Nimby Nation: The High Cost To America Of Saying No To Everything
This story will appear in the August 17, 2015 issue of Forbes
For more than 50 years Onyx Specialty Papers of South Lee, Mass. has carved out a niche selling unusual, high-value products like the Kevlar-reinforced paper used in automobile clutch plates. The company’s twin 100-foot-long paper machines sit in a 150-year-old brick building on the Housatonic River, churning out 12,000 tons of paper a year.
Pat Begrowicz and a business partner bought Onyx from industry giant Mead Westvaco in 2009. She cashed in her kids’ college funds to do so. Now she’s wondering whether that was such a great idea. The problem isn’t labor (starting pay for manufacturing jobs at her 155-employee company is $20 an hour) or even raw materials costs or markets. It’s energy.
Massachusetts has the third-highest electricity costs in the lower 48 states, after Connecticut and Rhode Island. Begrowicz pays about 14 cents per kilowatt-hour, more than double the national average of 6.5 cents. As a result, she figures she pays $1.2 million a year more than she needs to in order to run her machines. She takes a hit on natural gas as well, which Onyx burns to produce steam for the big revolving steel cylinders that dry the paper pulp slurry. Gas prices in Massachusetts, which also drive the high cost of electricity, are two times higher (about $11 per thousand cubic feet) than the national average. “I can’t recoup it,” she says, shaking her head.
The painful irony, of course, is that America sits in the midst of a historic natural gas boom that has seen prices plunge more than 75% since 2008. Just 200 miles to the southwest of South Lee lies the Marcellus Shale natural gas field of Pennsylvania, the biggest in America. From nothing a decade ago the Marcellus now produces 16.5 billion cubic feet of natural gas per day, about 20% of the national total. Pipeline companies are itching to extend their lines to bring plentiful gas into Massachusetts; Kinder Morgan KMI +0.46% has already signed up long-term buyers for the gas it would haul in via its stalled $3.3 billion Northeast Direct line.
But that’s not going to happen, at least not anytime soon. Despite the fact that Western Massachusetts’ GDP plunged 3.6% from 2007-13 (while the U.S. overall expanded 5.6% over the same time), opposition by small, well-organized groups to any new pipeline remains as ferocious as it is irrational. “We want to prevent the overbuilding of gas infrastructure and overreliance on gas, for economic reasons and climate reasons,” says Kathryn Eiseman, head of Massachusetts PipeLine Awareness Network advocacy group. Yet thanks to her group and others like it, in January 2014 New England’s power companies, lacking gas to make electricity, resorted to burning 2.7 million barrels of emergency fuel oil–more expensive and far more toxic, pumping out twice as much carbon dioxide as natural gas. So much for “economic and climate reasons.”
Call such irrationality the NIMBY tax–the unnecessary, exorbitant and more and more common cost of getting anything done in America. From subways to bridges to power lines and pipelines, the nation’s land, water and key infrastructure is increasingly being held hostage by a growing thicket of regulation, sophisticated opposition and a me-first philosophy that regards development, no matter the public good, as a potential assault on the sacred. From housing construction caps in San Francisco and the Keystone XL pipeline in Nebraska to bridge and subway construction in New York City and port expansion in Savannah, Ga., NIMBY has delayed, killed or inflated the expenses of more than 500 projects nationwide over the last decade at a cost to the economy of more than $1 trillion annually, FORBES conservatively estimates, though in truth those numbers are likely far higher.
The problem is being exacerbated by a furious wave of regulation-writing in Washington. According to the Government Accountability Office, the Obama Administration enacted 499 major rules across all federal agencies in its first six years, up 43% from the first six years of the George W. Bush White House. The GAO defines “major” regulations as having an annual effect of more than $100 million on the economy or significant impacts on prices, productivity, employment or international competitiveness. This summer, new regulations issued by the Environmental Protection Agency expanded the waterways over which it has some say by 4.6 million miles, infuriating landowners across the nation.
“What has happened by accident is that the legal approval system has evolved to be so complicated that any person who doesn’t like a project can exercise a legal veto,” says Philip K. Howard, whose new book, The Rule of Nobody, documents the madness. The effect, Howard says, is “bureaucratic mental illness.” It’s the kind of sickness that now threatens a country that was once defined by advancement and progress.
Of course, it was not always like this. From the global trade booms brought about by the Erie and Panama canals to Depression-era electrification programs that lifted millions of Americans out of poverty and darkness to the rollout of the Interstate Highway System, which transformed the country into a single, seamless economy, the history of the United States was once the history of watershed infrastructure projects, completed quickly, and the opportunities they created.
But by the 1960s the pendulum had swung too far, most famously in New York, where an unparalleled public construction boom driven by the Triborough Bridge & Tunnel Authority’s bare-knuckle chairman, Robert Moses, overshot the mark, destroying neighborhoods and rending the city’s social fabric, igniting a revolt against the bulldozer-driven “urban renewal” movement of the time.
