Local and statewide business groups were hoping this would be the year that problems with the state’s environmental law would be solved so that development opponents couldn’t abuse it to block projects.

But those hopes were mostly dashed last week as a bill that cleared a legislative committee contained few of the big reforms business groups were seeking to the controversial California Environmental Quality Act.

What’s more, the bill’s author, state Senate President Darrell Steinberg, D-Sacramento, said publicly that he has no intention of adding those reforms while the bill advances.

That’s not all: Business groups say Steinberg’s bill, SB 731, could end up making things even worse. They say Steinberg inserted language several weeks back that gives project opponents additional opportunities to file lawsuits and also complicates the approval process.

Local business leaders say they were caught off-guard.

“This has taken a twist that we never expected,” said Gary Toebben, chief executive of the Los Angeles Area Chamber of Commerce.

“We never thought something that would be placed on the table would be worse. It makes our task now doubly difficult: We must work to eliminate the language now in the bill that makes it tougher (for development) and then turn around and advocate for language that would provide meaningful reform.”

Toebben was one of dozens of business leaders across California who signed a letter to Steinberg urging him to drop the added provisions and include more of their proposed reforms.

“Unfortunately, as drafted, SB 731 would not advance true CEQA reform and, in fact, could make approval of worthy and responsible projects even more difficult,” the statewide business coalition wrote last month in their letter.

Among the other local business leaders who signed the letter: Tracy Rafter, chief executive of the Los Angeles County Business Federation, or BizFed; Leron Gubler, chief executive of the Hollywood Chamber of Commerce; Marna Smeltzer, chief executive of the Redondo Beach Chamber of Commerce; and Bill Allen, chief executive of the Los Angeles County Economic Development Corp.

Reforms rejected

In testimony Aug. 14 at the Assembly Local Government Committee, Steinberg rebuffed the business coalition, indicating he was not planning to change his bill.

“If there is any expectation – and I know there is a big expectation – that my bill will include the lengthy and ever-changing list that the CEQA coalition seems to want, you’re gonna have to find another author, another year, another time, another way to do this,” he said.

Nonetheless, all the local business leaders contacted for this story said they intend to continue negotiating with him through the end of this legislative session and even into next year, if that’s what it takes.

“We definitely feel that there will be CEQA reform legislation,” said the Hollywood chamber’s Gubler. “It’s just a question on whether it gets done this year or next.”

But he said his bigger concern is whether the legislation that ultimately passes will be sufficient.

“I think we have one shot at getting this right,” he said. “Once this legislation is adopted, I believe that the Legislature will feel that they have handled CEQA issues and will not want to address them again in the near future.”

Among the reforms the business coalition is still seeking: requiring disclosure of all parties contributing financially to lawsuits brought under CEQA that challenge projects and making plaintiffs pay for legal costs.

The negotiations will likely be tough, as environmental and labor groups across the state have dug in their heels to prevent any major changes to the law.

“At its very core, CEQA is a public empowerment statute, giving a community a voice on air, water, environment and traffic issues. That hasn’t changed with this bill,” said Bruce Reznik, executive director of the Planning and Conservation League, a statewide environmental policy group in Sacramento.

In an unexpected turn, labor unions, including the state’s construction and building trade unions, joined environmental groups this year in opposing major changes to CEQA, claiming that there was little evidence that it delays projects and that the law protects residents.

Lawsuit concerns

CEQA, the state’s 40-year-old environmental law, requires local government agencies to certify that development projects either pose no threat to the environment or contain mitigation measures to offset those threats. It provides the ability to sue on the grounds that a project could harm the environment. Such lawsuits often result in lengthy delays, costly additional measures to reduce environmental impact or the scaling back of projects. Developers have sometimes abandoned projects when faced with CEQA lawsuits.

Critics charge that legal challenges based on the environmental law stifle development and slow down job creation. They acknowledge some actions might be legitimate, but say others are simply a means to delay or derail projects. In Hollywood, for example, at least a half-dozen projects faced lengthy delays due to CEQA challenges. Developers ultimately dropped or sold off three of the projects.

Business groups have for years tried to push changes through the Legislature, but have been rebuffed each time by environmental groups and, more recently, labor unions.

But things seemed to change earlier this year when both Gov. Jerry Brown and Steinberg said they would make “meaningful reform” a priority.

Business groups were initially enthusiastic about Steinberg’s proposal, which was supposed to set consistent statewide development standards, give project opponents a deadline for legal challenges and restrict the ability of opponents to reopen challenges.

But after the bill cleared the Senate in June and went to the Assembly, Steinberg inserted major amendments. Language calling for consistent statewide development standards was taken out, except for transit-oriented infill development.

Among the provisions that were added was a requirement for local agencies to give a 15-day notice when a draft environmental impact document is made available. Also, local agencies will have to prepare annual compliance reports. Both provisions, business groups say, would give project opponents more opportunity to block projects or force them to be scaled down.

“We don’t want to be saddled with a new law that might create more opportunities for meritless lawsuits,” Gubler said. But Reznik at the Planning and Conservation League said that if these provisions remain in the legislation, business groups only have themselves to blame.

“The business community did itself a disservice by going after the core of CEQA,” he said. “That forced us to build a coalition, not just environmental groups but also with labor, to defend the law and even to strengthen it.”