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Solimar Research

CEQA: The Cause of All Problems in California

Josh Stephens on
Mar 23, 2015

This week brought yet another critique from the right of the California Environmental Quality Act. Unlike most, this one isn't confined to concerns over land use, unnecessary regulation, and high housing cost. Rather, CEQA's ills have grown so vast that, apparently, it now deserves blame for California's low educational attainment, lousy job growth, extreme wealth inequality, and significant domestic out-migration. 

Jennifer Hernandez and David Friedman are attorneys with the firm of Holland & Knight, which has been an astute observer of, and enthusiastic participant in, the evolution of CEQA caselaw. (See for example the firm's analysis of CEQA lawsuits over infill projects.) They are the authors of "California's Social Priorities," a new report published by Chapman University's Center for Demographics and Policy, whose director is that well-known free-market critic of regulation, Joel Kotkin.

The report (and it is a report, not a study) offers some compelling—dare I say original—claims about California's decline and its misplaced "social priorities." 

The body of the report — a full 11 pages, with plenty of pretty graphics – accurately chronicles California's recent problems. Job growth has dropped from 5.6 million from 1970 to 1990 to 2.6 million from 1991 to 2013. The number of Californians without a high school diploma has risen since 1970 (never mind international immigration). Income inequality ranks 45th nationally, down from 25th in 1970. Everyone is moving to Texas. Woe is us.

And yet, somehow, among all the laws, regulations, micro-, macro-, and global economic trends that impact on and emanate from our state, the overriding cause of California's malaise is — wait for it — CEQA. 

Hernandez and Friedman don't even mention CEQA in the body of the report. But it makes a grand entrance in the first paragraph of the report's conclusion. After carefully documenting the state's ills, the authors boldly say that "there is little doubt that California's high costs and weak economic performance is related to the state's regulatory requirements." They literally just say it. They don't explain it. They don't prove it with anything resembling facts, scholarship, or original research. The report's 20 footnotes include, as far as I can tell, not a single mainstream scholarly study leading them to this idea.

For the rest of the conclusion, the only "regulatory requirement" they talk about is CEQA. And the only "evidence" they present between runaway jobs and the evils of CEQA is Tesla's recent decision to locate its new "gigafactory" in Reno, Nevada. While it is undeniable that "CEQA lawsuit risks and other regulatory burdens have emerged as well-publicized major roadblocks to completing even the most popular entertainment or sports projects, long overdue infrastructure improvements, and manufacturing plants," no one at Tesla says that CEQA was the only deal-killer – or even a deal-killer. Meanwhile, the authors don't cite the sweetheart deal that Tesla got from the State of Nevada.  Nevada coughed up the money partly because it was competing with several states other states that were also throwing economic development incentives at Tesla. Would CEQA reform have magically counteracted the $1.56 billion incentives package that Nevada offered? 

If Californians end up moving to Reno in order to work for Tesla, they'll join legions of Californians who have already abandoned the state because of the tyranny of CEQA between 1990 and 2010. Indeed, the report implies that 3.8 million autonomous, freedom-loving Americans would have stayed in California were it not for the invisible scourge of CEQA – a fact which is bad for climate change and the environment, they argue, because when people move to other states their carbon footprint doubles. 

Californians emit 11.4 metric tons of greenhouse gases per capita per year, or about half what the average American does. So, when people abandon a relatively efficient state, they do the biosphere that much more harm (assuming, of course, that they instantly change their lifestyles upon breaching California's borders).

Never mind that, CEQA – along with California's other regulatory requirements, such as the state's tough air pollution laws – is one of the reasons why Californians live more efficiently in the first place. 

What's most amazing is that — despite their seeming passion for reform — the authors offer no practical suggestions for how to actually reform California's laws. They offer no plan for funding education or taking on teachers unions (if that's your thing, which is probably is if you're a right-leaning scholar). They offer no prescriptions for tax reform or other business incentives. They don't begin to ask how to solve for inequality. They dare not mention Proposition 13. For that matter, they don't even make any suggestions on how to reform CEQA.

Indeed, even Kotkin himself doesn't seem to quite buy the argument that CEQA is the cause of all evil. In his OC Register column plugging the report, he goes on at great length about California's economic and social ills – but even he doesn't mention CEQA. With that said, things are getting better even if CEQA is still a mess. Recent data indicate that the state added a half-million jobs in 2014. That's 30% more than Texas added. This growth really shouldn't surprise anyone, since California's employment patterns have had both downs and ups over the decades. Remember the 5.6 million jobs added from 1970 to 1990? Those were all added under CEQA – which, after all, was passed in 1970. And signed by Gov. Ronald Reagan.

Why does all this alleged scholarship seem so tortured? To a great extent, the Kotkin crew's complaint reflects the changing nature of CEQA. No longer can conservatives rail proudly against CEQA for impeding development. That's because many liberals — particularly planners who support infill and the public officials who support SB 375 and SB 743 — are levying many of the same criticisms of CEQA (if for different reasons). Conservatives now have to hate on CEQA in much more vague ways. Nowadays, if an endangered butterfly flaps its wings in Lassen County, a scholar in Irvine has to work harder to find something to bloviate about.