Meanwhile, Americans woke up to the reality that rampant industrialization was destroying the environment. In 1962 Rachel Carson published Silent Spring, which led directly to the banning of the toxic pesticide DDT. In 1963 the Clean Air Act was passed in part to alleviate L.A.’s noxious smog. In 1970 President Richard Nixon created the Environmental Protection Agency. That same year was the first Earth Day. In 1978 toxic horrors were discovered under a new housing development at Love Canal, N.Y., leading to the 1980 creation of the Federal Superfund program to clean up industrial disasters. That same year marks the first recorded usage of the phrase “Not in My Backyard.”
It didn’t take long for newly minted NIMBYs to realize the tools they had been handed. The law that created the EPA required all sizable federal project plans to include an environmental impact statement. Courts decided that it wasn’t enough to declare what the impacts would be–agencies also had to inform the public on how they intended to address those impacts. The problem, though, is that every agency can weigh in on environmental impacts, but no single agency has authority over the process, allowing environmentalists to litigate over every word in every impact statement. Richard Geddes of the American Enterprise Institute says one local transportation official told him that “if I take $1 of federal money for a state transportation project, it can add 11 years to the process.”
Forty-five years later the unanticipated result is a sophisticated NIMBY-industrial complex of activists and lawyers that has grown increasingly proficient at weaponizing all this well-intended regulation to stall even green projects and explode their costs.
Take Vermont, where New England NIMBYs sought to block an electric transmission project that would bring zero-carbon hydropower to the region from Canada. The plan, proposed by the company Transmission Developers, owned by Blackstone Group, is to build a 1,000-megawatt line under Lake Champlain to Ludlow, Vt., where it would patch into the grid near the decommissioned Vermont Yankee nuclear plant (closed in 2014 due to pressure by activists who–you guessed it–didn’t want a reactor operating in their backyard).
But if you think subbing hydropower for nuclear power would satisfy the region’s NIMBY forces, think again. Boston’s Conservation Law Foundation intervened because of the plan’s “impact on the aquatic environment” and potential competition with renewable projects in New England. Greg Cunningham, CLF vice president and director of its Clean Energy and Climate Change program, explains that hydropower “is not a zero-carbon resource, so that needs to be accounted for.” Dams, he says, create sediments that release higher levels of CO 2 in their early years, and the land behind the dam needs to be clear-cut of CO 2 absorbing trees to make way for the reservoir. Faced with the potential for endless litigation, Transmission Developers CEO Don Jessome cut a deal with the NIMBYs: Drop your opposition and in return we will invest nearly $300 million over 40 years on Conservation Law Foundation pet causes like solar and wind.
Continued here:
http://www.forbes.com/sites/christo...cost-to-america-of-saying-no-to-everything/4/
This story will appear in the August 17, 2015 issue of Forbes
For more than 50 years Onyx Specialty Papers of South Lee, Mass. has carved out a niche selling unusual, high-value products like the Kevlar-reinforced paper used in automobile clutch plates. The company’s twin 100-foot-long paper machines sit in a 150-year-old brick building on the Housatonic River, churning out 12,000 tons of paper a year.
Pat Begrowicz and a business partner bought Onyx from industry giant Mead Westvaco in 2009. She cashed in her kids’ college funds to do so. Now she’s wondering whether that was such a great idea. The problem isn’t labor (starting pay for manufacturing jobs at her 155-employee company is $20 an hour) or even raw materials costs or markets. It’s energy.
Massachusetts has the third-highest electricity costs in the lower 48 states, after Connecticut and Rhode Island. Begrowicz pays about 14 cents per kilowatt-hour, more than double the national average of 6.5 cents. As a result, she figures she pays $1.2 million a year more than she needs to in order to run her machines. She takes a hit on natural gas as well, which Onyx burns to produce steam for the big revolving steel cylinders that dry the paper pulp slurry. Gas prices in Massachusetts, which also drive the high cost of electricity, are two times higher (about $11 per thousand cubic feet) than the national average. “I can’t recoup it,” she says, shaking her head.
The painful irony, of course, is that America sits in the midst of a historic natural gas boom that has seen prices plunge more than 75% since 2008. Just 200 miles to the southwest of South Lee lies the Marcellus Shale natural gas field of Pennsylvania, the biggest in America. From nothing a decade ago the Marcellus now produces 16.5 billion cubic feet of natural gas per day, about 20% of the national total. Pipeline companies are itching to extend their lines to bring plentiful gas into Massachusetts; Kinder Morgan KMI +0.46% has already signed up long-term buyers for the gas it would haul in via its stalled $3.3 billion Northeast Direct line.
But that’s not going to happen, at least not anytime soon. Despite the fact that Western Massachusetts’ GDP plunged 3.6% from 2007-13 (while the U.S. overall expanded 5.6% over the same time), opposition by small, well-organized groups to any new pipeline remains as ferocious as it is irrational. “We want to prevent the overbuilding of gas infrastructure and overreliance on gas, for economic reasons and climate reasons,” says Kathryn Eiseman, head of Massachusetts PipeLine Awareness Network advocacy group. Yet thanks to her group and others like it, in January 2014 New England’s power companies, lacking gas to make electricity, resorted to burning 2.7 million barrels of emergency fuel oil–more expensive and far more toxic, pumping out twice as much carbon dioxide as natural gas. So much for “economic and climate reasons.”
