Why shouldn't permits be withheld on ethical grounds? Isn't that just giving permission for companies to be unethical and get away with it?
Also, we don't live in a world adjudicated by machines, there will always be discretion and the potential for special favors. No matter how much you tie the hands of regulators there will be some actor who will have the power to extort. Not to mention that regulation is not opposed to due process and the rule of law, but is the most important component of both.
Imagining a world without discretion is imagining a world where corporations can do as much irreparable harm as they want as long as there isn't a law against it.