Fostering Economic Development: A New Approach

The rules were supposed to help. That's always how it starts.

Zoning codes to protect neighborhoods. Environmental reviews to safeguard ecosystems. Permitting processes to ensure safety. Each regulation arrived with good intentions and a reasonable justification. But somewhere between intention and implementation, a pattern emerged: the very frameworks designed to guide development started strangling it.

That tension is what makes the question worth asking — what if we've overcorrected? What if economic development regulations, in their current form, are doing more to inhibit infrastructure growth than enable it?

This isn't an argument for deregulation. It's an argument for smarter regulation — and the distinction matters enormously for anyone trying to move a solar farm, battery storage project, data center, or land development deal from blueprint to reality.

Understanding Economic Development Regulations

Economic development, at its core, is the process by which communities build lasting capacity — jobs, infrastructure, tax base, services. Regulations touching that process span an enormous range: federal environmental statutes like NEPA and CEQA, state-level interconnection rules, local zoning ordinances, utility tariff structures, and dozens of agency-specific permitting requirements that vary county by county.

The problem isn't that these rules exist. The problem is that they weren't designed to work together — and they increasingly don't.

A utility-scale solar developer in California, for example, might face sequential (not parallel) reviews from the Bureau of Land Management, the state energy commission, the relevant air quality management district, and local planning boards — each operating on different timelines, different standards, and different definitions of "complete application." The result is a project that might take four to seven years to permit, even when every stakeholder nominally supports it.

That's not a hypothetical. Lawrence Berkeley National Laboratory's 2023 interconnection queue analysis found that the median project in the U.S. interconnection queue waits over five years from application to commercial operation — and the queue itself has grown to over 2,000 GW of proposed capacity. To put that in perspective, the entire existing U.S. generation fleet is roughly 1,200 GW.

The Real Cost of Regulatory Friction

It's tempting to treat permitting delays as a bureaucratic inconvenience — annoying, but manageable. The actual cost is far steeper.

Every year a large-scale infrastructure project sits in regulatory limbo, developers absorb carrying costs on land options, engineering contracts, and capital commitments. For a 200 MW solar-plus-storage project with $300 million in total development costs, even a modest 6% annual carrying cost translates to $18 million per year in dead money. That expense doesn't disappear — it gets baked into the project's required return, which ultimately raises the cost of energy for ratepayers and makes marginal projects unbankable.

The regulatory impact runs deeper than project economics. Uncertainty is the true deal-killer in infrastructure finance. Lenders and tax equity investors don't fear regulation per se — they fear unpredictable regulation. A permitting process that takes three years consistently is more financeable than one that sometimes takes two years and sometimes takes eight. Consistency and clarity are the foundations of investable markets, and most current regulatory systems provide neither.

There's also a competitive dimension. While a project in Ohio waits 18 months for a grid interconnection study, a comparable project in a jurisdiction with streamlined review moves forward. Capital is mobile. Developers aren't obligated to fight through difficult regulatory environments when easier ones exist — and increasingly, they don't.

Where Regulation Becomes a Development Tool

Here's the contrarian flip: well-designed economic development regulations don't just permit growth — they actively catalyze it.

Texas offers the clearest case study in U.S. energy infrastructure. The state's ERCOT grid operates largely independently of federal oversight, and Texas built the Competitive Renewable Energy Zones (CREZ) transmission lines in the late 2000s specifically to unlock West Texas wind resources. The regulatory and legislative framework was purpose-built for speed. The result: Texas now leads the nation in installed wind capacity — over 40 GW — and has become one of the world's most active markets for utility-scale solar and battery storage development.

The lesson isn't that Texas has no regulation. It's that the regulation was designed with a clear outcome in mind and structured to enable rather than evaluate. The CREZ program designated transmission corridors proactively, before projects were proposed, eliminating one of the most time-consuming steps in infrastructure development.

Proactive regulatory design — building the framework before the projects arrive — is consistently the approach that separates high-growth markets from stagnant ones.

Federal policy is beginning to catch up. FERC Order 1920, finalized in 2024, mandates long-term regional transmission planning for the first time, requiring utilities to assess 20-year transmission needs and identify proactive upgrades. It's not a perfect rule — transmission planning at the scale required is genuinely complex — but it represents exactly the kind of structural shift that converts regulatory systems from reactive gatekeepers into active infrastructure development partners.

Navigating the System as It Actually Exists

For developers working in the market today, philosophical arguments about regulatory design don't pay bills. What matters is how to move projects through the existing system faster and with less attrition.

A few approaches separate the developers who consistently close transactions from those who perpetually cycle through the queue.

Early agency engagement is non-negotiable. Pre-application meetings with permitting agencies aren't courtesy calls — they're intelligence-gathering operations. Agencies will tell you, often explicitly, which elements of a project are likely to trigger extended review, which mitigation measures they've accepted before, and where the real political pressure points are. Developers who show up to formal submission having already had those conversations move dramatically faster than those who don't.

Third-party consultants with agency relationships matter more than most developers admit. Environmental consultants, permitting specialists, and land use attorneys who have navigated specific agencies for years carry institutional knowledge that can't be replicated by reading the regulations. A consultant who knows which NEPA reviewer at a regional BLM office has particular concerns about certain habitat types can structure environmental assessments that address those concerns before they become comments — shaving months off review timelines.

Jurisdiction selection deserves serious analysis before site control. The 20-minute conversation about which county or state to develop in can save two years of permitting. States that have established renewable energy permitting offices, streamlined interconnection procedures, or proactive transmission planning frameworks aren't just easier to develop in — they're fundamentally better markets from a risk-adjusted return perspective.

Where This Goes Over the Next Decade

The trajectory of economic development regulations in the infrastructure and clean energy sector is moving toward streamlining — but unevenly, and not without setbacks.

The Inflation Reduction Act fundamentally altered the economics of clean energy development in the U.S., deploying hundreds of billions in tax incentives that created enormous demand for new projects. That demand pressure is forcing regulatory systems to adapt. Interconnection queues that functioned adequately when processing a few hundred applications annually are collapsing under thousands. The dysfunction is becoming impossible to ignore, and FERC, state utility commissions, and legislatures are responding — albeit slowly.

Expect to see two diverging tracks emerge. States and regions that proactively reform their permitting and interconnection systems — building the kind of regulatory infrastructure that enables rather than constrains — will attract disproportionate shares of clean energy investment, data center development, and advanced manufacturing. States that don't will find capital moving elsewhere, along with the jobs and tax revenue that follow it.

The next decade of infrastructure development will be shaped less by where the best resources are and more by where the regulatory systems are most functional.

For land developers, project developers, and investors operating in this space, that realization should be orienting. The fundamental opportunity isn't just identifying good sites — it's identifying jurisdictions where the regulatory environment converts good sites into financeable projects. That's where value is being created, and that's where attention should be directed.

The goal was always to build more, faster, better. The question is whether the rules governing that build are pointed in the same direction.

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