Call such irrationality the NIMBY tax–the unnecessary, exorbitant and more and more common cost of getting anything done in America. From subways to bridges to power lines and pipelines, the nation’s land, water and key infrastructure is increasingly being held hostage by a growing thicket of regulation, sophisticated opposition and a me-first philosophy that regards development, no matter the public good, as a potential assault on the sacred. From housing construction caps in San Francisco and the Keystone XL pipeline in Nebraska to bridge and subway construction in New York City and port expansion in Savannah, Ga., NIMBY has delayed, killed or inflated the expenses of more than 500 projects nationwide over the last decade at a cost to the economy of more than $1 trillion annually, FORBES conservatively estimates, though in truth those numbers are likely far higher.
The problem is being exacerbated by a furious wave of regulation-writing in Washington. According to the Government Accountability Office, the Obama Administration enacted 499 major rules across all federal agencies in its first six years, up 43% from the first six years of the George W. Bush White House. The GAO defines “major” regulations as having an annual effect of more than $100 million on the economy or significant impacts on prices, productivity, employment or international competitiveness. This summer, new regulations issued by the Environmental Protection Agency expanded the waterways over which it has some say by 4.6 million miles, infuriating landowners across the nation.
“What has happened by accident is that the legal approval system has evolved to be so complicated that any person who doesn’t like a project can exercise a legal veto,” says Philip K. Howard, whose new book, The Rule of Nobody, documents the madness. The effect, Howard says, is “bureaucratic mental illness.” It’s the kind of sickness that now threatens a country that was once defined by advancement and progress.
Of course, it was not always like this. From the global trade booms brought about by the Erie and Panama canals to Depression-era electrification programs that lifted millions of Americans out of poverty and darkness to the rollout of the Interstate Highway System, which transformed the country into a single, seamless economy, the history of the United States was once the history of watershed infrastructure projects, completed quickly, and the opportunities they created.
But by the 1960s the pendulum had swung too far, most famously in New York, where an unparalleled public construction boom driven by the Triborough Bridge & Tunnel Authority’s bare-knuckle chairman, Robert Moses, overshot the mark, destroying neighborhoods and rending the city’s social fabric, igniting a revolt against the bulldozer-driven “urban renewal” movement of the time.
Meanwhile, Americans woke up to the reality that rampant industrialization was destroying the environment. In 1962 Rachel Carson published Silent Spring, which led directly to the banning of the toxic pesticide DDT. In 1963 the Clean Air Act was passed in part to alleviate L.A.’s noxious smog. In 1970 President Richard Nixon created the Environmental Protection Agency. That same year was the first Earth Day. In 1978 toxic horrors were discovered under a new housing development at Love Canal, N.Y., leading to the 1980 creation of the Federal Superfund program to clean up industrial disasters. That same year marks the first recorded usage of the phrase “Not in My Backyard.”
It didn’t take long for newly minted NIMBYs to realize the tools they had been handed. The law that created the EPA required all sizable federal project plans to include an environmental impact statement. Courts decided that it wasn’t enough to declare what the impacts would be–agencies also had to inform the public on how they intended to address those impacts. The problem, though, is that every agency can weigh in on environmental impacts, but no single agency has authority over the process, allowing environmentalists to litigate over every word in every impact statement. Richard Geddes of the American Enterprise Institute says one local transportation official told him that “if I take $1 of federal money for a state transportation project, it can add 11 years to the process.”
Forty-five years later the unanticipated result is a sophisticated NIMBY-industrial complex of activists and lawyers that has grown increasingly proficient at weaponizing all this well-intended regulation to stall even green projects and explode their costs.
Take Vermont, where New England NIMBYs sought to block an electric transmission project that would bring zero-carbon hydropower to the region from Canada. The plan, proposed by the company Transmission Developers, owned by Blackstone Group, is to build a 1,000-megawatt line under Lake Champlain to Ludlow, Vt., where it would patch into the grid near the decommissioned Vermont Yankee nuclear plant (closed in 2014 due to pressure by activists who–you guessed it–didn’t want a reactor operating in their backyard).
But if you think subbing hydropower for nuclear power would satisfy the region’s NIMBY forces, think again. Boston’s Conservation Law Foundation intervened because of the plan’s “impact on the aquatic environment” and potential competition with renewable projects in New England. Greg Cunningham, CLF vice president and director of its Clean Energy and Climate Change program, explains that hydropower “is not a zero-carbon resource, so that needs to be accounted for.” Dams, he says, create sediments that release higher levels of CO 2 in their early years, and the land behind the dam needs to be clear-cut of CO 2 absorbing trees to make way for the reservoir. Faced with the potential for endless litigation, Transmission Developers CEO Don Jessome cut a deal with the NIMBYs: Drop your opposition and in return we will invest nearly $300 million over 40 years on Conservation Law Foundation pet causes like solar and wind.
Continued here:
http://www.forbes.com/sites/christo...cost-to-america-of-saying-no-to-everything/4/
