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Solimar Research

Schwarzenegger Operates On CEQA With Scalpel, Not Hatchet

Jan 11, 2010

Arnold Schwarzenegger has always been a Republican with a twist. As the governor enters his final year attempting to deal both with economic woes and an ambitious environmental agenda it appears that nothing has changed. He is going after the California Environmental Quality Act (CEQA) in his own way. It's legacy time for the governor. For better or worse, the Schwarzenegger approach to skinning CEQA may be part of his legacy.

Given the gravity of the state's economic problems, especially the prolonged real estate slump, a conventional Republican governor would have called for CEQA's repeal long ago. CEQA didn't cause the worldwide economic slowdown, but orthodox Republican philosophy would dictate that streamlining, reforming, or eliminating the law should be part of the recovery.

In his January 6 State of the State speech, Schwarzenegger laid out a five-point plan "create jobs and get California's economy back on track." One of the five points is, "Streamline Regulations To Get Shovels In The Ground." This is targeted at CEQA, and although it sounds sweeping, it really is not. Schwarzenegger is not proposing to reform CEQA or even change it in any way. Instead, he is going to propose a bill that would give the Business, Transportation, and Housing Agency (BTH) the power to identify 20 private projects around the state with completed environmental impact reports and declare them to be exempt from legal challenge under CEQA.

Even though it's not a broadside against CEQA, it got a predictable response from the Democrats. Senate President Pro Tem Darrell Steinberg who joined hands with Schwarzenegger on climate change legislation called the CEQA proposal "an ideological battle" and said the administration should focus instead on spending $23 billion in unspent money from state bonds and the federal stimulus package.

Schwarzenegger's CEQA proposal is similar to the CEQA reform he successfully wrestled from the Legislature last year as part of the budget deal (see CP&DR Insight, March 2009). That reform called out eight highway projects and specifically exempted them from CEQA, substituting a somewhat truncated alternate process. The governor's approach was the same as it is now: Keep CEQA, but attack it surgically in order to advance certain key projects and put people to work.

Indeed, in announcing the CEQA proposal, Schwarzenegger went out of his way to make it clear he's leaving CEQA intact. "This proposal will not exempt projects from the California Environmental Quality Act and will expedite shovel-ready projects that have followed environmental law, not provide a way for projects to circumvent California's strong environmental protection law," he said in a press release. This statement came immediately after he criticized the use of CEQA in the Industry stadium situation as "needless lawsuits brought by a tiny group of individuals."

Together with last spring's exemptions and the recent legislation exempting a new football stadium in Industry from CEQA (see CP&DR Capitol Update, October 15, 2009) Schwarzenegger's latest proposal may represent a new way to cut into CEQA's power that will transcend his term of office, especially during hard times. Instead of gutting CEQA, move along chosen projects especially by end-running the litigation process. There's one big difference between the highway and stadium exemptions, however, and his latest proposal: The latest proposal doesn't specify which projects are going to be moved along. If Schwarzenegger's bill is passed, it would set up a highly competitive and, presumably, highly political process to decide on the exempt projects.

As the bill is drafted, BTH will have the power to identify 20 projects statewide and exempt them from CEQA lawsuits. Seven of these projects would be in the Los Angeles area, three in the Bay Area, five in the San Joaquin Valley, and five in other parts of the state. (There is no explanation as to why the bill specifies 20 projects, rather than 5 or 100.) The bill calls upon BTH to work with "local economic agencies" and chambers of commerce to solicit applications for exempted projects.  As an urgency law, it would require a two-thirds vote, which presumably means Schwarzenegger intends to make it part of the budget package, as last year's reform was.

Like last year's exemption, Schwarzenegger's idea is a big change from traditional CEQA practice. Last year's provisions provided exemptions to eight projects based on economic hardship, not the traditional concept of natural disaster. This year's idea is even more of a deviation.

The idea of an executive branch agency giving certain projects a CEQA pass is not new.  The natural resources secretary has always had the power to declare certain categories of projects exempt from CEQA if they provide a net benefit to the environment. In this case, however:

The power goes to the business-oriented BTH secretary, not the environmentally oriented natural resources secretary.

The power is not tied to the idea of a net environmental benefit, as the categorical exemptions are.

The power is tied in the bill only to economic criteria specifically, "the number and quality of jobs" and the amount of capital investment.

Ordinarily, BTH would go through a lengthy process of devising criteria for selecting the projects. (The Strategic Growth Council has been working on criteria for doling out Proposition 84 planning money for several months.) But Schwarzenegger wants to move quickly. BTH has to pick the projects within five months and finalize the choices within nine months. There's no requirement for public discussion of the criteria, though there is a requirement for one public hearing on the projects selected before the list is finalized.

So BTH will have to scan the state quickly for the biggest pending private projects that appear close to EIR certification and, in a short period of time, pick the 20 likely to have the most economic pop if construction begins immediately. Given the intense lobbying that went for the Industry stadium CEQA exemption, it's frightening to contemplate the amount of lobbying that will be devoted to leaning on BTH. For any large developer in California, throwing lots of money at a Republican administration is likely to be far more attractive than throwing money at CEQA lawsuits. Indeed, there's a good argument to be made that the worse your EIR is, the harder you should try to get the exemption.  Developers with environmentally "good" projects may choose to slap down plaintiffs in court quickly; developers with environmentally "bad" projects will be highly motivated to end-run the courts.

The bill will hit resistance, of course. Even if it passes, some environmental group will figure out how to file a lawsuit over it. This is CEQA, after all. And if I were an environmentalist, I'd start adding non-CEQA claims to my CEQA lawsuits so that a project on BTH's exemption list could be hung up in court on other grounds.

For decades, nobody ever even proposed this kind of thing. CEQA was considered more or less beyond the Legislature's purview, and most CEQA battles were hashed out in court. The legislative debate, when it occurred, took place at the "nuclear" level of repealing CEQA or gutting it beyond recognition an approach that was guaranteed to have enviros laying down in front of the bulldozers, so to speak.

Yet CEQA isn't a sacred text or a constitutional provision. It's only a law a statute that could be changed at any time. And so Schwarzenegger's final legacy in the growth wars might be to show how you can use legislation to bypass CEQA processes selectively for your own purposes, while still being able to say you're an environmentalist. If he is successful, he will provide a lesson that will not be lost on future governors.

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