering firms have significant backlogs of projects. In fact, the longer it takes, the more billable hours there are.

“You’re cranking out many projects,” said White. “As soon as one folder leaves your desk, you pick up the next one. In times when it is busy, developers are going to wait in line.” He said that environmental permitting consultants work at their own pace, and not all of them work efficiently. “Working hourly, they are not always concerned about how long it takes to complete a task.”

In fact, the longer it takes, the more billable hours there are.

“While the cost for environmental review is built into a developer’s financial model, it’s really the uncertainty about the time frame that can be costly,” said White.

“There may be streams or creeks, prime agricultural or protected lands, wetlands, threatened or endangered species,” said White. “All of these potential resources are then mapped into the field and incorporated into further mapping to produce a final map the client would sue for continued planning.”

The environmental permitting process for sensitive resources can be incredibly intense. It can involve various permits from the local, county, state, or federal levels. For example, basic permitting to comply with the Clean Water Act involving any wetland might take three months of dialogue with the federal level just to get basic information and then take nine months to a year to permit, according to White.

For a land developer, though, every day waiting to understand what environmental permits they need means a higher price tag. So, the ability to move forward quickly is crucial.

Until now, developers and builders have had little control over the process. Due to the expertise needed to research and work through environmental concerns, consultants have had a monopoly on the process, controlling pricing, resources, and timelines for environmental due diligence with little to no visibility into the process for developers.

Our Climate Goals Mean the Time for Innovation and Reform is Now

President Biden’s $1 trillion infrastructure plan created even more demand. According to Brookings, however, permitting challenges remain a key sticking point that has yet to be addressed.

A federally funded infrastructure project is subject to as many as 60 reviews and authorizations under federal environmental regulation, not including what’s required at the local or state level. From the Clean Water Act to the National Environmental Policy Act to the Endangered Species Act, developers must adhere to a laundry list of regulations.

Major projects must produce environmental impact statements. A study done by the Executive Office of the President's Council on Environmental Quality found that federal agencies, on average, took between 3.6 and 4.5 years to complete the process. One-quarter of agencies took more than six years.

Biden’s infrastructure plan calls for a significant investment in renewable energy, which takes up vast swaths of land. A study by Princeton University and Bloomberg estimates that the land requirements are roughly the size of South Dakota. Yet, meeting the requirements to complete the environmental due diligence using environmental permitting appears overwhelming.

Nobody’s arguing for easing environmental protection under the current Administration. Still, without significant change, the biggest obstacle to deploying the infrastructure plan is likely to be the burden and bureaucracy of the environmental permitting process.

Without reform, Brookings says, “permitting projects of this magnitude by 2035 will be highly improbable if hundreds of massive projects have to plod through the current permitting system.”

Leave the Broken Environmental Permitting Process Behind

Innovative SaaS Products Can Help Land Developers Take Control of the Permitting Process

Digital tools can make a significant difference. When the Washington State Historic Preservation Office was suddenly forced to go remote during the pandemic, they were able to turn around requests within three days — more than doubling the speed it took before. The federal permitting process is ready for an overhaul.

Despite the digital transformation of industries globally, environmental consulting remains married to an environmental permitting process that has barely changed since the first environmental regulations were passed into law 50 years ago. This makes it nearly impossible for the status quo to handle the pace of technological advances in the industry, leading to continued delays and costs.

Writing in The Hill, Kelly Lizarraga said that handling the flood of new infrastructure projects requires early planning and engagement, cutting-edge technology to speed up the process, and effective implementation of infrastructure projects at all levels of government.

“Digital tools also offer big opportunities to save time and money,” she wrote. “Ensuring ease of access to data will help developers incorporate the consideration of historical and natural resources into their plans right from the start.”

However, there is some potential relief to clear the backlog of projects, reduce costs, and improve transparency in the world of environmental impact reporting. Several startups are taking on consulting firms with a digital approach to simplify the process for developers. Rather than have to wait weeks or months to have desktop reviews completed, companies like Transect can query the same data and databases as consultants and pull results almost instantly.

“I was working on a transmission line in Western Florida last fall,” said White. “It was a 330-mile transmission line. I used Transect to map what I knew was in the field. Their product gave me results in minutes. Instead of months, it took 3-4 minutes.” White said that the data was accurate and matched what field surveys had shown in a fraction of the time and at a fraction of the cost.

Land development gets complicated quickly, and every step of the process takes time and money. Developers rely on accurate information to make million-dollar decisions.

“We had an experience where the developer and the civil engineer were relying on information given to us by a municipality for a site plan,” Jones explained. “We found out well into the process — millions of dollars had been spent — that the software being used had an update glitch which failed to note a blue line representing a potential waterway.”

The issue in the resulting data added 14 months to the project’s schedule. “The cost was measured in millions of dollars,” said Jones. “Transect would have found that immediately. It would have saved several million dollars and so much time lost on the schedule that you almost can’t quantify the cost.”

Digital solutions are shaking up the industry. “They can produce the same level of due diligence faster and less expensively,” said Jones. “Whether you want to use something like Transect as an alternative to desktop reviews during site selection or use it as an extra layer of protection, it can significantly reduce the time it takes to get the information you need.”

Most developers we talked to agreed. While you never want to spend any more money than you have to, their biggest concern is the length of time it takes to do the studies. Digital solutions like Transect can provide real-time data, allowing developers to make better and faster decisions. This can speed up site selection and save years of permitting delays and hundreds of thousands of dollars in the survey and environmental permitting process.

Consultants are disincentivized to create streamlined solutions because they can affect billable hours. With a project today, you don’t know how long it will take or what it will cost.

It’s time for a change, so land developers can finally take control of the environmental permitting process.

Read more about the broken environmental permitting system in our eBook below!