Even California Democrats See Need for Regulatory Reform

Golden State lawmakers reluctantly face the economic facts.

Although many of California's legislative Democrats are eager to "test drive" the new two-thirds majorities their caucuses hold in both chambers—i.e., pushing the limits of their power to advance their progressive agenda—others are focusing on a sensible reform that almost everyone knows is slowing job growth.

Passed in 1970 at the height of the nation's push to clean up the environment, the California Environmental Quality Act, known as CEQA (pronounced See-Kwa), created a convoluted bureaucratic process to "mitigate" environmental harm from major new projects. One can argue whether the high costs the act imposes in terms of delays and reports have helped preserve the state's ecology, but there's no question it delays the construction of just about everything.

CEQA has been a boon not only to enterprising consultants who prepare foot-high stacks of Environmental Impact Statements, but for lawyers, NIMBY (Not In My Back Yard) groups, environmental activists, and labor unions that manipulate the process for cynical reasons that have nothing to do with identifying and reducing potential environmental harm.

Local NIMBYs use it to stop anything that might be built in their neighborhood. Some environmentalists are adamantly "no-growth" and use it to oppose any and all projects. We know what lawyers get out of it. Unions routinely file CEQA suits—or threaten to do so—to coerce developers into approving union-only Project Labor Agreements. You can only impose so many new costs on a project before it becomes less feasible to build it.

For example, in one case of CEQA abuse, a gas-station owner used the process to slow down the expansion of a competitive gas station across the street. In another case, local residents used CEQA to delay by two years (and add about $3 million in costs) the construction of a low-income senior-citizens housing project in Berkeley. This type of thing is as ridiculous as it is commonplace.

The Legislative Analyst's Office notes that the current economic recovery—or whatever one wants to call the modest economic rebound that might be taking place—is not resulting in the creation of many new jobs, especially in California. The Democrats' new group of self-styled moderates, who hold immense power in the Capitol now that the GOP is essentially dead, have made job creation their top priority. So CEQA is a reasonable target.

Republicans have long pushed for regulatory reform, understanding the role excessive regulations play in dampening economic growth. Oddly enough, then, one of the first orders of business in the new Democratic-dominated Legislature is an issue that Republicans should applaud.

Gov. Jerry Brown set the stage for CEQA reform in his State of the State address: "We also need to rethink and streamline our regulatory procedures, particularly the California Environmental Quality Act. Our approach needs to be based on consistent standards that provide greater certainty and cut needless delays."

In his first terms as governor, Brown devoted himself to undermining the kind of big infrastructure projects championed by his dad, Gov. Pat Brown. As Rep. Tom McClintock (R-Calif.) has written about Jerry Brown: "He enacted volumes of environmental regulations that created severe impediments to home and commercial construction, empowering an incipient no-growth movement that began on the most extreme fringe of the environmental cause and quickly spread." In his recent tenure as attorney general, Brown used the state's cap-and-trade law (AB32) to gum up the works in new development by claiming that the projects would heighten the global-warming problem.

So what gives?

These days, Brown and his Democratic allies have unchecked power in the Capitol and they don't want anything getting in the way of the projects they favor. The most obvious example is High-Speed Rail. If CEQA has any redeeming features, it is this—it applies to public projects also and forces the government sector to deal with the same regulations it imposes on the rest of us. If that weren't the case, there would be no push for reform.

But, again, this is a great bipartisan issue. As former California governors Pete Wilson, Gray Davis, and George Deukmejian argued in a recent column, "Sadly, documented cases of CEQA abuse include examples where CEQA has stood in the way of renewable energy projects, infill housing, schools, hospitals, universities, public transit, and needed infrastructure. In fact, CEQA is often a direct barrier to the sustainable and environmentally friendly growth that California aspires to achieve."

Even with such high-powered support, reform isn't a slam dunk given expected opposition from environmental groups.

Gov. Brown has recently been in a highly publicized rhetorical match with Texas Gov. Rick Perry over their respective states' business climates. Perry has had much success in luring California businesses to his lower-tax, lower-regulation state. Brown has chided Perry and champions the new balanced budget here as evidence of the Golden State's rebound.

Instead of wasting time in a rhetorical battle, Gov. Brown should acknowledge that California is a tough place to do business and focus on those reforms that actually make California a better place to create jobs. CEQA is a great starting point.