Building physical infrastructure, such as that related to energy and transportation, generally requires complying with a variety of procedural and substantive legal requirements at the federal level as well as, in some cases, at the state, local, and tribal level. For instance, a notice in the Federal Register listed roughly 30 federal requirements relevant to border wall construction, including requirements in place under the National Environmental Policy Act (NEPA), the Endangered Species Act, and the Clean Water Act. (As shorthand, we refer to the general set of such procedural and substantive legal requirements as permitting requirements throughout this post.)
NEPA, for example, requires the production of information about how certain infrastructure projects would affect communities and the environment. The process of complying with those requirements generally increases the cost of affected infrastructure projects and the time required to complete them. The possibility of NEPA-related litigation also generally increases the uncertainty associated with investments in affected projects because federal courts allow plaintiffs to challenge a federal agency's compliance with NEPA under the Administrative Procedure Act (5 U.S.C. §§ 701–706; see Hite 2025).
The Congress periodically considers legislation that would change federal permitting requirements. In some cases, those changes would also affect state, local, or tribal permitting requirements. Additional data and research would help to broaden and deepen the Congressional Budget Office's basis of assessment for estimating the budgetary and economic effects of permitting-related legislative proposals and administrative actions.
CBO's Modeling of Changes in Permitting Requirements
When producing cost estimates for permitting-related legislative proposals, CBO estimates the effects on the federal budget as well as the costs associated with mandates on state, local, and tribal governments. Standard cost estimates, called conventional cost estimates, do not incorporate budgetary feedback effects stemming from changes in the size of the U.S. economy.
When directed or requested to do so by the Congress, CBO reports the results of more comprehensive analyses—known as dynamic analyses—as part of its cost estimates. Unlike conventional cost estimates, dynamic cost estimates include the anticipated effects of the legislative proposal on the economy and the subsequent budgetary effects of those economic changes. For example, because the House-passed version of the 2025 reconciliation act (H.R. 1) was classified as major legislation under House Rule XIII(8), CBO—in collaboration with the staff of the Joint Committee on Taxation—provided a dynamic analysis of that bill. As reported in its dynamic cost estimate, the changes to permitting included in H.R. 1 would, in CBO's assessment, result in increases in public and private investment, total factor productivity, and economic growth.
When CBO updates its baseline projections of the federal budget and the U.S. economy, it incorporates estimates of the economic and subsequent budgetary effects of enacted legislation and administrative actions. That is, CBO's baseline projections incorporate the dynamic effects of enacted legislation even if a dynamic cost estimate was not provided at the time that the legislation was being considered by the Congress.
In addition to conducting dynamic analysis as part of preparing its baseline projections, in the course of producing some conventional cost estimates in recent years, CBO has modeled the effects of legislative proposals on private investment in directly affected sectors. An example is CBO's conventional cost estimate for H.R. 5616, the BRIDGE Production Act of 2023: In order to model the legislation's effects on federal receipts from oil and gas royalties, the agency modeled changes in private investment in oil and gas production.
CBO's ability to provide consistent and comprehensive dynamic analysis of permitting-related legislation, and to incorporate the full economic and budgetary effects of enacted legislation and administrative actions into the baseline, depends heavily on the research literature describing and documenting those effects.
Example: Estimating the Effects of a Permitting Provision in H.R. 1
To illustrate how CBO models the effects of changes in permitting requirements, this blog post focuses on the example of a permitting provision that was included in the House-passed version of the 2025 reconciliation act (H.R. 1). (The version of the permitting provision discussed in this blog post was not ultimately included in the version of the 2025 reconciliation act that became law.)
That provision in H.R. 1 would have amended NEPA to allow project sponsors to pay an opt-in fee in exchange for faster processing of environmental assessments (EAs) or environmental impact statements (EISs) and would have precluded judicial review of those EAs and EISs. Some experts have conjectured that such changes to judicial review, if enacted, could meaningfully decrease the time needed to build physical infrastructure projects (Bagley 2025, Hochman 2025).
