California Wakes Up
Rolling back CEQA is one of the smartest things it’s done in years
In 2012 I attended the Milken Global Conference in Los Angeles, an annual sun-baked version of Davos hosted by financier and philanthropist Mike Milken at the Beverly Hilton. I’d brokered a strategic partnership between the Milken Institute and Chevron, where I was manager of corporate affairs and, as a result, was invited to a small, private roundtable with then-Gov. Jerry Brown and about two dozen representatives of California businesses. What was expected and what actually happened at that roundtable were two very different things.
What was expected was a friendly, casual conversation about the business environment and politics in California. What happened was a vigorous lashing of the governor by business leaders who were frustrated and fed up with the state’s mothership of environmental legislation, the California Environmental Quality Act, or CEQA.
Russell Goldsmith, the CEO of a regional bank headquartered in Los Angeles, City National, led the charge. CEQA, he told the governor, had morphed from a regulation with good intentions to protect sensitive ecosystems into a massive enabler of a new acronym that had entered the vernacular — BANANA, or Build Absolutely Nothing Anywhere Near Anything. CEQA, he bluntly told the governor before walking out of the meeting, was strangling growth in California. And Goldsmith was a Democrat.
The governor was clearly taken aback. The friendly roundtable had turned dark as the business community’s frustration with regulatory paralysis spilled onto the table. For the people at the table, it was like shooting fish in a barrel, but for Gov. Brown it wasn’t much fun being the only fish in that barrel.
Still, CEQA lumbered on in California, continuing to impose its metastatic control on every aspect of growth in the state, especially the sky-high housing market, where dwindling supplies pushed prices into the stratosphere. We won’t belabor the examples of CEQA abuse, but at one point when UC Berkeley announced plans to expand student enrollment (a very good thing), local residents blocked the plan under cover of CEQA, complaining that “noise” from more students would pollute the local environment. It seemed there were no limits to the reach and power of CEQA.
Until now.
Gov. Gavin Newsom just signed a housing bill with broad bipartisan support that will effectively shield a big swath of new housing construction from CEQA oversight. For California developers it was a “Wizard of Oz” moment, as the unimaginable happened when Dorothy threw a pail of water on the Wicked Witch of the West and she evaporated into a puddle.
“Saying ‘no’ to housing in my community will no longer be state sanctioned,” said Assemblymember Buffy Wicks, an Oakland Democrat. “This isn’t going to solve all of our housing problems in the state, but it is going to remove the single biggest impediment to building environmentally friendly housing.”
For a state that provides free healthcare to illegal immigrants and has spent nearly $12 billion on a so-called bullet train without yet laying a single mile of high-speed rail, this is a breath of fresh air and the potential glimmer of a future when California begins to balance its sometimes senseless optimism with a healthy dose of pragmatism.
Newsom put the right frame around it.
“If we can’t address this issue, we’re going to lose trust, and that’s just the truth,” he said. “And so this is so much bigger in many ways than the issue itself. It is about the reputation of not just Sacramento and the legislative leadership and executive leadership, but the reputation of the state of California.”
We’ve written about this before, but as Ezra Klein and Derek Thompson charge in their new book “Abundance,” Democrats have allowed their zeal for a perfectly curated society to stand in the way of growth and prosperity. By legislating outcomes at every opportunity, especially in California, they’ve created a regulatory thicket that smothers construction, capital formation and other precursors of economic growth. In Martin Luther King’s vision, the moral arc of the universe is long, but it bends toward justice; in California, it bends toward stasis and high prices.
Years ago, I was at an event featuring Stanford professor Paul Saffo talking about the future of California. One of the state’s problems, he said, is that it had “too much democracy.” It was a shocking, even heretical, idea. But he was beginning to articulate the idea that Klein and Thompson fully develop in “Abundance.” California’s obsession with identity politics, environmental justice and regulation-at-scale solutions like CEQA have unintended consequences, such as telling kids they can’t come to UC Berkeley because they’re too “noisy” or pushing the median price of a home to more than $1 million.
Rolling back CEQA isn’t a panacea for California. The state’s challenges are far too complex for a single solution. But it’s a start. We’ll take it.
The Yarrow-led Chevron California Initiative! Gone but not forgotten! Well well. Gavin’s nascent presidential campaign is producing some sensible moves. We’ll see. But credit where credit’s due.
Two things struck me when I moved to the Bay Area in 2010. First was, for a state rooted in the 60’s counter culture, there were an awful lot of rules, regulations, and notices. Like, if you drink from this wine glass, you’ll die (lead). There was a sticker on cars that basically said DO NOT EAT THIS CAR. It came with a $10K fine if not displayed. Then there was the law that rules them all, the LAW OF UNINTENDED CONSEQUENCES. Even in my short time in CA I lost count of the number of ballot initiatives that passed, then subsequently redone because no one thought of what would happen next! It makes our CDN governments look like libertarian paradises!