Why, Yes, Regulatory Reform Is Possible

Newsom muscles Legislature into reining in the California Environmental Quality Act, which reminds us that change is achievable with effort.

SACRAMENTO, Calif. — The latest news from the rebuilding effort following the Los Angeles wildfires confirms everything we’ve all come to believe about the nature of the state’s bureaucracies. As of July 2, Los Angeles County’s permitting progress dashboard — a clever way for residents to track the rebuilding process — showed that only one building permit has been approved in Pacific Palisades and only 46 have been approved in the Eaton unincorporated area.

That’s excruciatingly slow progress more than five months after the fires ended. It’s especially striking given that Gov. Gavin Newsom exempted via executive order reconstruction projects from the cumbersome California Environmental Quality Act (CEQA) and the Coastal Act. State, city, and county officials have — to their credit — embraced every kind of streamlining reform including a self-certification process for housing projects. And, still, there’s little to show for it in terms of actual rebuilding.

As the Southern California News Group opined, “In reality, California governments have built a massive bureaucratic process that impedes construction of anything — and it’s not easy to unravel even after an emergency and when top leaders are committed to doing so.” It pointed to news reports examining real-world anecdotes of people trying to navigate this labyrinth.

This frustrating situation is a reminder of (Jerry) Pournelle’s Iron Law of Bureaucracy, named after the scientist and science-fiction writer: “[I]n any bureaucratic organization there will be two kinds of people: First, there will be those who are devoted to the goals of the organization. … Secondly, there will be those dedicated to the organization itself. … The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization.” 

And then there are plenty of other realities of bureaucracy, such as its risk-averse nature. If you work in a bureaucracy, you can more easily destroy your career by approving something too quickly — and rarely face any punishment for moving too slowly. There’s little accountability, too. Sadly, California was once an entrepreneurial haven, but our state has spent decades building bureaucracies that operate mainly for the benefits of those who work for them.

In recent years, California’s Democrats have been trying to roll back some of these regulatory impediments, especially those that impede housing construction. It’s not that they’ve suddenly lost their interest in government, but they’ve realized that this regulatory edifice is threatening their own policy goals. The state’s high housing costs have genuinely concerned them, exacerbated the homelessness situation, and upset the voting public.

As I’ve reported here for The American Spectator, CEQA is the biggest obstacle. It requires volumes of paperwork and reviews for virtually every proposed construction project. It allows basically any “stakeholder” to file or threaten a lawsuit over CEQA compliance, which delays projects, adds costs to them, and kills many others. Members of both parties in Sacramento know the depth of the problem, but there’s been insufficient effort — except on a piecemeal basis — to solve it.

But just as I was about to give up for this year, Gov. Gavin Newsom decided to play hard ball and announced last week — just a few days from the budget-signing deadline — that he would hold up the entire budget unless the Legislature passed a wide-ranging (although the specifics were still evolving) CEQA reform. The ultimate measure, which was cobbled together in two separate bills, exempts nine types of projects from CEQA requirements. It tightens up the standards for filing CEQA lawsuits.

Environmentalists were livid and filled the public hearing room. They issued their predictable statements. Sen. Scott Wiener — a progressive San Francisco Democrat who has nonetheless led the charge on housing reform — even berated their “melodramatic statements.” The Legislature voted overwhelmingly in favor of the reforms, with the only “no” vote coming from a senator who objected to Newsom’s last-minute tactics. Newsom of course signed the laws.

It will take time to see if these reforms will really change the way CEQA operates. As we saw in Los Angeles, even with legal changes, it’s hard to redirect bureaucracies from their organizational goals back toward their original, often-laudatory objectives. For example, CEQA has long impeded even environmentally friendly projects, so it’s hard to argue that it actually helps the environment. 

The governor’s tactics also showed that, yes, the Legislature can make meaningful change. The big question is if it actually wants to do so.