CBO first modeled the effects of that provision by focusing on how it would change the average time to build and the variance in that time. The agency then estimated the effects of those changes in time to build on outcomes such as public and private investment, total factor productivity, and economic growth. CBO would benefit from information about whether that modeling approach—that is, focusing on changes in time to build—is sufficient to capture the key economic and budgetary effects of similar permitting provisions.
Below, we articulate a series of examples of data and research that would help inform CBO's modeling of the effects of changes in permitting requirements such as those specified in the provision in H.R. 1.
Effects on Time to Build
Little research has quantitatively estimated whether and by how much this type of legislative proposal would change the time to build for infrastructure projects.
For example, the permitting-related provision in H.R. 1 would have exempted the EAs and EISs required under NEPA from judicial review. However, the proposal did not affect other federal permitting requirements, such as the requirements in place under the National Historic Preservation Act, the Endangered Species Act, or the Clean Water Act, nor did it affect other state, local, or tribal permitting requirements. To project how the legislative provision would affect time to build, CBO needed to model “litigation shifting”—that is, whether litigation that would have been brought under NEPA would shift to be brought under other statutes or requirements. In the absence of direct evidence on the existence or magnitude of such litigation shifting, CBO analyzed data on NEPA-related litigation in order to make an indirect adjustment. The agency would benefit from additional legal or economic analysis considering whether and to what extent litigation shifting would occur in response to such exemptions from judicial review.
CBO is also on the lookout for new research on several other topics that relate to estimating changes in time to build, including the following:
- The amount, characteristics, and outcomes of litigation relevant to different federal, state, local, and tribal permitting requirements, similar to the data on NEPA litigation compiled by the Breakthrough Institute (2024);
- What share of projects generally pause construction during the litigation process, either because of preliminary injunctions or voluntary stoppages;
- Whether and to what extent states or localities would change their permitting requirements or processes in response to federal policy changes; and
- How the effects of a given change in permitting requirements would differ across industries. For instance, some experts have argued that changes in permitting alone may not meaningfully affect investment in infrastructure for electricity transmission; rather, permitting changes may affect such investment only in combination with other changes, such as changes to the incentives of utilities (Elmendorf, Hubbard, and Liscow 2025).
Changes in "Litigation-Proofing" Activities
Both the Congressional Research Service (Luther 2011) and the Government Accountability Office (2014) have observed that some of the time and cost of preparing NEPA applications may be spent developing litigation-proof EAs or EISs. In principle, an exemption from judicial review could reduce the need for agencies (or contractors acting on their behalf) to undertake such activity, which could reduce the time and cost required for infrastructure projects. CBO would benefit from legal or economic analysis quantifying whether and to what extent litigation-proofing activities would change in response to exemptions from judicial review or other changes in permitting requirements.
Project-Level Data Linking Permitting and Litigation
A team at Indiana University's Paul H. O'Neill School of Public and Environmental Affairs constructed DEV-CaMP, a database that links project-level data on critical minerals projects with records of financial support (including federal loans), land ownership, litigation, and permitting. CBO would benefit from additional linked project-level data.
Estimates of How Changes in Permitting Requirements Affect Public Investment
In June 2025, a bipartisan group of House Members expressed interest in incorporating provisions in future surface transportation reauthorization bills that would shorten the time required to comply with permitting requirements, noting that such changes might speed the construction of public projects such as highways. Targeted changes to permitting have been implemented for some other forms of public investment, including border wall construction. They have also been implemented for some publicly subsidized private investments, such as certain semiconductor projects subsidized through the CHIPS and Science Act that were excluded from permitting requirements under NEPA and the National Historic Preservation Act (NHPA) by the National Defense Authorization Act for Fiscal Year 2024. In its cost estimate for that act, CBO estimated that the NEPA and NHPA exclusions would speed up those physical infrastructure investments.
