Thomas Hochman, a policy manager at the Foundation for American Innovation, focuses on regulatory reform. He looks into the complexities of how state and federal regulations intersect, particularly in the context of permitting and environmental laws.

“State permitting is a really interesting and, I think, under-leveraged issue,” Hochman says. “While we tend to think of regulations, particularly permitting rules, as federal laws, the reality is that a significant portion of them are implemented at the state level.” 

He points out that 75 to 80% of federal permitting laws are carried out by the states, offering them a degree of influence that is frequently underestimated.

States not only implement federal laws but also enact their own regulatory frameworks. This dual system creates a patchwork of rules that companies must navigate, which can significantly impact economic development. 

“When we talk about why it’s hard to build things in the United States, a lot of attention is focused on the federal level — and for good reason,” Hochman says. “But there’s still a lot of opportunity to focus on states as well.” 

One of the most striking examples Hochman points to involves Texas’s attempt to create a flexible permitting program under the Clean Air Act. The Environmental Protection Agency (EPA) is legally required to approve or reject a state's permitting proposal within one year. However, in the Texas case, the process took 16 years.

“The EPA’s delay left facilities in limbo,” he says. “Texas eventually started issuing permits on its own after waiting a decade, and the EPA finally decided to reject the program after 16 years.” 

Texas challenged the decision and won, “but the damage was already done,” according to Hochman.

Another significant challenge arises from the EPA’s system of classifying areas as “attainment” or “non-attainment” based on air quality standards. 

“If you’re already in a non-attainment area, it’s a huge disadvantage,” Hochman says. “It’s devastating for local economies when a region’s designation changes from attainment to non-attainment.”

Businesses in non-attainment areas face stricter regulatory requirements, significantly raising costs. 

“The Clean Air Act’s permitting programs for attainment and non-attainment areas are completely different,” Hochman says. “If you’re in attainment, you’re under the ‘Prevention of Significant Deterioration’ program. If you’re in non-attainment, you’re under ‘Non-Attainment New Source Review.’” The latter requires businesses to adopt “best available control technology,” which changes, forcing businesses to frequently upgrade their facilities at great expense.

Hochman’s research for the Foundation for American Innovation highlights how permitting delays and regulatory complexity hinder innovation. He has conducted a review of how 32 states implement four key environmental laws — the Clean Air Act, Clean Water Act, the National Environmental Policy Act (NEPA), and state-level Endangered Species Acts.

“There’s so much more opportunity for improvement than I expected,” he says. “Even in red states like Montana, which you’d expect to have fewer barriers, you’ll find extremely prohibitive state-level NEPA laws. Montana’s regulations are sometimes stricter than the federal NEPA.” 

This has tangible consequences for industries like critical minerals development, which are essential for clean energy technologies and national security.

Despite the challenges, Hochman sees potential for states to lead reform. 

“States can develop flexible permitting programs that reduce procedural barriers while still meeting substantive requirements,” he says. Texas, for instance, has become a model for other states by implementing flexible permits under the Clean Air Act.

However, states are often discouraged from pursuing such innovations. 

“They’re afraid of the delay,” Hochman says. “Why spend resources developing an innovative permitting program if it’s going to take the EPA 16 years to approve it?” He notes that other states, like Wyoming, have struggled due to limited resources. 

“Wyoming’s regulatory burdens are lower, but they don’t have the capacity to develop new permitting frameworks like Texas has.”

Another pressing issue is the growing federalization of local zoning laws. While Hochman’s focus is on energy infrastructure, he notes that the problem extends to housing. Montana’s restrictive state-level NEPA is a case in point.

“There’s enormous pressure on housing due to the influx of people during the COVID-19 pandemic,” he says. “But state NEPA is making it incredibly hard to build new housing.”

This dynamic has played out in other areas, too. During a wildfire prevention effort in Montana, the U.S. Forest Service’s plan to implement controlled burns was delayed by NEPA—and the forest burned down before the plan was approved. 

“Little stories like that are what got me going,” Hochman says, referencing the moment he realized how damaging bureaucratic delays can be.

Hochman continues to push for reforms that streamline permitting processes and reduce red tape. He’s helping states develop a “state permitting playbook” to guide them in navigating federal and state regulatory frameworks. His broader vision is to find ways for the executive branch to address inefficiencies, including exploring the use of artificial intelligence to identify duplicative regulations.

“We’re looking at all the levers we can pull,” Hochman says. “We’re even considering how independent agencies like the Government Accountability Office could play a role.”

To follow his work, Hochman suggests visiting the Foundation for American Innovation’s website or following him on Twitter at @ThomasHochman.

You can listen to the entire interview at the following link:

Ep. 113 - Thomas Hochman