March 15, 2013

CEQA reform opposed by enviros and … unions?

By Jonathan Wood Attorney

According to the LA Times, opposition to CEQA reform is spearheaded by an alliance of environmentalists and labor unions. At first blush, this seems an odd pairing. CEQA is an obstacle to development across the state. It delays some projects, and prevents other entirely. CEQA is intended to protect the environment. But the result is lost or delayed construction jobs, as well as the loss of other jobs that could have been created. You would expect unions to see this as a reason to push for reform, yet they oppose it.

The explanation for union opposition to CEQA reform may be what Bruce Yandel terms the  “bootleggers and Baptists” theory of regulation:

Indeed, the pages of history are full of episodes best explained by a theory of regulation I call “bootleggers and Baptists.” Bootleggers, you will remember, support Sunday closing laws that shut down all the local bars and liquor stores. Baptists support the same laws and lobby vigorously for them. … The most successful ventures of this sort occur where there is an overarching public concern to be addressed (like the problem of alcohol) whose “solution” allows resources to be distributed from the public purse to particular groups or from one group to another (as from bartenders to bootleggers).

The opposition to CEQA reform appears to fit this theory. There is an overarching public concern—the environment—which dominates the public discussion of the issue. The focus, in the LA Times story and elsewhere, is squarely on the environmentalist case for CEQA. The unions are publicly silent about what other reasons they may have for opposing CEQA reform.

One exception is when unions explain their position to their own members. For example, in a message to union members, a local of the UFCW explained that CEQA reform would “mak[e] it much more difficult for us to stop Wal-Mart and similar big-box retailers from coming to San Diego and other places in California.” Unions oppose the construction of Wal-Marts and similar businesses because they oppose unionization efforts and drive out businesses whose unions have rendered them unable to compete. When explaining its position to union members, as opposed to the public, unions focus on using CEQA as leverage for unionization and labor concessions, rather than the environment.

Also consistent with the theory, CEQA redistributes resources from property owners and businesses to unions. According to state senator Tom Berryhill, unions use the threat of a CEQA lawsuit as leverage against businesses to extract labor concessions. UnionWatch explains that unions routinely file suits raising these environmental objections, but the resulting settlements have nothing to do with environmental concerns. Rather, suits are settled because the businesses proposing projects agree to separate labor agreements,  guaranteeing union jobs.

This extortionate practice is big business in the state, for both unions and their attorneys. According to the Sacramento Business Journal, California Unions for Reliable Energy (CURE) “has intervened in most state applications for major new power plants over the past few years. In all but a couple of cases the power-plant builders have resolved the issue by signing project labor agreements sought by CURE, guaranteeing union jobs.”

By simply paying a filing fee (which ranges from $50 to $500), anyone can stop a project. And, the costs of delay and defending a CEQA lawsuit will be borne by the defendant, unless a court determines that the case was frivolous. As you can imagine, this almost never happens.

CEQA suits, even merit-less ones, impose serious costs on the defendant. When the SEIU filed suit against the expansion of a Sacramento hospital in 2006, the delay alone cost $3 to $5 million a month. Legal fees only compound these costs. Mark Friedman, one of the developers involved in the hospital expansion described the problem this way:

“There’s a surprising and unholy alliance between some environmentalists and labor unions,” Friedman said. “It’s particularly demeaning to the environmental movement to allow laws designed to protect the environment to be used as a sword in a labor fight.”

An alliance between bootleggers and Baptists makes reform more difficult, but not impossible. Its worth noting that prohibition, which gave the theory its name, was eventually repealed. But, the sincerity of the public face of the regulation—the environmentalists—obscures the motives of other groups (like unions) who improperly benefit from the inefficiencies of the regulation.

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