Brooks and Liscow (2023) documented evidence suggesting that the addition of permitting requirements, such as NEPA's enactment in 1970, contributed to increases in the cost of highway construction. CBO would benefit from additional information about how changes in permitting affect public investment.
Information About the Scope of Permitting Requirements Relevant to Private Investment
In dynamic analyses of how changes in permitting requirements would affect private investment, CBO constructs projections of which types of private investments are subject to different permitting statutes, such as NEPA or the Clean Water Act. To determine the relevance of different permitting requirements to specific industries in its analysis of the permitting provision included in H.R. 1, the agency relied in part on RegData—a database linking federal regulations to industries that was created by Al-Ubaydli and McLaughlin (2014) at George Mason University's Mercatus Center and is now hosted at QuantGov.org.
Determining the relevance of different permitting requirements to specific industries is straightforward for some requirements, such as those under the Natural Gas Act of 1938, which focuses on regulating the natural gas industry. But such determinations are much less straightforward for other permitting requirements, such as those under NEPA, which applies to several types of major federal actions that do not cleanly map to specific industries, including proposed actions on federal lands; actions requiring passage across federal lands; actions funded—either entirely or in part—by the federal government through discretionary programs, creating a "federal nexus"; and actions that affect air or water quality regulated by federal law.
CBO's modeling of changes in permitting requirements would benefit from research mapping the relevance of different permitting requirements, including state, local, and tribal permitting requirements, to private investment in different industries or geographic areas. An example of such research is the work of Greenhill and others (2024), who used machine learning to predict which rivers, streams, and wetlands the Clean Water Act has regulated over time.
CBO would also benefit from legal or economic analysis proposing and validating methods for projecting how changes to particular permitting requirements relevant to private investment in a given industry would affect such investment. An example would be a reapplication of the methods developed by Jaffe (1986) and refined by Bloom, Schankerman, and Van Reenen (2013), which could conceptualize mappings between permitting requirements and industries as vectors of weights indicating each permitting requirement's relevance to each industry. Such frameworks could provide insight into which permitting requirements are likely to be the binding constraints on investments and how different legislative proposals would be expected to change investments.
Estimates of How Changes in Permitting Requirements Affect Private Investment
The costs of regulation may often come in the form of "missing" investments—infrastructure projects that are never started because of the additional time and cost imposed by permitting requirements. If permitting requirements do in fact result in missing investments, analyzing observed investments alone would provide an incomplete picture of how permitting affects investment. Instead, research could inform estimates of how much investment might have been made under a counterfactual set of permitting requirements.
In its analysis of the permitting provision included in H.R. 1, CBO used a calibrated structural model to translate estimated changes in the average time to build and variance in that time into a change in the cost of capital. The agency then quantified how that change in the cost of capital would affect private investment using CBO's CapTax model, which CBO uses to estimate the effect of federal taxes on capital income from new investment. CBO's modeling of changes in permitting requirements would benefit from legal or economic analysis quantifying the extent to which changes in permitting requirements, as modeled through changes in time to build or through other channels, would change private investment.
Joseph Kile is the Director of Microeconomic Analysis, Sam Papenfuss is a Deputy Director of Budget Analysis, and Heidi Williams (a consultant to CBO) is a Research Adviser. This blog post includes contributions from the following CBO staff: Ann E. Futrell, Mark Hadley, David Hughes, Jeffrey Kling, Kevin Laden, Donald Marron (a consultant to CBO), Caroline Nielsen, and Chad Shirley.
As part of the legislative process, CBO supplies the Congress with cost estimates for legislation, economic and budget projections, and other economic assessments. Information from the research community is an important element of the agency's analyses. This is the 13th in a series of blog posts discussing research that would enhance the quality of the information that CBO uses in its work. (Earlier posts in the series discussed the need for new research in the areas of energy and the environment, finance, health, hepatitis C, labor, macroeconomics, national security, new drug development, nutritional standards in the Supplemental Nutrition Assistance Program, obesity, spending in Medicare Part D, and taxes and transfers.) Please send comments to communications@cbo.gov.